How to sell a mobile app

A mobile application is usually created for future sale. Either the developers of the growing application are selling it, or the application is custom-built for specific purposes. Therefore, a contract for sale of a mobile application becomes inevitable. Since the application includes many elements, some of which may be meaningful in their own right, the contract must reflect the transition of this entire structure from buyer to seller. You can read about how to sell a mobile application in our article.

Contents: 

• What is conveyed when selling a mobile application?
• Methods for transferring exclusive rights to a mobile application
• Drawing up a contract for the sale of a mobile application
• Taxation of software sales

What is transmitted when selling a mobile application? 

The mobile application is based on the source code. It is protected by copyright. Therefore, first of all, it is transmitted. Copyright includes several types, but in practice, exclusive rights have value. The person who owns the exclusive rights is called the copyright holder. It defines the scope and ways of using the copyright object. Therefore, by purchasing a mobile application, you acquire exclusive rights to the source code. Initially, the exclusive right belongs to the author, but he can transfer it.

Along with the source code, other elements are included in the mobile application. An application design can be protected with an industrial design. Therefore, when selling an application, it is necessary to transfer exclusive rights to the interface as to an industrial design.

Methods for transferring exclusive rights to a mobile application

There are two options in which you can use the app. 

The first option is an agreement on the alienation of the exclusive right to the source code. According to it, the exclusive right will pass to you in full. This agreement cannot be limited. This will be a full-fledged sale.

The second option is a license agreement. According to it, the exclusive right will pass to you with some restrictions on the time of use, territory, methods or purposes.

When concluding an agreement for the creation of a mobile application, you need to immediately provide for the procedure for transferring exclusive rights to you. The contract can be mixed, i.e. you can include the terms of other contracts in it. Therefore, even if this is a work contract, it may provide for the disposal of exclusive rights.

Drawing up a contract for the sale of a mobile application

The contract must be in writing. Otherwise, this will entail the invalidity of the contract. In addition, the mobile application includes elements, the rights to which are subject to mandatory state registration. Therefore, when they are transferred to the Register, it will be necessary to replace the copyright holder.

Also, in the contract, regardless of whether it provides for an alienation or a license, it is necessary to provide for a condition on remuneration. It is mandatory, and without it, the contract will be deemed non-concluded. In the case of a license, the remuneration can be paid in the following ways:

• Lump-sum contribution - a fixed one-time remuneration;
• Royalty:
  • Fixed periodic remuneration;
  • Fixed variable. 

Taxation of the sale of software

The Russian Tax Code (hereinafter - TC) provides for exemption from VAT in case of alienation of exclusive rights to computer programs, including when granting rights under license agreements (clause 26 of article 149 of the Tax Code of the Russian Federation). However, there are significant limitations to this. This benefit applies only to programs that are included in the Unified Register of Russian Computer Programs and Databases, better known as the Register of Domestic Software. In order for Russian software to be included in this Register, the following conditions must be met:

• Software copyright holder - a citizen of the Russian Federation or an organization with a Russian share of more than 50%;
• Information about the software does not constitute a state secret;
• Payments from foreign persons under license agreements - less than 30%;
• The software does not have forced management and updates from abroad.

The privilege does not receive computer programs that are intended for advertising or for the sale and placement of goods by remote means. 

Thus, in order to sell a mobile application, you must first decompose it into parts, i.e. see what results of intellectual activity are included in it: source code, industrial design, etc. Then you need to decide whether you want to sell it, i.e. completely transfer all rights to it, or you want to grant for a while (license). Then you can already proceed to drawing up a contract. If you have any questions or you need help with legal support for the purchase and sale of applications, please contact A4 Law Firm lawyers.