Steam and paying VAT

[Cannibal Panda Studios]

Hey there everyone!

I have a question, and I hope there are many more experienced users around here who may be able to answer it. So I know that by default Steam automatically pays VAT after game sales, but I am not totally sure what that means. The share of Steam from revenues is 30%. does that mean they handle VAT from that ammount and my share is 70% or they remove and additional 20% for VAT payment and my share is 50%?

Also, is it possible to request Steam not to pay VAT after revenue as the user of the mental property or whatever a video game can be called, but to give me the right, as the owner to handle paying VAT in my own home country after the revenues? It could be benefical as according to the laws of my country I can reuqest not to pay any VAT at all after royalti fees (my share of the game sales revenue), until my yearly income exceeds 20,000$, so basically I would get away VAT free.

Anyone having a deeper knowledge regarding these two issues. Your answers are highly appreciated, thanks :)

[Muppet among Puppets]

Originally posted by Cannibal Panda Studios:

until my yearly income exceeds 20,000$, so basically I would get away VAT free.

In your country, do you go with full proof of your financial situation to buy in a shop and then taxes are removed for them? And they copy your data and send them?
For every purchase? Even a candy?

What country is that?

[Cannibal Panda Studios]

Obviously not. This law can only be applied to a very few specific situations. VAT paid after rojalty fees income, which is certainly clearly documented, is one of them.

[Muppet among Puppets]

Isnt vat what the shop has to pay? What does it have to do with your income?

Who would pay vat then at all? If all it takes was to know someone with a certain income to buy things vat free for them all day long?

Really wonder what country that is.

[cinedine]

First Steam takes it cut.
Then publishers/distribution networks get their share from the remaining amount (e.g. 20%)
Then other royalties and license fees are applied to the remaining amount (e.g. UE3 with 25%)
The remaining is your taxable revenue (e.g. 20%)

So from the sales price:
after Steam: 70%
after publisher: 56%
after royalties: 42% (<- that's what's taxable)
after taxes: 33.6%

BTW: VAT is not your concern, but the end-customers. You will have to pay income tax as a developer. If the sales price includes VAT it's subtracted BEFORE Steam's share:

after VAT: 80%
after Steam: 56%
after publisher: 44.8%
after royalties: 33.6% (<- taxable income)
after taxes: 26.88%

[Cannibal Panda Studios]

So if there are publisher/distribution networks thta I use to get pay to, and I use Unity, which is as far as I know royalti free, that my taxable revenue will be 70%?

[Muppet among Puppets]

Are you talking about selling or buying?

[cinedine]

Edited above. Depends on whether VAT is part of the final sales price (European model) or added on top (US model).

[Gallifrey - CSSC Gaming Founder]

Originally posted by Muppet among Puppets:

Isnt vat what the shop has to pay? What does it have to do with your income?

Who would pay vat then at all? If all it takes was to know someone with a certain income to buy things vat free for them all day long?

Really wonder what country that is.

If you work for yourself or in a partnership you only have to CHARGE VAT on your goods and services if your gross income is more than about £70k I think. This is to avoid placing excessive admin costs on small businesses.

Above that level all businesses must CHARGE VAT. If they are registered to CHARGE VAT they can then recover the VAT they have paid on goods and services for the business.

So if you buy a chocolate bar from a shop you pay VAT but can't recover it.

And, yes, the system can be abused/ defrauded.

S.x.

[The Gentlebros]

Is VAT added to the price of the game, or is it part of it?

For example, if a game is priced at $10, and there is a 20% VAT, does the game appear as $12 to that consumer who needs to pay VAT?

Or does the game still appear as $10, and Valve/Developer shoulders the VAT cost?

[cSg|mc-Hotsauce]

VAT is included with the price of the game on the store page.