Yeah you're right about EU VAT - it's paid based on the retail price... So you'd have to take that into account when setting the price in Euros. Note that steam allows you to set different prices for different countries -- e.g. often a game will be USD60 for an American customer and USD100 for an Australian one >:(

With your example game, this is what the store looks like for me: http://i.imgur.com/G0fEe4Yh.jpg

Note that the price is not equal (US$19.99 is cheaper than €19.99), and I've got the extra item on their of "Tax: $0".
In Australia, VAT (or GST as we call it) must be included in the retail price, but should also shown to the customer on recepits. It's 10%, so it should be a $20 game that includes $2 of GST in that price, but apparently isn't... Somehow they're getting away with not charging me any GST - maybe because I'm importing a product and paying in foreign currency?
Huh.

Anyway, the agreements you sign with Valve will have to covee all of this, plus Valve helps developers choose a price for their game per region.

The GST is most likely already included in the final price, much like over here in germany (thought we have a VAT of 19% :( ), I think that there's a tax agreement between USA and Australia. So, the developer will only see 90% of your $20 minus -30%. In each country, each market, customers will be used to different final prices. In some countries the final price will always include the VAT, in other countries people are used to add them on top.

It's strange that VAT/GST are supposed to be paid on the increase in value - e.g. the difference in retail and wholesale, but my quick research on EU VAT says that for digital goods this isn't taken into account.

A digital publisher can buy the rights to a good for 90c per unit, sell it for $1 per unit, make a profit of 10c per unit, but then be required to pay 17c to a European tax office. WTF is up with that?

If it really is a value-added-tax, then it should only be taken from Valve's slice.
I wholesale them a product for $7, they distribute it and retail it for $10, with a markup of $3... So they should pay, say 17% VAT on the increased value of $3 (which is 51c).

The GST is most likely already included in the final price

The standard here is to include it in the retail price, but also explicitly write "Contains GST of $0.91“ etc, because there's situations where you can apply for refunds of your GST paid. In manufacturing chains, we do a stupid thing also where everyone pays 10% GST on the full value, but then applies for a refund such that they only end up paying GST for the value they added :/
On the steam screenshot I posted, they're explicitly telling me that it contains no tax component (whereas Ricki's screenshot doesn't even mention tax).

> A digital publisher can buy the rights to a good for 90c per unit, sell it for $1 per unit, make a profit of 10c per unit, but then be required to pay 17c to a European tax office. WTF is up with that?


This is how it would work in germany more or less: As company you would pay € 0.90 which would include € ~0.17 VAT. Then, when you sell it for € 1 you would pay €0,19 VAT, but you can set this off, so that you only need to pay € 0,02 VAT actually, so only the end-consumer will need to "pay" the VAT, not the company.

It's strange that VAT/GST are supposed to be paid on the increase in value - e.g. the difference in retail and wholesale, but my quick research on EU VAT says that for digital goods this isn't taken into account.

You're right about that. However it's the seller who must increase the value. If the seller didn't, then it is assumed the price already included the raise.

It's strange that VAT/GST are supposed to be paid on the increase in value - e.g. the difference in retail and wholesale, but my quick research on EU VAT says that for digital goods this isn't taken into account.

You're right about that. However it's the seller who must increase the value. If the seller didn't, then it is assumed the price already included the raise.

I guess which is why you want to use a retailer like Steam rather than running your own store. Ain't nobody got time to research the implications of selling something to 300 jurisdictions...

It's strange that VAT/GST are supposed to be paid on the increase in value - e.g. the difference in retail and wholesale, but my quick research on EU VAT says that for digital goods this isn't taken into account.

You're right about that. However it's the seller who must increase the value. If the seller didn't, then it is assumed the price already included the raise.

I guess which is why you want to use a retailer like Steam rather than running your own store. Ain't nobody got time to research the implications of selling something to 300 jurisdictions...

But that is quite recent change that indies are almost unable to sell games on their own sites... Its has to do something with the EU and it went in force only in 2015 i believe?

You know there is a threshold to vat right? Check with an accountant, but I'm sure that you don't even have to deal with it at all until your turnover per year is greater than £20K...

I guess which is why you want to use a retailer like Steam rather than running your own store. Ain't nobody got time to research the implications of selling something to 300 jurisdictions...

It would be easy if it weren't for the EU that screwed up. Traditionally, "civilized" countries applied the VAT from imports (as seen from the country of the buyer) by withholding at the payment issuer (e.g. typically the credit card). Even if you pay with PayPal, PayPal gets the money via a credit card transaction, a bank transfer, or another PayPal transfer.

Only the last one is hard to withheld (paying w/ PayPal using funds from a previous PayPal transaction), and even then, legislation on "decent" countries is to make the buyer liable for paying the VAT. After all, the VAT is a tax imposed on the consumer, not the seller (but normally the seller is the one who deposits the VAT funds to the Tax agency since it's the most practical thing to do; but not in this case).

But no... the EU wanted to force the buyer to register with their tax administration agencies even if the seller never set a foot there, or despite these EU countries don't even have jurisdiction to enforce such thing. I ranted about it in detail on my website.

You know there is a threshold to vat right? Check with an accountant, but I'm sure that you don't even have to deal with it at all until your turnover per year is greater than £20K...

Yes, but the problem with EU's new legislation is that you have to check the threshold of every single european country, and watch out if there's a country without thresholds.

It's a mess.