Is tax generally included in HTML5 game prices?

[tackle]

We see a lot of numbers in threads on this forum - you should not, in general, accept a price for your HTML5 game below $400-$500-ish.

 

When you sell a game for $500 - is tax included?

I know this is a very broad question and depends on the location of both the buyer and the seller, so let's look at a few examples:

 

1. Seller is in EU - buyer is in another EU country

Seller gets $500 transferred over.

According to my country's (Sweden) tax agency info on EU policies, the seller can sell without handling tax in any way, but supply the company's VAT (Value Added Tax) number for the buyer.

The buyer in turn declares tax in the buyer's country.

 

2. Seller is in EU - buyer is outside of EU

Unsure what applies here.

 

3. Seller is outside EU - buyer is either inside or outside EU

Also unsure what applies here.

 

One thing I wonder about is if a buyer can offer a price, and upon finding out your a located at a specific location reply with "oh in that case we have to account for tax so you will only get 0.8 * initial offer" for example.

 

Can you help with the examples above?

 

Side note - here is an online service (free) that checks if VAT numbers are valid or not:

http://ec.europa.eu/taxation_customs/vies/vatRequest.html

[rich]

Tax and tax law varies so dramatically from country to country that I wouldn't really go on anything posted here, unless the poster is in the same country as you! And even then I wouldn't trust it unless they were an accountant

 

In the UK though VAT can only be charged by a VAT registered company, not an individual. You generally don't need to be VAT registered unless you earn over £150,000 a year. The VAT is only charged on invoices sent to other UK companies, and a few select EU locations. It's always in addition to the sale amount. I would imagine most devs on this forum don't fall into this category and instead need only worry about personal income tax. I.e. declaring what they earn to the tax man, and having to give up a percentage of it. But again this varies tremendously even within your own country, based on other factors (external income, etc), so really - get proper qualified advice if you want to do it right. Please

[sbat]

One thing I wonder about is if a buyer can offer a price, and upon finding out your a located at a specific location reply with "oh in that case we have to account for tax so you will only get 0.8 * initial offer" for example.

 

 

Short answer: yes, it happens sometimes, good publishers tend to notify about the possible issue upfront. 

 

Sometimes you have to provide additional paperwork to reduce/remove the extra tax burden. 

[tackle]

Yeah you're probably right Rich.

I suppose you'd have to look at it case by case.

 

As a sole proprietorship here in Sweden you have a VAT number, so I have that going for me at least.

[dev]

It really depends.

 

One rule I have: I quote my prices in the exact amount that I will gain and that the licensor will lose. You'll see how that works out.

 

For companies based outside my company I don't have to charge VAT currently. As such, I quote my price as is, without tax, normally in dollars except if it's an EU company, but even then dollar amounts are usually used in negotiations! Usually that means ~$600 for me. I don't have to pay anything to the government on this amount.

 

For companies within my country I do have to charge tax roughly 20%. Here again I quote the price without tax. The final invoice will add the tax, but I have to give this to the government (more precisely the revenue service) and the licensor will get this money back from the revenue service. As such, I actually only gain the quoted price without tax and they lose the quoted price without tax. The only losses for them on taxes is the time value of money which for quarterly taxes is probably less than half a percent of the tax amount, pretty puny.

 

I think this is the most fair way to charge prices and quote prices. All companies have complied with this, it's never a problem because it's quite fair. Only once was there resistance to this idea. When I sold one license for €500 + tax, one company said the total budget was 500, so the tax had to be included in that. I told them again, any taxes on the quoted price I will have to give away and you will get it, so I gain 500 and you pay 500 in the end, the taxes are just passed on. They did agree to this the very same day.

 

Some companies ask ridiculously low prices and then say taxes-included. That's generally not how it works. For consumers I *always* quote tax-included prices because they can't get back the VAT so that's their final price. For businesses I almost always quote tax-excluded prices because any taxes they do pay they can get back. There are a few exceptions to this, but with HTML5 licenses normally this is the way.

 

That's my case. It's extremely country-dependent though. But don't let companies take advantage. If you spend a month building a game, you can spend an hour looking up some tax rules of your country and that of your licensor