Gamesalad Marketplace & new EU VAT laws

DigiChain

As i’m sure many of you know (and many others probably don’t) - new EU VAT laws came into place on 1st January. As a result any digital media sale is now required to pay VAT at the VAT rate of the EU country to which the sale was made (there is no longer a VAT threshold when it comes to digital sales!)

In the case of Apple, Amazon and Google the VAT is collected and paid by them for any sales we make in the EU (Google actually changed its policy to comply with the new law) - which is good news!

I’m still trying to determine whether Nook, Windows and Tizen stores do the same.

So, does Gamesalad collect and pay VAT on our behalf for sales made through the Gamesalad Marketplace to EU countries?

My guess is probably not - but I’d like to know for certain before I pull my templates from the store.

Can someone from Gamesalad please advise on this.

Thanks

Armelline

I really hope not as most sellers are going to be under the threshold and it would be money down the drain.

DigiChain

@Armelline - yeah, the threshold for any other business (selling physical products) here in the UK is £81,000 before having to register and pay VAT.
The threshold for selling digital media however is now £1.
It's ludicrous!

Armelline

@DigiChain said:
Armelline - yeah, the threshold for any other business (selling physical products) here in the UK is £81,000 before having to register and pay VAT.
The threshold for selling digital media however is now £1.
It's ludicrous!

There's a separate threshold for digital media? That's insane! Guess I'm increasing the price of my templates...

Wow, this is even more insane than I thought:

http://www.soulambition.com/blog/2014/12/eu-vat-changes-digital-sales/

Guess I'm spending a long time on the phone to HMRC on Monday...

DigiChain

Yeah, it's not just UK either - this is Euro-wide. It also effects anybody selling to EU countries, so nobody is safe.

Here in the UK if you decide to continue selling through marketplaces which don't handle the VAT for you I believe it'll mean becoming VAT registered and submitting a VAT return every 3 months. You'll also need to pay the VAT at the rate of the country to which sale is made (the EU countries have differing VAT rates), so you'll need to keep records of every sale, which country it is to and the VAT rate payable in that country! It's a lot of additional work - hence my decision to pull my templates should GS not handle tax on our behalf.

A lot of people will be burnt by this one.

Armelline

I'm definitely going to get very clear and precise information before I decide how I want to handle this/want this handled. I'm seeing a lot of contradictory information online. But I guess we can't complain about companies like Apple avoiding their tax duty and then be surprised when something like this happens.

DigiChain

If you do find some clear info would you mind sharing it.

I've spent hours trawling tax sites trying to get to the bottom of it and my brain is now a little fried!!!

Cheers

ogreofwart

I think we also need to know the official Gamesalad standpoint on this, in view of the new marketplace update.

jigglybean

Like many companies, they have just added the VAT on top, so be ready for price increases. Got to love the EU. Graphic river/themeforest etc have seen their prices increase prior to Christmas.

Many themes saw an increase of $10+

DigiChain

@jigglybean - who has added VAT / price increases on top?
The templates that I offer for sale on the marketplace are still at the same price as they were before, so I don't think Gamesalad have increased prices to cover VAT... and therefore are unlikely to be handling VAT payments to the relevant EU countries on our behalf. Unless you know something different?

Hopefully I'll be able to push for an official GS response on this next week.

DigiChain

@dgackey‌ @ForumNinja‌ @BlackCloakGS‌

Sorry to copy you all into this but I'm not sure who may be able to advise on this issue.
Do we know what the GS position is on EU VAT payments for marketplace sales?

jigglybean

@DigiChain said:
jigglybean - who has added VAT / price increases on top?
The templates that I offer for sale on the marketplace are still at the same price as they were before, so I don't think Gamesalad have increased prices to cover VAT... and therefore are unlikely to be handling VAT payments to the relevant EU countries on our behalf. Unless you know something different?

Hopefully I'll be able to push for an official GS response on this next week.

I was referring to Themeforest, not here. When VAT was added to the price of Protein Shakes that I buy, the price went up by 20% - thats the VAT. The same was on themeforest. No one but the government get it to waste on the next expenses scandal.

So prices will increase unless both GS and the seller are prepared to swallow a 10% reduction each in profit

DigiChain

@jigglybean‌ - ok i'm with you now, I didn't realise what themeforest was.

The issue isn't whether prices increase or not though - the issue is who is taking responsibility for the payment of the new EU VAT.
If it the sellers responsibility then we'll all be filling out VAT returns regardless of how few sales we may be making.
This is why we need to know what GS policy on this is.

Armelline

Spent a decent chunk of the afternoon on hold with HMRC, waiting to speak to someone. I'm going to have to give up and go out soon. Guess with it being tax return time and with these new rules coming in, there's a lot of people phoning them up. This one phone call looks set to use up my entire month's supply of included phone plan minutes

Armelline

Okay, so after nearly 3 hours queueing, they told me to visit this link.

I explained I had specific questions I needed answering and they told me the technical team would call me back within a week.

Time well spent. Zero answers gained.

DigiChain

Cheers for the link, i'll have a proper read through in a bit.

As far as I now can tell from reading through T&C's:
Apple, Google Play, Amazon, Windows Store, Nook Store & Tizen Store ALL act as agents or commissionaires (meaning they deduct and remit VAT to the relevant authorities before paying us, so we need to do nothing new).
** I'm awaiting email confirmation of this from Nook & Tizen though**

For me personally this just leaves the GS marketplace as I've removed my products from everywhere else.

jigglybean

All App stores, automatically charge the VAT at the payment point, so they handle the process. But of course, these are huge corporate bodies. I would imagine, if we purchase a template form Gamesalad(for example) and living in the over taxed EU, the VAT should be added and if that is the case, then its up to Gamesalad to send that money to the clowns at the EU.

I think in the US, some states have different sales taxes/rates, so I am guessing that it would be handled in the same way. Either way, I will end up using Borderlinx for more of my international transactions to make some savings.

DigiChain

@jigglybean said:
All App stores, automatically charge the VAT at the payment point, so they handle the process. But of course, these are huge corporate bodies. I would imagine, if we purchase a template form Gamesalad(for example) and living in the over taxed EU, the VAT should be added and if that is the case, then its up to Gamesalad to send that money to the clowns at the EU.

Yes thankfully this does appear to be the case now - but it wasn't always that way. Sales through Google Play were previously classed as B2C (business to customer), they've only just changed to a B2B (business to business) model in January due to this new law.

Smaller stores may or may not operate as B2B, after all it's additional work for them too.

Armelline

It looks like we do NOT have to pay VAT on sales to UK customers if we're below the thresh-hold, but we DO need to pay it for sales to EU customers. It definitely looks like we're going to be best served by GameSalad taking care of this like Apple etc. do, but it may be something they're unwilling to do. Same applies to the 3rd party template sites.

@jigglybean said:
All App stores, automatically charge the VAT at the payment point, so they handle the process. But of course, these are huge corporate bodies. I would imagine, if we purchase a template form Gamesalad(for example) and living in the over taxed EU, the VAT should be added and if that is the case, then its up to Gamesalad to send that money to the clowns at the EU.

You do know this change is by the UK government, not the EU, right? Do you actually have any real concept of what the EU actually is, and what it does?

Personally I'm happy to pay UK tax rates. I have relied on both the NHS and the DWP in the past and if I lived in the US I'd have been bankrupted by my health.

DigiChain

@Armelline said:
It looks like we do NOT have to pay VAT on sales to UK customers if we're below the thresh-hold, but we DO need to pay it for sales to EU customers. It definitely looks like we're going to be best served by GameSalad taking care of this like Apple etc. do, but it may be something they're unwilling to do. Same applies to the 3rd party template sites.

Yes I've already removed templates from 3rd party sites. The income from them was far too small to justify the additional paperwork!

I believe that this is a European-wide thing, though how each country implements it is different. I also believe that it also applies to anyone outside of the EU. If you sell to the EU (from the United States for example) you'll have to pay VAT to the country where you made the sale.

I'm amazed this thread isn't getting more input. It's a big deal!
I guess tax issues just aren't as interesting as game-making!!!

jigglybean

the 20% rate is a EU wide thing Armelline. UK VAT used to be 17.5%. And in the EU, protein shakes were already subject to VAT, so the UK just followed.

And my concept of the EU is simple. A bunch of over paid clowns who spend most of the time conjuring up new ways to justify their jobs. You know, like the EU Parliament that has no powers but happily take a huge chunk of the billions sent to it.

DigiChain

@jigglybean - actually each EU country has set its own VAT rate which is why this could become such a headache. Hungary for example has the highest VAT rate at 27%.

Anyway, some good news is that Nook have changed their process from 1st Jan so we need do nothing if selling on their store.

This is the email I just received from Nook Store:

**Dear Developer,

There is nothing you need to do on your end. As of January 1, 2015 we made the necessary changes to our systems to ensure they were fully compliant for the VAT changes.

Please let us know if you have any additional questions

NOOK Developer Team**

ogreofwart

@DigiChain said:
I guess tax issues just aren't as interesting as game-making!!!

True maybe to some this is an uninteresting conversation, but I think they will regret not paying attention to the implications of this new TAX FIDDLE.
It is a very serious threat to any independent producer of digital media, and could have the reverse effect in the UK on the government's directive of making a strong economy.
This is not just UK or EU related this is ANY vendor in ANY country who sells to the EU.
If you sell anything here THIS MEANS YOU.

Armelline

@jigglybean said:
the 20% rate is a EU wide thing Armelline. UK VAT used to be 17.5%. And in the EU, protein shakes were already subject to VAT, so the UK just followed.

As @DigiChain mentioned, each country sets its own VAT. We had that brief glorious period of 15% in 2008 before it got upped back to 17.5%, and then the Tories moved it up to 20% after they got elected. The 20% rate is due to the Tories, not the EU.

I can see arguing with you about the EU would be pointless, so I won't. You may want to do some research on what the EU actually is, though.

jigglybean

I was referring to protein powders regarding the VAT, which was added in line with the rest of Europe. And you are right, there's no point arguing with me over a pointless unelected bunch of clowns.

DigiChain

Ok guys, keeping this thread on topic:

@dgackey‌ @ForumNinja‌ @BlackCloakGS‌
Could we please have a response on where GS marketplace stand on this?

Also - what's the best/quickest ways to remove our marketplace templates?.. as I would like to remove my templates until this is resolved.

ogreofwart

@DigiChain Yup this is no good when the powers that "be " won't comment.
I am feeling the same, not knowing which way to turn.
We need some information and fast.

jigglybean

@ogreofwart said:
DigiChain Yup this is no good when the powers that "be " won't comment.
I am feeling the same, not knowing which way to turn.
We need some information and fast.

They are probably working things out themselves,and I believe it was a National Holiday in the USA yesterday(Monday), so many people weren't at work

jonmulcahy

@ogreofwart said:
@DigiChain Yup this is no good when the powers that "be " won't comment.
I am feeling the same, not knowing which way to turn.
We need some information and fast.

it's a holiday in the US today (the 19th), no one was in the office to see this thread.

DigiChain

Tizen Store Update:

It's looking likely that Tizen won't be collecting and remitting VAT on our behalf. I'm trying to get firm confirmation of this.

If you don't want to fall foul of these new laws you may want to consider pulling your games from the Tizen store.

This is the response I got from their customer support:

Dear Customer,
Thank you for contacting Tizen Store. We appreciate the opportunity to assist you.

Regarding your inquiry, we would like to inform you that sellers in the EU should refer to the VAT payment process in their own country.

Therefore, we would like to recommend you to refer to your country's VAT payment process with visiting the related organization and contact us if there is any further question.

jigglybean

There's really no need to get in such a spin over this. The clown Parliament have set up a VAT checker for each state. So depending on where you sell your app, you can check the current rate.

Then, if you have registered for VAT, you just follow your normal procedures.