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VAT on purchases / regional pricing

A topic by Isaac Ashdown created 16 days ago Views: 61 Replies: 4
Viewing posts 1 to 3
(+1)

Hello,

When European customers buy games on itch, VAT is added to the purchase price. This makes some sense, but it is not the standard way of selling products in the EU. In fact, I believe EU VAT law is that the price shown to the customer on the store page should include VAT, though I'm no lawyer so don't quote me there. But regardless, that's what other online stores do, including for example amazon. If an EU customer buys a product on amazon that's listed for EUR 15, they pay 15, and the vat is included in that 15. This is different to how sales tax tends to work in the US.

This is a bit of a problem for sellers, because we can only list a price in USD on itch. That is the global price for the product. If an EU customer buys it, they pay 15 USD, converted to EUR, and then with VAT on top. But if they buy the same product elsewhere, they often will wind up paying less in total.

This is a bit of a problem as some other online videogame marketplaces have rules that a product sold there cannot be sold cheaper elsewhere. Therefore, if the USD price on that other marketplace must be the same as it is on itch. But as other marketplaces have regional pricing, the seller can take the included VAT into account when determining the EUR price. This is not possible on itch. The only way to have the prices be the same would be for the EUR price on other marketplaces to match that on itch, which is often significantly higher than desired.

The bottom line is, it's not possible for sellers to sell a game on itch at the same net EUR price as other marketplaces. I would propose two solutions:

  • Have VAT be included in the listed price (potentially an option sellers could enable, though again EU law may actually require this)
  • Implement regional or currency-specific pricing to itch

Hopefully that makes sense. And please correct me if I have anything wrong. And again: not a lawyer / accountant :D

Moderator

This has been subject to considerable debate over on GitHub, and no good solution has been found. You're right in principle, but it's not that simple. Though per-region currency and/or pricing is a fresh idea.

Ahh, I knew I couldn't be the first to notice this! Can you link me to the github discussion?

Moderator

Here it is. Took a bit of searching. Can't believe the discussion is two years old now.

I can't approve more on this.

Having a list of target retail price (inc. VAT where required) per country should be the way to go.