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30% instead of 10% itch.io cut?

A topic by Edward Neave created 80 days ago Views: 325 Replies: 23
Viewing posts 1 to 6
(2 edits)

[SOLVED]

The payouts and stuff was explained properly thank you everyone for your comments.

(+1)

Are you talking about tax withholding? That goes to the U.S. government, not the UK. My understanding is that VAT is charged to the buyer.

No, i have no withheld tax it's the tax charge that i get ontop of my sales which is 20% so i'm guessing it's VAT and it's only for sales in the UK but as a tax payer i dont have to pay VAT as i'm under the 80k threshold

Moderator(+1)

No, it's not. William is right, Itch.io also withholds the taxes owed to the US government for running an online store out of there. And again, you don't pay the VAT in EU countries, the buyer does. It doesn't matter where you are based, in either case.

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I'm in the UK though i shouldn't have to pay US tax. and i checked my payout and there is nothing withheld "Tax Withheld(0%) -$0.00 USD"

Ah i see now that the buying pays the VAT well that's something atleast but still they're taking 30% when they should be only taking 10%

Moderator

Indeed. Currently VAT is added on top of the price you set (or what the buyer chooses to pay), and sent to the buyer's country of residence. It shouldn't impact what you earn as a seller.

Not sure what you mean because i'm not recieving that 20% of income when people from the UK buy my software. And when i worked it out it seems like all payment have 20% taken off them. I worked it out earlier my sales was $55 and i only got $35 which has 36% missing from it itch.io takes 10% they then take another 20% and then 10% of whats left for proccesing fee which i guess adds up to 6% of total. So why are they taking the extra 20% off all my sales. Doesn't seem right. I'll work it all out when i get a run down of my last payout

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okay worked it all out i should have got $50.92 before any fees, $45.83 after there 10% fee. But then i have a payment processing fee then adjustments for charges i have aquired somehow they i never asked for so i have no idea why there charging me for things i didn't accept. After all that i only get $35 and that's before paypal takes there cut. i'm $10 short in extra fees they have randomly added. This is silly i'm setting my itch.io cut to 0% if they're just gonna keep taking extra stuff i might then actually only give them 10% . this time they have taken 30% instead of there 10% they're taking tripple what they should. Even if i set it to 0% they'll still be taking 20% of my income which to me is more than fair.

(+1)

I'm still not sure I completely understand what you're saying (screenshot would help), but I can explain why the Itch.io cut and fees work the way they do (someone from Itch please correct me if I'm wrong about any of this). Itch, as you know, allows you to share any amount from 0% to 100% of your revenue with the company. That pays for website hosting, development, support staff, etc. In addition to those costs, Itch incurs fees from payment processors like Stripe and PayPal both when they process initial payments, and when they send the final payout amount to you. Those costs are passed on to you regardless of what your Itch cut percentage is set to. If you set up your own website and dealt with PayPal and Stripe directly, you'd pay those exact same fees. None of it goes to Itch.

Other stores like Steam don't list those fees separately, but they still exist, they're just hidden in the much larger (typically 30%) cut that the store takes. If you set your Itch cut to 0%, Itch.io will make no money off of the sales of your game, and in fact will lose money paying for the hosting of your game's files and such. Itch is nice enough to do that stuff for free, and I'm not saying that you shouldn't take them up on that offer, but it's worth understanding what those different line items on your payouts mean and where they really go. Personally I think processing VAT, fraud prevention, refunds/support, hosting, analytics, etc. is worth at least a few bucks, but the nice thing about a pay-what-you-want model is that you can make up your own mind.

Admin

Thanks for the detailed response. I'm just confirming all of this is correct.

Thank you for the response from this most recent payout itch.io have taken 30% of revanue, i checked all the detailed payout info and i only got 60% of gross revanue i have lowered the itch.io cut to 5% which i think if they're taking 30% each time before then 25% to them should be fine. I went with itch.io because they only took 10% but with all the fees ontop it's 30 so 25% is somewhere in the middle of what i wanted and what itch.io gave me.

I think you are paying UK's "Basic rate" tax. https://www.gov.uk/income-tax-rates

No i pay t hat myself after i get income and you don't pay income on anything under around £10,000 i file my own tax returns

Admin (2 edits) (+2)

Currently VAT is implemented on top of the product price (aka VAT exclusive), so your revenue will never be reduced if VAT is collected on a transaction. This may change in the future though since it's counter-intuitive to how European buyers expect pricing to work. VAT is not an income tax, it's a sales tax. So there's no threshold's about how much money you make and whether VAT is collected or not.

On your dashboard's home screen, itch.io reports "Gross Revenue," which is the sum of the amounts people paid for your goods (minus sales tax, like VAT). So if 10 people paid 5 dollars, then $50 will be reported.

The payouts screen breaks down your actual earnings, after subtracting any relevant fees. This represents how much you get paid after everything is settled. These fees include:

  • itch.io's revenue share - set by you on your account settings
  • Payment processor fee per transaction
  • US withholding tax (for international payees only)
  • Account adjustments
    • Any fees from money transfers that previously happened
    • Tax identity verification
    • Refunds/Fraud that were overpaid to you in a previous payout

itch.io only makes money from our revenue share, highlighted in bold above. All of the other fees are passed through directly. Why do we do this? Because we let you set revenue share to 0%. Those additional fees represent a substantial amount of money going through the system and we would be unable to operate if we did not structure payments in a way that prevents us from losing money by just having someone on our platform. (Although we do make an exception by covering the cost of bandwidth)

Hope that explains everything.

Also, please avoid making topic titles in all caps with excessive punctuation. So other people can find answers when they have similar questions, write a brief summary of your question as the topic title.

Thanks

I see, i understand now and the caps was because VAT is  how it's spelt with caps but i do apologise about the punctuation. Itch.io says it themselves that the industry standard is 30% and it's default is 10% however i'm only recieving 60% of my gross revanue which means they are taking 30% before paypal takes their cut of course. It seems abit shady to me. At the very least it should say "10%+fees".

Admin

Keep it mind it also depends on how you price your project. If you sell a game for 1 dollar then the flat rate processor fee of 30 cents is going to be a substantial portion of the revenue. If you sell a game for 10 dollars then that fee is effectively 1/10 the amount.

Hi there, I have a question.

  • US withholding tax (for international payees only)

This is for sales only from US, or if I sell in other countries I'm also charged this tax?

(+2)

The way I understand it is that you pay this tax as soon as you transfer profit you made in the US to a country outside the US. All money you made is made in the US as Itch is an American company. So this means as soon as you initiate your payout, and you live outside the US, you pay this tax on all of your profits.

I see, very heavy then.

I probably will stick back to the old legacy system. I hope they enable BRL as a currecy soon too.

I mean, you have to look at the trade deal your country has with the US. For me, being from Belgium this is in my advantage. If I didn't pay taxes in the US, as a freelancer I'd have to pay 50% of my profit as taxes to Belgium. But thanks to the trade deal that is now 30% to the US and 0% to Belgium. ;) People living in the US don't have to pay this tax, but they probably have to pay sort of an income tax at some point, which is unrelated to Itch, hence not mentioned.

That's my problem, I have to pay 30% to receive my revenue since I'm from Brazil and my country don't have any trade deal with USA. =(

(+1)

oh, that's hefty indeed. sorry to hear that. :/

I got this from Steam panel:

"Payments made to you may be subject to US tax withholdings per US tax reporting regulations. Developers may be eligible for a reduced or exempt rate of US tax withholding on units sold to US customers if your country of permanent residence has an income tax treaty with the US. At the end of the interview, you will be notified of the US withholding tax rate, if any, that may apply to you."

So, this withholding tax should apply only for sales for U.S.A. customers, right?

I don' t know about Steam, maybe they have a branch in Europe(/brazil?, I doubt it ;) ). If they do have a branch in your country, you won't have to pay the tax cut I guess.


But with Itch (and I assume steam as well honestly) any payment (either by US, European or Brazilian citizen) is made to an American Company (Itch, Steam, ...). So the money you make, is made in the US. This means you pay this tax on all money you made.

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