I am aware that itch.io handles vat payments for you and that you have to pay tax to with draw money but at what point in the process will the tax have to be payed. To clarify will i have to pay tax as money comes into my itch account or will i only have to pay when i am ready to withdraw my earnings.
Someone who works at Itch could give a more complete answer, but generally any taxes/fees will be subtracted from the amount that Itch sends you.
VAT is added to the price of your game, so if your game was $5 and the VAT was another $1, the customer would be charged $6 but that extra dollar would get sent to the relevant government by Itch. So from your side you're pretty much getting the same $5 regardless of what additional taxes the customer paid.
For other taxes/fees that do come out of your side, Itch will just subtract them from your total payout amount. They send money to you, not the other way around.
Keep in mind that this is all totally separate from income taxes, which you'll still need to pay to your country's government just like you would for any other income.
