The article you linked is about how Steam geo-locks activation keys to *prevent* UK customers from purchasing games outside the UK to avoid paying UK VAT rate - that's the exact opposite of what is happening here.
I'll say it again, Steam are *definitely* charging 20% VAT in the UK. https://partner.steamgames.com/doc/finance/taxfaq
In fact, here's my invoice from A Short Hike.
From what I can tell the developer has either set their Itch price incorrectly, or their Steam price incorrectly. And I have seen this happen several times. The mix up means Steam ends up charging 20% less than Itch. This needs to be addressed, it makes Itch uncompetitive.
We ask for developers to price their game excluding any sales tax (like VAT). This means that the final price you pay is the developer’s price + sales tax. Since implementing this we’ve learned that in Europe people tend to expect VAT to be included in pricing, so we did it backwards. It’s likely we’ll change this structure in the future, but it would have a substantial impact on developer earnings so we haven’t started looking into it too deeply yet.
So until we make any changes: Although you may be paying more, the developer is also getting more.
Hi Leafo,
Thanks for the clarification. I do understand this. My query is not regarding how and when you charge VAT but why there are sizeable price discrepancy between Itch and Steam for certain games.
Regardless of whether VAT is charged upfront (Steam), or on top of the advertised price (Itch), there are large discrepancies in base price. My provided example stands, A Short Hike,
On Itch = £6.12 + 20% VAT = £7.61
On Steam = £4.82 + 20% VAT = £5.79
The fact that the Itch price before tax is comparable to the Steam price after tax suggests to me that the developer has made a mistake when setting the price. Is there not a way to approach the developer and highlight the discrepancy, fixing the mistake (by either increase the Steam price or decreasing the Itch price) and thus making them equally competitive?
We don’t have £ prices on itch.io for A Short Hike, so I’m not sure where you’re getting that price. The developer only sets a price in USD and then whatever payment method you use is doing the currency conversion. I’m currently looking at their USD price and it matches itch.io. Do you think they set a regional £ price on Steam that’s much cheaper than the USD version? You can see what prices they have on Steam here: https://steamdb.info/app/1055540/ I’m not entirely sure how Steam does regional pricing for this, if it’s auto generated or the developer’s choosing.
The Itch price in £ I'm quoting is simply the converted rate. As offered by PayPal in the UK when going through the checkout.
Steam allows the developer to set regional prices - and presents the cost as per regional expectation (tax excluded in US, included in Europe). This is why the USD price is the same on Itch v Steam.
I assure you the UK final price is different, by some way, I have been through the checkout for both. I have seen this for a number of different games, usually smaller indie games (A Short Hike, Baba Is You). All I can think is when the developer has set the UK price on Steam they have not realised that tax is included in the upfront price, hence the final price being a fair amount higher on Itch.
On that steamdb page you linked it shows the UK price *including* tax versus the US price *excluding* tax. That doesn't seem like a fair comparison.
you cant trust steam for any information when it comes to tax, they have broken and are in lawsuits from around the around for misleading the government and people. 20% means it will always get a cut by that much, it will always be more than a £1. What you seeing on steam is incorrect price. This can be easy proven by math:
Anything lower than £1.03 with 20% VAT is £0.20 or less
£1.03 with 20% VAT is £0.21
Anything lower than £1.08 with 20% VAT is £0.21
£1.08 with 20% VAT is £0.22
Anything lower than £1.13 with 20% VAT is £0.22
£1.13 with 20% VAT is £0.23
Anything lower than £1.18 with 20% VAT is £0.23
£1.18 with 20% VAT is £0.24
Do you understand now, the numbers are always in prime numbers, every £0.05 makes VAT tax go by £0.01. Steam version of £0.97 is incorrect. They are breaking the law, Steam can not be trusted with anything.
