understanding plimus and vat

[xDan]

Hello!

Can someone help me understand VAT?

I'm creating my product in Plimus, and I see they add VAT to an order, and there seems to be no way to disable that (although I could absorb it so the customer doesn't see it). But I read somewhere that unless I earn over £70K or something I don't need to pay VAT...

I also read that since Plimus is a reseller (is that correct??), they themselves pay VAT, so perhaps the VAT they add is not *me* paying VAT, but is *them* paying VAT (hence why I can't disable it).

Is that correct?

And so I still have to account for that (in UK) 20% cost, even with me earning far less than £70K? And no way to get around it?

[jcottier]

This is not you paying VAT but the customer. In France you pay VAT about 19%. I'm from France, if I buy your game, I will have to pay your price+20%. Plimus will send the 20% to the French tax office.

JC

[xDan]

But presumably if the customer was buying from me, they wouldn't need to pay VAT since I am not VAT registered?

http://www.hmrc.gov.uk/vat/start/introduction.htm
"Value Added Tax (VAT) is a tax that's charged on most goods and services that VAT-registered businesses provide in the UK"

or does it have to be paid even if I'm not registered? :S

so I suppose laws will be different in different countries... but at least in the UK it seems to me it shouldn't be paid?

[jcottier]

But presumably if the customer was buying from me, they wouldn't need to pay VAT since I am not VAT registered?

http://www.hmrc.gov.uk/vat/start/introduction.htm
"Value Added Tax (VAT) is a tax that's charged on most goods and services that VAT-registered businesses provide in the UK"

or does it have to be paid even if I'm not registered? :S

Nope, when I buy abroad or localy (in France) I have to pay tax. This has nothing to do with the vendor location. It has to do with the buyer location.

JC

[jcottier]

As far as you concerned, these VAT don't exist. The customer pay them to plimus and plimus paid them back to the right office. You don't even know about these taxes.

BTW, you are not selling the games. Plimus are the official sellers.

JC

[xDan]

> BTW, you are not selling the games. Plimus are the official sellers.

OK, that explains a lot, but still it seems rather odd. What am *I* doing then, if I'm not selling?! And whatever it is I *am* doing, does VAT ever need to be paid on the me-to-plimus step (as opposed to the plimus-to-customer VAT)?

What if I were using PayPal or something that doesn't consider VAT? Would I be responsible for tracking down VAT laws in all countries and paying the appropriate amount to the "right office"? Would it be illegal not to!? What about all these times I've bought odd things like royalty free art packs using PayPal, are those people seriously all complying with correct VAT laws?

And it still seems to me that perhaps if I were using PayPal instead of Plimus, I wouldn't have to consider the VAT in the UK due to me not being VAT registered. So it could save a lot of money there...

[jcottier]

>What am *I* doing then, if I'm not selling?
In some ways, you are earning royalties on Plimus sale. That's the simplest concept/explanations have got.

> does VAT ever need to be paid on the me-to-plimus step
No, forget about all this VAT stuff :) this doesn't concern you, it's only between your reseller (Plimus) and their client (the buyer).

Trust me, this is a good thing for you, less work and everything :)

> Would I be responsible for tracking down VAT laws in all countries and paying the appropriate amount to the "right office"?
Not sure about this one. May be it is the responsability of the buyer. When you come back from abroad with loads of goods, you might get ask to pay VAT on these goods when entering you country.

> if I were using PayPal instead of Plimus, I wouldn't have to consider the VAT in the UK due to me not being VAT registered. So it could save a lot of money there...

It won't save a penny. You are not paying these VAT (unless you tick a box in the plimus dashboard). So, if you sale something to 100$ on plimus and I want to buy it, I will have to pay 120$. You, you get paid 100$ (minus plimus fee), you don't know about these VAT (how many time will have to repeat this one :)

JC)

[electronicStar]

Actually, if he was using Paypal, he probably would have to take care of the VAT stuff by himself if Paypal doesn't do it.

[xDan]

It won't save a penny. You are not paying these VAT (unless you tick a box in the plimus dashboard). So, if you sale something to 100$ on plimus and I want to buy it, I will have to pay 120$. You, you get paid 100$ (minus plimus fee), you don't know about these VAT

Ok, just as a consumer, e.g. buying from Amazon UK, Amazon would hide the VAT in the price, so the price I see is what I expect to pay. And it can be a nasty surprise when you find out that the actual cost is more than you expected.

So I guess when I've been thinking of the price to sell my game at, I've been considering the final price the customer pays, due to habit.

Although while it won't save me money then, it might save certain (UK) customers money, if I don't have to charge *them* VAT [i.e. if I were using PayPal and dealing with VAT myself], in which case I might get more sales...

Edit: maybe this is an edge case, there is no way I will use PayPal rather than Plimus anyway, I was just curious really...

> how many time will have to repeat this one :)

No more times now, I promise :)

Thanks for the explanations!

[gamer247]

What's Pilmus charge or percentage from your sales guys?

[jcottier]

What's Pilmus charge or percentage from your sales guys?

too much :)
http://home.plimus.com/ecommerce/sel...ng/no-set-fees

Now, they do offer much more than simply put a paypal link on your site.

JC

[gamer247]

Damn it is a bit of balance. What's the alternative to Pilmus?
I'm 3 months from finishing my first game and only now starting to look into these things.

[gamer247]

At least no upfront charge or fees.

[jcottier]

> What's the alternative to Pilmus?
BMT and others... do a search on this forum.

>I'm 3 months from finishing my first game and only now starting to look into these things.
It is preatty simple to set-up. If you still worry, nothing is stopping you for registering today on plimus & BMT and start setting up stuff.

JC

[Indiepath]

Perhaps someone should make a "Sticky" about VAT and how it applies to Resellers/Distributors and Direct Sales.. Bottom line is.... VAT is not a scary monster (until you have to pay it) :)

[JesseCF]

If you are selling your game through a reseller (BMTMicro or Plimus), they handle the VAT for you. VAT ceases to be a concern of yours in a specific sense. This is one of the major benefits of using one of these companies.

Although while it won't save me money then, it might save certain (UK) customers money, if I don't have to charge *them* VAT [i.e. if I were using PayPal and dealing with VAT myself], in which case I might get more sales...

While this is true, it is also illegal. If you are selling directly to consumers in the EU (a business to consumer sale) then you are required by EU law to collect the applicable VAT taxes based on where that customer lives, and deliver them to the appropriate tax agency. There are special registration procedures which make this easier, but it still may be more than you are willing to deal with.

Moving onto pure speculation. Also, I am not a lawyer or tax man - take this with a huge grain of salt:
While I have no data to back this up, my guess is that most U.S. based indies which use Paypal are ignoring this law and are operating illegally, most likely because they don't understand EU tax law and assume it is the same as in the U.S. where state tax law generally doesn't require you to collect taxes on internet software sales. It would be difficult (as mostly a waste of time) for EU tax agencies to hunt you down, subpoena PayPal for your sales records, and find out if you have been illegally selling in the EU.

This all potentially changes if you start making millions of dollars off your products. It makes you more noticeable and a more worthwhile target for tax agencies, for what that's worth.

[xDan]

[old topic, but anyway]

> While this is true, it is also illegal

In the specific instance of the UK £70K threshold - which is what I was talking about there - it's perfectly legal not to pay VAT below that in the UK. (though since people say Plimus are counted as the seller and not me the question is moot).

So there you have a negative of using those companies - if you are earning under that threshold in the UK they are adding on VAT you wouldn't need to have if you somehow handled the payments yourself.

[totor]

The only rule with VAT is "check with your local tax collector or your accountant" because each country has it's own rules and of course exceptions.

[jcottier]

So there you have a negative of using those companies - if you are earning under that threshold in the UK they are adding on VAT you wouldn't need to have if you somehow handled the payments yourself.

Not at all, unless you specified that YOU want to pay the VAT (tick box: Include Vat in Price), the VAT will be paid by the client (on top of your price).

JC

[xDan]

> Not at all, unless you specified that YOU want to pay the VAT (tick box: Include Vat in Price), the VAT will be paid by the client (on top of your price).

I know that. The price the customer pays is higher, and that matters, surely? I don't think the customer cares that it's not the developer getting the money.

So with the extra VAT, they become less likely to purchase the software. That's the negative.

[DaveGilbert]

A customer on my forum once complained about being charged VAT for my games: http://www.wadjeteyegames.com/forum/...hp?topic=887.0

He said that if he buys a game off Telltale.com or GoG.com, he is never charged VAT. Being from the US, I have no way of knowing if that is true or not!

I looked for ways of not charging VAT but there doesn't seem to be a way. Or at least, no legal way!

-Dave

[Jack Norton]

He said that if he buys a game off Telltale.com or GoG.com, he is never charged VAT. Being from the US, I have no way of knowing if that is true or not!

Simply because the vendor (telltale or gog) "absorb" the VAT cost themselves. There's NO WAY (unless illegal) for an european person to buy some digital good online without paying VAT. Even when is not shown added in the shopping cart, is only because the vendor pays instead of the customer.

[xDan]

> There's NO WAY (unless illegal) ...

So you're saying the UK threshold thing is nonsense - or I've misunderstood it? Even in the specific situation of being in the UK myself and selling to a UK customer?

Sorry, this is just out of curiosity :) I'd probably continue using a payment provider in all situations anyway just for the simplicity of it.

[Jack Norton]

Well those are special cases, but indeed it's not completely accurate what I said. FOR SURE, a european person buying from US, MUST PAY VAT :)

[Andrej Vojtas]

To add a little bit to the confusion, I have a different question: Ok, the payment processor is selling to the consumer and collecting the VAT from the product price. I am getting royalties. So far so good. Once my income from the royalties cross the VAT threshold of my country, I have to register as VAT paying business, right ? Do I then start to pay VAT on the incoming royalties ?

[jcottier]

Do I then start to pay VAT on the incoming royalties ?

Of course not. VAT is for when you are selling something to consumer. Here you are collecting royalties. Completely different.

You'll pay taxes on your royalties of course, but like any other income you'll declare to the tax man.


JC

[Andrej Vojtas]

Thanks for clearing things up, in the end the situation is much better then I expected.

[totor]

To add a little bit to the confusion, I have a different question: Ok, the payment processor is selling to the consumer and collecting the VAT from the product price. I am getting royalties. So far so good. ...

sorry, i don't get the part where you get royalties. Technically speaking Plimus or Bmt is a reseller not an editor thus you are a seller ie you sell your game to plimus who resells it to customer.

[jcottier]

sorry, i don't get the part where you get royalties. Technically speaking Plimus or Bmt is a reseller not an editor thus you are a seller ie you sell your game to plimus who resells it to customer.

No. You give them a Licence to ressell your product.
Check their term of use.

>In some ways, you are earning royalties
I said in some ways in my original post. I don't know the exact terminology. But basically, treat your plimus payment like you are treating royalties received from distributors. Again, you are not selling anything yourself, so you don't deal with all the VAT managment, and that is a good thing, don't you think :)

JC

[ManuelMarino]

Plimus is great! I'm with them since years and I've seen it growing and updating with so many options and features.

Absolutely the best software registration service, in my opinion.