Elite to get 20% more expensive?

[Beachlight7]

Elite to get 20% more expensive? (If we havent paid VAT)

I just read that in the Budget a tax loophole has been closed meaning digital software purchased while in the UK will be charged VAT.
I'm guessing this may mean all the prices go up, £35 becomes £42.
But i wonder if loopholes still remain for crowd funding and backing.
We backers did not purchase a piece of software, we backed the development of Elite, one of the perks is a FREE download of the game.
This could be a new incentive to back games rather than buy them.

The other option is to purchase the download from an offshore location.
You could download as many games as possible while on a flight?
Or you could just buy from an online shop that doesn't know where you are. Which to me is what a lot of people will do by disguising their location on their computer.

Steam will be adding 20% to all their prices anyway.

 

[[VR] Mad Mike]

I just read that in the Budget a tax loophole has been closed meaning digital software purchased while in the UK will be charged VAT.

Steam will be adding 20% to all their prices anyway.

that sucks eggs!.

edit, I just did a google.

do you have a link as I cant find anything after a brief look. I would have thought message boards would have been bombarded!

 

[Wulf]

Anyone buying in the UK will pay VAT, which you correctly say is currently 20%. If you are not from the UK and planning of leaving you can claim back the VAT. This is usually done from the location you are exiting the country, like an airport.

From what I can tell VAT was in the price anyway.

 

[Cmdr Andy B]

i also read about that, it has more to do with companies dodging tax by claiming their HQ in in Luxembourg where VAT is 3% - for example Amazon who employ 500 in that country but 1500+ in the UK?

as FD is a business with a UK based HQ i have a feeling that VAT @20% is already included in the price of the game.

still, it would be nice to know for sure.

 

[Beachlight7]

Will try and find again. Presently stores like Amazon etc have been selling digital downloads at 3% tax from Luxembourg.
Oh yes good point about the 20% frontier maybe already charging, but we don't know if their payment collection service is UK based.
IF we already pay the 20% it seems like there is still scope for us to being paying less for games. Maybe Elite needs a relocation office.


Link:
http://www.eurogamer.net/articles/2014-03-24-uk-budget-could-end-69p-cheeky-cheapies

"a 69p app will creep up to 79p; a £6.99 Steam game will rise to £8; and a £34.99 full-priced release will be £40."

 

[ZeeWolf]

i also read about that, it has more to do with companies dodging tax by claiming their HQ in in Luxembourg where VAT is 3% - for example Amazon who employ 500 in that country but 1500+ in the UK?

as FD is a business with a UK based HQ i have a feeling that VAT @20% is already included in the price of the game.

still, it would be nice to know for sure.

Yes, the game is produced and sold in the VAT zone, they will have accounted for the 20%

The HMRC website is very clear on that. I did a bit of reading up and consulting with my accountant when I started working with overseas clients of my own. But in the case of a software product made in the UK and delivered to UK customers (and non UK) its just like every other product.

 

[Markjamesonbrien]

Quick glance I believe it is this the OP refers to

The changes affect businesses that supply BTE to consumers (private
individuals). This means that the place of taxation of these supplies will
become determined by the location of the consumer who receives the service,
not the location of the supplier of the service (as it is currently). The changes
do not affect businesses that supply BTE to other businesses.


Basically, if you buy a product (Like Amazon in Luxembourg as mentioned) you pay the VAT rate of your country of purchase not the country of the selling companies VAT rate.

 

[[VR] Mad Mike]

So, steam will not be adding 20% to everything then?

Personally I am not that fussed about amazon, I dont think I have ever bought a digital download from them, and to be honest, their tax dodging WAS completely unfair to other companies which operate in the UK.

 

[Cmdr Andy B]

HERE is a link to an article explaining the change but the relevent setion reads:

Proposed changes to UK tax rates mentioned in this year's budget could mean that digital downloads will become more expensive next year. The changes will apply to film and music downloads, e-books and smartphone games, and will come into effect on 1st January 2015

so, it doesn't come into force until next year in any case.

 

[Squicker]

I just read that in the Budget a tax loophole has been closed meaning digital software purchased while in the UK will be charged VAT.
The other option is to purchase the download from an offshore location.

I guess our VPNs just found another use...

 

[Beachlight7]

edited a post above but here is link again and quote:

"a 69p app will creep up to 79p; a £6.99 Steam game will rise to £8; and a £34.99 full-priced release will be £40."

http://www.eurogamer.net/articles/2014-03-24-uk-budget-could-end-69p-cheeky-cheapies

 

[Thespen Tombs]

I guess our VPNs just found another use...

I never though about that

 

[Lobster]

In my experience games released on Steam that had physical counterparts cost exactly the same at launch digitally as they did in a brick store. It used to be the case that all the prices were in dollar value and worked out significantly cheaper after conversion, but ever since they added regional pricing things have been priced the same. (Excluding sales and price cuts obviously)

I think the information in the Eurogamer article is just speculation right now. Some providers may have to change their policy, but not all of them.

 

[DraigUK]

Steam (and others) already charge 20% VAT as part of the price, so there shouldn't be any increase above current prices.

The budget change was aimed at people like Starbucks, Amazon etc it won't effect gamers buying from stores such as Steam as they already charge 20% VAT.

Might be interesting to see if it effect sites such as Kinguin or CDKeyhouse for example which I have used a fair amoutn recently.

 

[Stormprooter]

In the UK, ALL digital purchases already include VAT, all my steam downloads include VAT, same for any other online store where you buy digital downloads of any kind.

The tax break for the games industry was something else (though not sure what), probably business rates or corporation tax. The article in eurogamer is at best, mis-informed.

 

[Pyros]

VAT is an european regulated tax. Usually (AFAIK currently) the applicable tax rate for intraeuropean consumer trade is from the country of origin (e.g. if a UK resident orders a good from Germany, it will pay the german VAT rate). When exporting to outside the EU there is no VAT.

That is why companies set up shop in lower VAT tax zones. They don't actually claim that the HQ is there, but what happens is that the goods are sold by another company. For example, Amazon in UK is a shipping&handling company (logistical), where the sales, website and value added services are tied to the much smaller Luxembourg company (that pays a service fee to the UK based one).

Now, in January 2015 it will change from being applied the country of origin (seller) tax to the destination (buyer) country.

I guess postal addresses services with included VPN connections will become popular in Luxembourg

 

[Im_Lost]

VAT is already added since Frontier operates within the UK.

I think this change will only apply within the EU though. So what could happen is those companies in Luxembourg simply move their HQ to a new tax haven outside the EU, where the rules don't apply.

 

[Beachlight7]

The store/website where Elite is purchased is located in the United States. Does that effect anything?
http://www.domaintuno.com/d/zaonce.net
How do you pay for Elite and not pay the VAT then if you are outside the EU?
When in the UK and buy from America, like on Amazon.com there is no sales tax in the listed price, it works it out for you when you tell them what country you are in. it adds 20% if you purchased from UK.
Does the Elite website automatically discount the VAT if you enter an order and say you live outside EU?

 

[Cmdr Andy B]

VAT is already added since Frontier operates within the UK.

This change will only apply within the EU though, you will still be able to buy from outside the EU without paying VAT

unless you are buying physical goods, in that scenario VAT is added on import, as well as customs fees.

if you don't sort this out in advance with the seller this can be prohibitively expensive, i once ordered 2 pairs of trainers from the USA - total cost including delivery £200, total cost of VAT/Custom fees £100

its important to note that VAT/fees are charged on the landed value of the goods and this figure includes delivery charges/P&P

 

[Beachlight7]

unless you are buying physical goods, in that scenario VAT is added on import, as well as customs fees.

if you don't sort this out in advance with the seller this can be prohibitively expensive, i once ordered 2 pairs of trainers from the USA - total cost including delivery £200, total cost of VAT/Custom fees £100

its important to note that VAT/fees are charged on the landed value of the goods and this figure includes delivery charges/P&P

It depends on the product, for example there is no customs on a PS4 from America, just the import VAT at 20%.
$399 plus about $12 delivery to UK plus 20% VAT is cheaper than getting it from a UK shop.