Australian GST and it's impact on royalty calculation

In Australia there is a 10 percent Goods and Services Tax on goods/services supplied by Australian companies. Please check my understanding of the agreement.

Selling a game for $10:

$11 is charged to the customer.

$1 goes to the government.

$10 is the gross amount.

$0.50 unreal receives in royalties.

Also are there any tax’s on the royalties in unreal’s jurisdiction that I need to be aware of. Or to put it another way if i owe X in royalties, do I simply pay X, or is there any additional amount to cover taxes originating from unreal’s jurisdiction.

We need to investigate this. In the USA, “sales tax” is a separate charge that isn’t associated with gross product revenue, so here your calculation would be correct. We will need to investigate the treatment of Australian GST.

Ok, we researched this and your math is correct. No royalties are due on any form of sales tax, such as GST, VAT, or retail sales tax.

The EULA addresses this by basing the royalty on revenue “actually attributable to your product”, which excludes tax revenue, merchandise like tee-shirts, etc.

Hope this helps!

Regarding your question related to tax on royalties, you would need to be aware that you would be paying royalties to a Switzerland entity and there is currently a withholding tax requirement of 10% on payments from Australia to Switzerland. This means that if you owe 100 in royalties, you would need to pay 90 to epic and remit 10 to Australia for withholding. This is of no cost to you (however as mentioned in the EULA you would need to send us paperwork related to the withholding).

Thanks for the answers.

Just out of curiosity why am I paying a Switzerland based company ? I thought epic was US based.

Epic headquarters is in North Carolina, USA but we have international offices in Switzerland, England, Poland, Korea, and Japan. For complicated accounting reasons, international revenue goes through the Swiss office.