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5% of revenue including or excluding VAT?

Hi,

We've just started selling our game on Steam, and now we need to start making financial projection from it. As we're all aware, UE4's royalty system is "5% of gross revenue per quarter minus $3000 (for that quarter)".

Now, in the EU, sales have a sales tax applied (the English term is VAT "Value Added Tax") which is normally around 20% of the item's price. Conceptually, this is a tax that the customer gives the seller that is then passed onto the customer's government. Fortunately, Steam handles all of this for us, retaining the VAT sales tax and passing it onto the customer so that the game studio never has to bother with it (aside from factoring it into the unit costs).

What I really need to know though, very clearly from Epic's perspective, is whether or not the "gross revenue" includes or excludes this tax portion?

Thanks, Matt

Product Version: UE 4.18
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asked Dec 08 '17 at 08:21 AM in Legal & Licensing

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MattSlug
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avatar image Omar Vector Dec 08 '17 at 10:22 AM

it will be better to contact their financial department directly by email

avatar image MattSlug Dec 08 '17 at 05:18 PM

Better for me maybe, but better for the community if there's a clear answer to be found here in a topic specifically for that purpose ;) If I get desperate I will do that, of course, but we're some weeks off being desperate.

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Hey Matt,

Gross revenue for the purposes of calculating your royalty due to Epic does not include taxes or VAT. You would use the "Net Steam Sales" column on your Steam report, which is your gross sales less taxes, VAT and returns, to calculate royalty. Hope that helps!

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answered Dec 08 '17 at 06:48 PM

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bdavis STAFF
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avatar image MattSlug Dec 08 '17 at 06:59 PM

Brilliant, thanks @bdavis!

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