VAT on Steam: the tax inside the player's price

VAT on Steam is the consumption tax included in a player's price in countries where Valve collects it. Valve remits it to tax authorities; it is not developer revenue. US and Canadian sales tax works the other way: it is added on top of the Steam price. Both are deducted between gross revenue and net revenue in Valve's monthly report.

Last reviewed · SteamStats team

What Steamworks says

Steam pricing is VAT inclusive in all countries where amounts are collected.
Steamworks: Tax FAQ
  • Valve's tax FAQ lists the countries where it collects VAT or a similar tax, with the current rates. Valve remits the tax it collected to each tax authority on a periodic basis.
  • In the other countries Valve sells cross-border and is not required to collect the tax.
  • In some US and Canadian jurisdictions Valve collects sales tax, which is calculated and added on top of the Steam price. These sales taxes are always additive.
  • The ad-hoc sales figures in Steamworks are gross and do not deduct taxes; the monthly sales report deducts them, with refunds and chargebacks, to reach net revenue.
  • The Steam Direct fee is taxed too: Valve charges VAT, GST or a similar tax on it where the payer's country requires it.

Why VAT matters to a developer

VAT is part of the price players see but never part of the developer's money, and the developer does not set it: it follows where buyers live. Two months with the same units at the same prices can end with different net revenue because more of the buyers lived in high-rate countries. It is also one reason the gross figures in Steamworks always run ahead of the monthly report, which takes the tax out.

How to take VAT out of a Steam price

  1. VAT inside a price = price × rate ÷ (1 + rate).
  2. Price before VAT = price ÷ (1 + rate).

Multiplying the price by the rate overstates the tax, because the rate applies to the price before VAT, not to the price the player sees. The error grows with the rate.

Example: one Pebblewick sale and one month

Illustrative inputs for Pebblewick, the fictional demo game by Hollow Fern Games: a price equal to $19.99 in a country with a VAT rate of 20.00%.

Pebblewick: VAT inside one sale
StepCalculationAmount
Price the player paysSteam price, VAT included$19.99
VAT$19.99 × 20.00% ÷ 1.20$3.33
Price before VAT$19.99 ÷ 1.20$16.66
Common mistake$19.99 × 20.00%$4.00

Over a month, the share of gross that goes to VAT depends on where buyers live. If 60.00% of Pebblewick's gross comes from countries charging 20.00% and the rest from countries where Valve does not collect, VAT is 10.00% of gross. A month with more buyers in high-rate countries has a wider gap between gross and net, with the same units and prices.

As a check, GameDiscoverCo's 2020 analysis of one publisher's portfolio put VAT and sales tax at 8.00% to 9.00% of gross. A game's own share can sit well above or below that range.

Where SteamStats shows it

The Money view shows VAT as its own step between gross revenue and net revenue, from the studio's Steamworks sales, and the Sales view splits units by country, which explains most of the month-to-month change in that step. Sales refresh every 4 h on Indie and every 60 min on Studio and Publisher and both views are part of Indie, Studio, and Publisher.

  • Chargeback: A card payment the buyer's bank reverses. Valve deducts chargebacks, together with refunds and taxes, between gross and net revenue in the monthly report.
  • US withholding: US withholding is the tax Valve holds back from the part of a non-US developer's Steam payment earned on US sales, at a rate between 0.00% and 30.00%.
  • Steam revenue share: The part of net revenue paid to the developer: 70.00% as standard, 75.00% beyond $10,000,000 and 80.00% beyond $50,000,000 of a game's revenue since October 2018.
  • US share: The part of a Steam payment earned on sales made in the United States. US withholding, where it applies, is calculated on this part only.

Sources