VAT on video games

The Video Game industry is not new, it has been around for more than 60 years after the creation of what is thought to be the first video game, Tennis for Two. Since then the industry has been evolving and pushing the envelope of animation technology, story telling, multiplayer interaction and more.

Today the Video Game industry is worth more than the Music and Video streaming combined, with a value of $130 bn in 2018 and expected to become a +$300 bn industry by 2025.  There are 2 main factors that are revolutionizing the video games industry, which have a direct impact in VAT and you should be aware of them:

1. New Supply Chain

Video Game development has evolved to a point where cross- disciplinary fields are required. More immersive, relatable and realistic experiences demand teams of Artists, Content Creators, Animators, Audio Engineers, Game Designers and Programmers which can be spread across the globe. Moreover, new business models are emerging, moving from physical to digital distribution. We see more often how games’ life cycles are becoming larger thanks to the introduction of new DLCs, cross-platform playing and online interaction.
Not only this, but the adoption of new ways to play, namely mobile gaming and the upcoming streaming services like Google’s Stadia, will have a huge impact in the VAT supply chain.

2. New Monetization Models

As technology, connectivity and distribution methods of games evolve, new streams of revenue are created and of course they also have an important role in your VAT position.
From the traditional Retail method, we can now find companies providing digital distribution of games such as Epic Games, Steam or PlayStation Store. Of course, we have to include mobile gaming where digital distribution and app downloads are the main method of delivering content to iOS and Android devices. Subscription models and microtransactions are other new means of revenue which also take advantage of the digital era.

VAT challenges on Video Games

The Video Game industry is evolving rapidly, and the digital distribution of games and Gaming as Digital Services is becoming the norm. New supply and transaction chains are making hard to apply the correct VAT treatment which might lead to inaccurate VAT calculations and allocations.

Global VAT Compliance has the knowledge and experience to make your company fully VAT compliant while you deliver more creative, interactive and immersive gaming experiences to customers all over the world.

GVC is up to date with all the new and ever changing regulations. This ensures that your company is complying with local tax requirements so you can focus on your business and expansion opportunities across the globe.

We offer comprehensive coverage across the globe providing services in Europe, the Asia Pacific region, Middle East and South and North America. Global VAT Compliance is able to provide Fiscal Representation in countries where even for Video Game companies this is required, such as Switzerland, Serbia and Albania.