VAT

Learn why and how we charge sales tax to some of your players.

When you use Checkout, you grant a license to Tebex to sell your products directly to consumers. Because Tebex are selling the goods directly, we are responsible for the collection and remittance of sales taxes such as VAT, TVA, IVA etc.

As Tebex is the seller of these goods, and as a VAT-registered company, we are required to charge VAT to players based in the European Union. As time passes and regulations change we may also have to charge sales taxes in other regions.

We collect and pay all sales tax on your behalf to the relevant tax authorities. For example, if we collect VAT for a player based in France, we will pay that sales tax to the French tax authorities for you without any input needed from yourself. Because you are not selling any goods to customers directly, you do not need to account for, or remit any VAT or sales tax for goods sold via Tebex Checkout.

This is a legal requirement for any business selling virtual goods online, and this same process happens with platforms such as Patreon, the Apple App Store and the Google Play Store.

Any payouts you request are paid to you as royalties, and for all non-UK organisations, we hand VAT under the reverse-charge mechanism, so you do not need to pay VAT again on any money you receive from Tebex. For companies in the UK, we will generate VAT invoices for the royalties sent on your behalf, and remit the VAT to you to pay on to HMRC. If you are currently paying VAT on products sold via Tebex, moving to Tebex Checkout will remove this requirement. If your accountant is requesting more information about how we handle VAT please provide them with the Tebex Checkout Terms Of Supply or ask them to get in touch with our customer support team.

Points to note:

  • You cannot disable or turn off sales tax/VAT - Please do not request this from the support team.

  • You do not need to add your own VAT number - As Tebex is the MoR, your VAT number is not required.

  • Do not advise your customers to avoid paying sales tax/VAT - Stores advising this risk permanent closure and removal from the Tebex platform.

Tax Modes

Tebex support two different 'Tax Modes' for Tebex Checkout users - allowing you to specify if the product prices you provide should be considered to be inclusive or exclusive of VAT.

VAT Exclusive Pricing

By default, Tebex assumes prices provided are exclusive of VAT. In this mode, we will calculate and add on tax in addition to the payment price. The benefit to this is that the brand owner will receive the same amount from each payment, regardless of where a customer comes from, however it means that different customers will see different prices for your products, depending on their country of residence.

Example 1: UK based customer
Example 2: Italy based customer
Example 1: UK based customer

In the UK, the VAT rate is 20%. If a product is priced at $10 with the VAT exclusive pricing mode, then the price a UK-based customer would be charged is $12. When a purchase was made, the $2 VAT would be deducted, meaning $10 was available to the brand holder, before processing and platform fees.

Example 2: Italy based customer

In Italy, the VAT rate is 22%. If a product is priced at $10 with the VAT exclusive pricing mode, then the price a UK-based customer would see would be $12.20. When a purchase was made, the $2.20 VAT would be deducted, meaning $10 was available to the brand holder, before processing and platform fees.

VAT Inclusive Pricing

If the brand owner opts to enable 'VAT Inclusive' pricing, then we will charge customers the same amount every time, and calculate the VAT as part of that price. Unlike VAT exclusive pricing, this means that every customer will see exactly the same price for your products, regardless of their country, but it does mean you'll receive a different amount depending on the amount of VAT charged.

Example 1: UK based customer
Example 2: Italy based customer
Example 1: UK based customer

In the UK, the VAT rate is 20%. If a product is priced at $10 with the VAT inclusive pricing mode, then regardless of country the customer would be charged $10. From this, $1.67 would be deducted as VAT, meaning $8.33 was available to the brand holder, before processing and platform fees.

Example 2: Italy based customer

In Italy, the VAT rate is 22%. If a product is priced at $10 with the VAT inclusive pricing mode, then regardless of country the customer would be charged $10. From this, $1.80 would be deducted as VAT, meaning $8.20 was available to the brand holder, before processing and platform fees.