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  The nightmare of taxes, and what can I do about it  (Read 3105 times)
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Offline grego

Junior Newbie





« Posted 2013-05-10 07:14:33 »

Hello everyone

Recently me and my friends decided to make a game. We were all very inspired about it and wanted to sell it for a small price (8$). Yesterday I asked a friend of mine about the taxes. He has no idea how does it all works, but he sad in Hungary 60% gone with taxes. That's simply an outrage, and if we have to tax that much we wont do anything, especially not gonna pay any taxes to the current government. (If you heard anything about it, its probably even worse then that, welcome back communism).
Also we want to sell it on steam. Do they somehow avoid (ofc legally) most of the taxes? I haven't contacted them yet, so I have no idea.
I know its country specific problem, but maybe general ideas can help us a lot.
Online Riven
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« Reply #1 - Posted 2013-05-10 07:36:10 »

Welcome to the real world.

Steam does not avoid tax for you. In fact, they take a large chuck of the money you make themselves, effectively adding yet another tax.
 
Keep in mind that for income tax, you pay tax over the profit, not the revenue. So saying you'll be paying 60% over the retail price is just wrong.

Also, the tax percentage goes up with your profit: it doesn't start at 60%.
   You pay a% tax over profit under X.
   You pay b% tax over profit between X and Y.
   You pay c% tax over profit between Y and Z.
   You pay d% tax over profit above Z.

In The Netherlands, the max percentage (over the high end of your profit) you pay is about 50%. Then you have all kinds of deductions, first and foremost costs, but also business related deductions, which either are a percentage or an absolute amount of money.

To give you an indication, although we have this ~50% tax in my country, I barely paid any tax last year, without resorting to shady tactics. persecutioncomplex

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Offline Danny02
« Reply #2 - Posted 2013-05-10 08:05:08 »

how taxes work are of course different from country to country, but I guess that there are some basic rules which are quite similiar everywhere.

You sell your game for 8$/€...
- substract some low percent value added tax
- accumulate all the money you made and substract all the cost which you had to produce the game(energy bill, software ...)

then either create a company which has to pay a sales tax, or take all the money and pay an income tax.


These are ofcourse just assumptions(from a german view) and I guess that you also have some tax exemtions. Like if you earn less then 10.000€ you don't have to pay any taxes.

When you sell your game over platforms like steam they will take most of the time around 30%(and will handle the part about value added tax also).
Also remember when you are using paypal or other payment provider, that they will also take a fee.
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Offline Cero
« Reply #3 - Posted 2013-05-10 08:26:28 »

Also,  not to destroy your dreamworld: but cannot just sell on steam.
Getting on steam is a very hard and long process, and chances are you already have a lot of money by then.

Offline Oskuro

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« Reply #4 - Posted 2013-05-10 09:40:15 »

especially not gonna pay any taxes to the current government.

Uh, bad attitude. Put your grievances with your government aside for this, because they won't care about your opinion when they bring the hammer down on you and your team for tax evasion.

I'm not getting on whether the taxation system is properly implemented in your specific country, and the fairness of it all.

Jut pointing out that tax evasion is a crime, and can land you in a lot of trouble.


Example? Around these parts (Spain), if you fail to report and pay your income taxes, when they come after you you've got to pay the debt, plus a fine.  The minimum amount for said fine is 50% of the debt, plus late charges, but it can go up to 250%!

And when I say minimum fine, I mean that, even if you didn't pay because of a silly mistake (my case some time back... involving a wrong mailing address and not being in the country when I should've received the notice), and even if you can prove that it was a honest mistake and there was no ill will on your part (as I did), they, as government employees, are legally obligated to bring the hammer down.

So the moral of my story: Don't mess with the government. If paying taxes makes the whole thing not worth the effort, then just don't do it. But please, don't ever consider tax evasion!


That... And not paying your taxes while others do makes you kind of an asshole.

Offline Cero
« Reply #5 - Posted 2013-05-10 09:51:29 »

@Oskuro You are some special kind of lady.
Although I fundamentally disagree with you, I wouldn't want to start a political discussion, unlike you.
If you do that in a public forum, all hell break loose.

Offline Oskuro

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Medals: 40
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« Reply #6 - Posted 2013-05-10 09:56:09 »

I don't want to get into the politics of taxes, just saying that the amount of trouble you can get into if you evade them is not worth it.

Seriously, screwing with the government is usually a bad idea, even for big corporations with lawyers and money behind them!

Offline Cero
« Reply #7 - Posted 2013-05-10 09:58:25 »

Well like always, you have to know the potential consequences.  persecutioncomplex

Online Riven
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« Reply #8 - Posted 2013-05-10 10:16:08 »

Cero, you're derailing this topic for no apparent reason.
It seems you misinterpreted Oskuro's first post.

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Offline grego

Junior Newbie





« Reply #9 - Posted 2013-05-10 10:19:38 »

I don't want to include politics here either, but I rather go to jail than pay 60% taxes for my product. As well as it is forbidden to support thieves and burglars, so it's strange to pay anything to the government. If you are interested in the hungarian bullshit then go on http://atlatszo.hu/category/english/ and enough of politics for here:)

We want to make the best game of all time for free, at the beginning. Then we realised it's awesome to make some money with it. I mean a little money, 8$ is affordable even for some hungarian folks. If the government takes 60% and steam 30% then we wont have anything left. It's just ridicilous don't you think? How am I supposed to eat? It's summer right now, but winter is cold. People are burning their trash because they don't even have money for wood. That's how good our government is.

By the way, I'm a bit mad as you see:) Maybe we will make it free after all. Or go to Germany and let it be a free game before we reach the 10000€
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Online Riven
« League of Dukes »

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Medals: 816
Projects: 4
Exp: 16 years


Hand over your head.


« Reply #10 - Posted 2013-05-10 10:26:43 »

If the government takes 60% and steam 30% then we wont have anything left. It's just ridicilous don't you think?

As explained earlier, and unfortunately blatantly ignored... it's simply not how it works... and if you'd rather go to jail than to pay taxes, there's not much reasoning left to do here... enjoy your ruined life, I guess, while everybody else seems to cope just fine, even when having to pay these taxes.



Or go to Germany and let it be a free game before we reach the 10000€
Your math is scary. How would you ever make 10K if you make it free before you reach that amount?

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Offline Oskuro

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Medals: 40
Exp: 6 years


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« Reply #11 - Posted 2013-05-10 10:32:34 »

Politics are always a complex headache, specially in these crappy times (I'm not personally happy about how things are handled here either).

Best thing you can really do is read up as much as you can on the specifics of your legislation.

The reason I bolded the word "read" is because of what Riven just said, don't rely on hearsay or forum posts. Read the actual legislation, find someone (a lawyer or something) to explain it to you if you don't understand it. Make sure you have all the facts before you make any decision.

After all, if you screw up, you'll be the one paying the consequences, not Riven, not Cero, not me, nor anyone on this forum, or anyone on the world who gave you advice.

The bottom line is: If you want to make money out of it, then you have to treat it as seriously as any job. Cutting corners will only get you trouble.


And I'm not bashing on you, it's just that this happens very often. People are frustrated, they make decisions without having all the facts, and then end up screwed. It's sad.  Sad

Offline grego

Junior Newbie





« Reply #12 - Posted 2013-05-10 11:35:29 »

Oskuro I know it's the Interwebz, I'm not gonna take anything seriously here. But I really want to make this project and that's why I'm mad.

Riven nothing was ignored what you wrote. I just don't understand, because of my bad english. As well as it's just not how things work here. We have this one key tax, which means everybody pay the same percentage.
In The Netherlands, the max percentage (over the high end of your profit) you pay is about 50%. Then you have all kinds of deductions, first and foremost costs, but also business related deductions, which either are a percentage or an absolute amount of money.

To give you an indication, although we have this ~50% tax in my country, I barely paid any tax last year, without resorting to shady tactics. persecutioncomplex
I don't really understand this part. I don't think there is a maximum amount here. If you work for one month for the possible less amount of money you can, you have to pay more money as tax than what you earn. Everybody use shady tactics here. Trust me:)

So basically my question should be sounds like it, what business modell you use.
Do you sell your product as a company or as a person? You probably don't believe me, but it's indeed 60% of the money you make if you make it as a small business.

Thanks for your previous and your future answers.

Edit:I left half of a sentence.
Offline Cero
« Reply #13 - Posted 2013-05-10 11:38:04 »

Quote
everybody else seems to cope just fine
mfw we are currently in the greatest depression in human history.

Online Grunnt

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Complex != complicated


« Reply #14 - Posted 2013-05-10 11:41:16 »

Recently me and my friends decided to make a game. We were all very inspired about it and wanted to sell it for a small price (8$).

First of all: as long as you do not have a game people want to play this is not a problem.

If you are so worried about this you should talk to a specialist on taxes in Hungary, e.g. an accountant or a tax advisor.

Finally, tax evasion is illegal and plainly stupid. It's a form of corruption that ruined Greece and most other southern European economies and it is something that IMHO should be exterminated with extreme prejudice where possible.

Offline DQQAYME
« Reply #15 - Posted 2013-05-10 11:47:00 »

If the government takes 60% and steam 30% then we wont have anything left. It's just ridicilous don't you think? How am I supposed to eat?
10000$ - 30% steam = 7000 – 60% tax = 2800$
Government don’t care that ^^,
She have billions ppl like you 1k – or 100k ppl less - government don’t care.
And if you die – after 1-2 years or less after that, no one will even remember you
–Welcome to Real World XD

99.9999999999999999999999999999999999999999999999999999999999999999999%
Think only about self and how make as many money as they can, and do nothing rest of there life’s.

This is sense of there life’s take as many pleasure as they can and die.

Offline grego

Junior Newbie





« Reply #16 - Posted 2013-05-10 12:01:33 »

First of all: as long as you do not have a game people want to play this is not a problem.
I believe that's the easy part, compared to law:)
Offline Nate

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Projects: 4
Exp: 14 years


Esoteric Software


« Reply #17 - Posted 2013-05-10 12:13:04 »

Also, the tax percentage goes up with your profit: it doesn't start at 60%.
   You pay a% tax over profit under X.
   You pay b% tax over profit between X and Y.
   You pay c% tax over profit between Y and Z.
   You pay d% tax over profit above Z.
This is correct. To be clear, when someone says something like "I payed 16% in taxes last year", they are talking about their effective tax rate. This is how much they actually paid in taxes divided by how much of their income was taxable. In other words, after all the tax deductions and workarounds to avoid taxes and after applying the sort of table Riven has shown, the effective tax rate is the percent of your profits that your government takes.

Having the problem of having to pay taxes is the good kind of problem. It means you made some money. If you don't like the taxes your government imposes on you then you can either: live in poverty, live illegally, or move to another country (where you'll just have to pay different taxes and, in certain countries with "low" taxes, you won't have any health insurance).

Also, I find it unlikely your effective tax rate could ever be 60% in Hungary:
http://en.wikipedia.org/wiki/List_of_countries_by_tax_rates
It looks like the max income tax you would pay in Hungary is 20.32% (2012).

Offline Nate

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Medals: 149
Projects: 4
Exp: 14 years


Esoteric Software


« Reply #18 - Posted 2013-05-10 12:18:12 »

Quote
everybody else seems to cope just fine
mfw we are currently in the greatest depression in human history.
Weird. I live all around the world and don't have a real job. :p

Offline grego

Junior Newbie





« Reply #19 - Posted 2013-05-10 12:35:55 »

Also, the tax percentage goes up with your profit: it doesn't start at 60%.
   You pay a% tax over profit under X.
   You pay b% tax over profit between X and Y.
   You pay c% tax over profit between Y and Z.
   You pay d% tax over profit above Z.
This is correct. To be clear, when someone says something like "I payed 16% in taxes last year", they are talking about their effective tax rate. This is how much they actually paid in taxes divided by how much of their income was taxable. In other words, after all the tax deductions and workarounds to avoid taxes and after applying the sort of table Riven has shown, the effective tax rate is the percent of your profits that your government takes.

Having the problem of having to pay taxes is the good kind of problem. It means you made some money. If you don't like the taxes your government imposes on you then you can either: live in poverty, live illegally, or move to another country (where you'll just have to pay different taxes and, in certain countries with "low" taxes, you won't have any health insurance).

Also, I find it unlikely your effective tax rate could ever be 60% in Hungary:
http://en.wikipedia.org/wiki/List_of_countries_by_tax_rates
It looks like the max income tax you would pay in Hungary is 20.32% (2012).

The wikipedia article is wrong. As I said earlier we have the same percentage for everybody. The EU is taking actions against hungary because of this.
Online Riven
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Medals: 816
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Hand over your head.


« Reply #20 - Posted 2013-05-10 12:43:01 »

The wikipedia article is wrong.

These reports don't quite agree:



I'm sorry, but I'm taking those reports more serious than the statements of your friend...
Quote
Yesterday I asked a friend of mine about the taxes. He has no idea how does it all works, but he sad in Hungary 60% gone with taxes.

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Offline Danny02
« Reply #21 - Posted 2013-05-10 13:04:50 »

Also when you are living in the EU, you are free to create an company which is listed in any other EU country i.e. in Ireland or Luxembourg which take nearly to zero taxes for business.
Offline Oskuro

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« Reply #22 - Posted 2013-05-10 13:18:29 »

Oskuro I know it's the Interwebz, I'm not gonna take anything seriously here. But I really want to make this project and that's why I'm mad.

I understand this. I don't want to patronize you, just sharing experiences because it's very common for people to jump into these things without thinking them through (Yes, personal experience, not about taxes, but still).

Offline grego

Junior Newbie





« Reply #23 - Posted 2013-05-10 13:34:48 »

Also when you are living in the EU, you are free to create an company which is listed in any other EU country i.e. in Ireland or Luxembourg which take nearly to zero taxes for business.
Thanks for the info, but I don't want to leave my home yet.

By the way, for those who think I'm evil because I want to avoid taxes. I don't want to avoid all of it. But keep it in a normal level. Probably most of you know it's a great effort to make a game. If I would sell 1000 copies, I'm gonna be so happy, but half year of development and hard work is still gone because of taxes. I would rather give it out free that way.
If I can find any other way than this 60% of tax rate I will do it.
And this 60% of tax comes from:
27% general tax on everything you sell for a person
16% personal income tax
2% industry tax
12% if you want to take your money out of the company.

And thanks riven for the correction of personal income tax. It's not 18% but 16%.
Offline delt0r

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« Reply #24 - Posted 2013-05-10 13:37:53 »

Well if you are interested really is what tax do i, could i owe. Then consider that personal income tax is not the same as company income tax. Setting up as a company and being naive about how you take the money out for your self can get you a double tax. But really most countries do provide quite a lot of help and advice on the topic. At least NZ, Austria and Switzerland anyway. Typically most things are roughly "taxed" once with the exception of VAT. Steams cuts is not however a tax.

Also while there is no money, there is no tax. But you may want to keep track of any real outgoings, since they are often valid for deductions for a few years (Austria its like 5 years, NZ 7). Even if you don't do the company thing. 

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Offline Danny02
« Reply #25 - Posted 2013-05-10 14:23:25 »


you don't have to leave your home(Hungary) to create a company which is based in another EU country. You can operate and have your address at your home but be registered in any other EU country. AND this is totally legal see Art. 43 EC see the judgment of the European Court
Offline SimonH
« Reply #26 - Posted 2013-05-10 15:58:16 »

And this 60% of tax comes from:
27% general tax on everything you sell for a person
16% personal income tax
2% industry tax
12% if you want to take your money out of the company.
Ok, so you make a game and in 1 year you sell 1000 copies at €20 each and make €20,000.
Take off 27% sales tax leaves €16,300.
Take off 2% industry tax leaves €15,974.
What's left is your personal income and you pay 16% tax leaving you €13,418.

That's 33% tax, not 60%!

It's also unlikely that you'll have to pay sales tax unless you make more than a certain amount (around €170,000 in the UK) in which case you'd only be paying around 17% tax.

People make games and games make people
Offline grego

Junior Newbie





« Reply #27 - Posted 2013-05-10 16:47:12 »


It's also unlikely that you'll have to pay sales tax unless you make more than a certain amount (around €170,000 in the UK) in which case you'd only be paying around 17% tax.

I'm from eastern Europe 20$ for us is a huge amount of money Smiley I don't want to sell it for that much.

It seems like if I'm selling as a person not as a company it's just 16% or so. I don't know if I still have to pay the 27% general tax but it's much better now.
Offline Nate

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« Reply #28 - Posted 2013-05-10 17:31:23 »

Of course you can set your price so the profit you earn after taxes is what you want for compensation.

Offline Cero
« Reply #29 - Posted 2013-05-10 18:08:45 »

Of course you can set your price so the profit you earn after taxes is what you want for compensation.
However unfortunately the gaming industry is kinda plagued by the fact that nobody wants to spend money on below AAA games.
This phenomenon that you see a game for 2 bucks instead of 1 in the android store or whatever and dont buy it, and then you tip a pizza guy...

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