How to Manage Video Game Taxes for In-Game Items and DLC
Veröffentlicht: August 22, 2025
To stay compliant when selling video games online, in-game items and DLC, you need a systematic approach for calculating, collecting, and remitting taxes. The rules for taxing digital goods are complicated and vary greatly between countries and even states, making tax compliance a significant challenge. This guide provides a straightforward process to navigate these obligations, helping you manage compliance thoroughly and effectively.
Choose a Tax Management Method
The first thing you need to do is decide how you will manage the tax process. This decision will impact your resource allocation, risk level, and ability to scale. To choose the right strategy for your company, begin by assessing your business needs by considering the following questions:
- Fachkenntnisse: Does your team have expertise in global tax compliance for digital goods?
- Ressourcen: What is your budget for tax software, potential advisory fees, or new hires? How much time can your team dedicate to tax administration rather than focus on core product development?
- Scale: In how many states and foreign countries do you plan to sell your game?
- Risk Tolerance: How comfortable are you with the risk of audits, fines, and penalties for potential non-compliance?
Based on your answers, you can evaluate the three primary methods.
|
Methode |
Kosten |
Time Commitment |
Risk Liability |
Am besten geeignet für |
|
In-House |
Variable (Salaries, Subscriptions) |
Sehr hoch |
Entirely on you |
Large enterprises with dedicated finance and legal teams. |
|
Tax Compliance Tools |
Medium (SaaS fees, per-transaction costs) |
Mittel |
Mostly on you |
Businesses with some financial expertise looking to automate calculations but manage filings themselves. |
|
Merchant of Record (MoR) |
Integrated (Fee on transaction volume) |
Very Low |
Handled by MoR |
Startups, indie developers, and scaling businesses wanting to offload all tax liability and focus on their product. |
Many startups begin by managing taxes in-house for a single market. As they pursue Marktexpansion, the complexity increases exponentially, which is a common trigger point for moving to a Merchant of Record model to avoid growing pains and compliance risks.
As a Merchant of Record, PayPro Global acts as your reseller, taking on the full legal responsibility for tax compliance worldwide. We handle all registrations, calculations, filings, and remittances. This allows you to sell to a global audience without ever having to manage international sales tax yourself.
Free Video Game Tax Checklist
Stop guessing about video game nexus and taxes. This checklist gives you clear steps of
-
Nexus determination thresholds
-
Registration guidance
-
Tax collection
-
Remittance procedures
-
Ongoing compliance
-
und mehr!
Determine Where You Have Tax Obligations
After selecting a management method other than an MoR, you’ll need to determine where you are required to collect taxes. This is based on two main factors: nexus and taxability.
- Nexus: This is a connection between your business and a taxing jurisdiction that obligates you to collect tax there. For online sellers, the most common type is economic nexus. As of 2025, over 45 of the United States have economic nexus laws.
-
- Economic Nexus Thresholds: These are typically based on annual sales revenue or the number of transactions within a state. For example, South Dakota’s threshold is $100,000 in sales oder 200 transactions. California’s threshold is a higher $500,000 in sales. You must track sales in each jurisdiction to know when you cross these thresholds.
- Tax Rates and Rules: Research the taxability of digital downloadable content in each jurisdiction where you have nexus. Rates for digital goods vary widely. The standard MwSt rate in the European Union, for example, ranges from 17% in Luxembourg to 27% in Hungary. The question of tax percentage on video games depends entirely on the buyer’s specific location.
See our Global Sales Tax & VAT Guide for nexus, thresholds, sales tax rates & rules based on location.
To apply the correct tax rate, you must accurately verify your customer’s location. For EU VAT compliance, regulations require collecting at least two pieces of non-conflicting location evidence, such as the customer’s billing address and the IP address of their device.
Free Video Game Tax Checklist
Stop guessing about video game nexus and taxes. This checklist gives you clear steps of
-
Nexus determination thresholds
-
Registration guidance
-
Tax collection
-
Remittance procedures
-
Ongoing compliance
-
und mehr!
Register for Tax Permits
Once you establish nexus in a jurisdiction, you must register for a tax permit before you can begin legally collecting taxes. Doing so without a permit is illegal in most places.
- In the U.S.: You will need to visit the website for each state’s Department of Revenue, create a business account, and complete an online application. You will typically need your Federal Employer Identification Number (FEIN), business formation documents, and director information.
- In the European Union: For sales to multiple EU countries, a non-EU business can register for the VAT One-Stop-Shop (OSS) scheme. You can choose one EU country for your registration (Ireland is a popular choice for English-speaking businesses) and file a single quarterly VAT OSS return to cover all sales across the EU.
Only register for a tax permit after you have confirmed you have nexus in that jurisdiction. Registering prematurely can create an obligation to file tax returns (including “zero returns” if you have no sales), adding to your administrative workload. For more guidance, see our guide on how to register your SaaS business.
A Merchant of Record, acts as a legal reseller and is responsible for your payments and sales taxes, meaning you do not need to go through the complex registration process in any country or state where your customers are located, saving you hundreds of administrative hours.
Free Video Game Tax Checklist
Stop guessing about video game nexus and taxes. This checklist gives you clear steps of
-
Nexus determination thresholds
-
Registration guidance
-
Tax collection
-
Remittance procedures
-
Ongoing compliance
-
und mehr!
Set Up Your Checkout to Collect Tax
Integrate a system to apply the correct tax rate during the checkout process. This requires a real-time calculation based on the customer’s verified location.
Technically, this means your checkout system, such as an in-game checkout, must make an API call to a tax engine at the moment of purchase. This call sends the customer’s location and the product type to receive the exact tax amount, which is then added to the final price.
Maintain transparency in your pricing. Clearly state on your product pages whether prices are inclusive of tax or if tax will be added at checkout. Unexpected fees at the final step are a leading cause of cart abandonment.
Free Video Game Tax Checklist
Stop guessing about video game nexus and taxes. This checklist gives you clear steps of
-
Nexus determination thresholds
-
Registration guidance
-
Tax collection
-
Remittance procedures
-
Ongoing compliance
-
und mehr!
File Returns and Remit Collected Taxes
The final step is to report and pay the taxes you’ve collected from your players. This process is labor intensive and deadline-driven.
Aggregate Data: Compile sales reports from your payment system by breaking down sales and collected tax by each specific jurisdiction (country, state, county, and city).
Complete Forms: Fill out the required tax return forms for each jurisdiction. Keep in mind most authorities now provide an online portal for this.
Remit Payment: Submit the collected tax amount to the respective authority and be sure to meet the deadline.
Filing frequency (monthly, quarterly, or annually) is assigned by the tax authority and is usually based on your sales volume—higher sales often require more frequent filings. To avoid common pitfalls, review our guide on the top sales tax mistakes in SaaS.
Schlussfolgerung
Managing taxes for video games, in-game payments, DLC and other digital goods is a detailed, ongoing process that is very complicated. By systematically choosing a management method, identifying your specific obligations, registering where required, and implementing a robust system for collection and remittance, you can maintain SaaS compliance.
For most developers and video game companies, partnering with a Merchant of Record is a wise strategic decision that simplifies this entire workflow, offloading the tax liability and administrative work to the professionals that have the expertise to manage these tasks.
FAQ
-
Yes, in most countries and many states, selling digital products like video games and DLC is a taxable transaction. These sales are typically subject to consumption taxes such as Value-Added Tax (VAT) or a state’s Umsatzsteuer, depending on the buyer’s location.
-
The tax rate on video games is not fixed; it is determined by the customer’s location at the time of purchase. Rates vary significantly, ranging from 0% in some states to over 25% for VAT in certain European countries.
-
Economic nexus is a commercial connection that obligates you to collect tax in a state, even without a physical presence there. As a game developer, you establish nexus by surpassing a state’s specific sales threshold (e.g., $100,000 in revenue or 200 transactions annually).
-
To manage global taxes, you must identify each country where you owe tax, register with its tax authorities, and use a system to apply the correct rates at checkout. A more straightforward solution is to partner with a Merchant of Record, which handles all global tax compliance on your behalf.
-
Failing to comply with tax laws can lead to severe consequences, including significant penalties, interest charges, and liability for all uncollected back taxes. Tax authorities have the power to conduct audits and take legal action to recover the owed amounts.
-
A Merchant of Record is a service that acts as the legal reseller of your product, taking on full liability for all transactions. For game developers, an MoR manages the entire tax process—calculation, collection, filing, and remittance—eliminating your compliance burden entirely.
Bereit anzufangen?
Wir waren dort, wo Sie jetzt sind. Lassen Sie uns unsere 19 Jahre Erfahrung teilen und Ihre globalen Träume Wirklichkeit werden lassen.
Deutsch 
English 
Español 
Português 
Português do Brasil 
Français 
Italiano 
Nederlands 
Polski 
Română 
Українська 
简体中文 
日本語 
한국어