Steam Game Prices Might Rise as UK Government Fixes a Tax Loophole

We all love Steam, usually. However, it wouldn’t really be nice if the prices of games that the digital distributor offers will rise. Something like this might happen by the next year though and it will be forced. The Steam game prices might increased after the UK government changes certain policies in the taxation law.

Currently, Steam makes its UK sales through the company’s Luxemburg offices, Valve S.A.R.L, as a result they are charged a VAT rate between three to 15 percent. This rate will increase by two percent next year in Luxemburg.

However, the UK government is closing the tax loophole that let Steam sell the games in the UK through an office outside the country meaning they will have to make the sales from within the UK.

As a result of this, the VAT rate that they will be charging is going to be 20 percent from January 1, 2015.

Here’s an excerpt from the Budget that details the changes in the taxation policies relating to telecommunications, broadcast and e-services:

“As announced at Budget 2013, the government will legislate to change the rules for the taxation of intra-EU business to consumer supplies of telecommunications, broadcasting and e-services. From 1 January 2015 these services will be taxed in the Member State in which the consumer is located, ensuring these are taxed fairly and helping to protect revenue.”

This means that Steam game prices will be higher than what the UK consumers have been paying until now. How do you think this will affect the sales of Steam?