Steam consumer tax and US withholding: two different calculations

A numeric example showing the separate bases for included consumer tax, Valve’s share and optional US withholding.

Do not put both taxes in one percentage

Consumer tax concerns the transaction with the player. US withholding in the Steamworks tax FAQ concerns a payment to the partner and the applicable US-source amount. They belong at different points in the cash-flow model. A company’s local income tax is a further calculation and is not inferred from either field.

Example: a price that includes consumer tax

Assume 10,000 copies at $12 including a hypothetical 20% consumer tax, with no discounts or refunds. Customer receipts are $120,000. Divide by 1.20 to obtain $100,000 before consumer tax; the included tax is $20,000. Subtracting 20% of $120,000 would remove $24,000 and use the wrong base. The figures illustrate arithmetic, not the effective tax rate of any particular market.

Apply the platform share to the adjusted amount

For this example use a 30% Valve share on the $100,000 adjusted amount. Valve’s portion is $30,000, leaving $70,000. If the game crosses an applicable revenue-share tier, the tiered calculation changes this step. Do not reduce the platform-fee percentage merely because the studio has a reduced corporate tax rate: those are different systems.

Optional withholding uses the US-source portion

Suppose the studio is paid directly by Valve, 40% of the relevant post-Valve payment is US-source, and its applicable tax-interview rate is 30%. The modelled withholding is $70,000 × 40% × 30% = $8,400. That leaves $61,600 before further modelled contract allocations. The 40% and 30% values are examples, not recommended defaults. The calculator starts both fields at zero and does not choose a rate from the user’s country.

Match the model to the actual payment chain

If the publisher receives Valve’s payment and later pays the studio, entering the studio’s tax-interview rate against Valve’s full payment may describe the wrong transaction. Leave the optional module off until the relevant payee, source allocation and contract treatment are established. The calculator subtracts enabled withholding before recoup; a contract with a different order needs its own model.

Reconcile the inputs, not just the final number

Use the same period for sales, refunds and deductions. Check whether your average selling price includes tax, whether discounts were already reflected, and how the US-source share is defined in the relevant payment report. Keep exchange conversion and bank charges separate. The linked example reproduces the arithmetic; the current Steamworks tax FAQ and your actual tax-interview result determine which inputs are relevant to your situation.