German publishers are among those facing a serious competitive disadvantage in their global marketing effort – profit-cutting “double taxation”. A company generating revenue from players in other EU states may be required to pay sales tax or VAT in Germany as well as in the respective foreign country. The workshop “Sales Taxes in Telecommunications and Media” on 21 May 2012 in Berlin focuses on this complex subject.

Ingo Vahl, Finance Director and Company Lawyer at ATLAS Interactive, will examine the impact on the German games industry and the options businesses have to avoid double taxation. The Federal Association of the Computer Games Industry (G.A.M.E. – Bundesverband der Computerspieleindustrie e.V.) and the German Association for Telecommunication and Media (DVTM Deutscher Verband für Telekommunikation und Medien) are the event organizers.

Cash flow according to industry-specific sales tax regulation until 2009

Payments from the player to the game provider follow the telecommunications chain. An example: subscriber – network operator – ATLAS Interactive – game provider. According to the “industry solution”, as reflected by Sect. 45 h para. 1 Telecommunications Act (TKG) in conjunction with Sect. 3 para. 11 Value Added Tax Law (UStG), the national network operators remit the sales tax portion of the collected earnings directly to their local tax authorities. The network operator costs and ATLAS Interactive’s margin are deducted, and the remaining amount is passed on as earnings to the client companies.

Changes in taxation since 2009

German game providers have been faced with incremental changes in this practice since 2009. The German tax authorities currently only apply the original, industry-specific scheme to domestic sales. If the paying gamer and network operator are located in another EU country, any revenues generated are still subject to German value added tax. If the foreign network operators have already remitted sales tax on the gross receipts to their local tax office, sales tax or VAT is actually paid in two instances, thus resulting in “double taxation”. This situation puts German game providers at a significant disadvantage. Until now, the German tax authorities have not established a common standard practice regarding the prevention of double taxation and application of interim rulings.

Payment service provider ATLAS Interactive is the partner of several companies in the computer games and entertainment industry marketing their digital products globally. The sale of in-game items is transacted by way of web billing, premium SMS or telephone-based billing. This is the part handled by ATLAS Interactive. Agreements must be reached with a multitude of national/local network operators around the world to ensure that text messages and phone calls are routed to the ATLAS Interactive servers. The company has implemented such arrangements in more than 85 countries to date.

ATLAS Interactive has expanded its service range in North America. The focus of the existing subsidiary in Miami is now shifting to the booming game industry in order to meet the needs of more and more American companies using the services of the German provider for Premium SMS, Voice, and Web Billing. ATLAS Interactive has been offering a wide range of mobile payment solutions for over 15 years. In order to provide more comprehensive and direct services in the US, the company will open a new office in San Francisco in 2011 to have a west coast presence.

Alan Vejan, a Sales Manager of ATLAS Interactive from Hamburg, will manage the setup of the subsidiary in San Francisco in the coming months as the International Sales Strategy Manager. Both US offices will contribute the use of payment solutions in the North American game industry. “The games industry is an important industry for us. As our customer basis in the US and Canada has been steadily growing, now nothing is standing in the way to expand our presence in North America”, says Marco Priewe, CEO of ATLAS.

Marco Priewe, CEO of Atlas Interactve

The year 2010 was probably the most dynamic year in the history of the  gaming and payment industry. Before the start of the Christmas holidays and the concentration on the next year, we talked to Marco Priewe, CEO of Atlas Interactive about his eperiances in the year 2010 and why he thinks 2011 will be even more exciting:

SocialGamesOberver: First of all, how is your respective view on the fading year 2010?

Marco Priewe: 2010 has been a very busy, very exciting year. Not only for the payments and games industry but with ATLAS Interactive as well. We have seen an explosion in online games which has translated to an explosion in the need for suitable micro payment solution. Whether its Premium SMS, Voice or Web Billing, we have seen an increased interest in all three areas of payment methods.

SGO: It is not obvious for everybody that Kanzaloo belongs to Atlas. Can you explain the two brands and their individual focus?

Marco: We have received this question before and the best way for me to explain it that kanzaloo is an all-in-one payment solution that ATLAS Interactive offers. A lot of our competitors give there services or products a name and since we are able to provide all forms of micro payment into one easy to use solution we decided to give it a name that is memorable. You will see a lot more in terms of marketing and product development from the kanzaloo product in 2011.

SGO: You previously mentioned a strong interest in the publishing business. Can you elleborate on your plans in this industry?

Marco: The publishing industry has been trying to come up with a way to bring their services into the 21st century. They are realizing now that the subscription based payment model does not work. More and more readers are going mobile. What this means is that their readers are no longer purchasing their publications at newsstands/stores, but rather reading their content on their smartphones/tablet computers or online desktop browsing. At this moment the content is either free or they charge the users to download their app or maintain the subscription based model. With a micro payment service, such as kanzaloo, we are able to provide these publishers the means to charge the readers per article. So instead of buying the entire publication that less than 5% of readers read, the publishers can charge for the articles the readers want. So for 0.10€ an article or any other price point they are able to reach a broader market. In 2011 with the expansion of the kanzaloo product, ATLAS Interactive will be adding even more publishers to our portfolio of clients and continue to educate those who are still skeptical.

SGO: Which markets have been your strongest so far and which ones are you planning to tackle next?

Marco: The gaming industry by far has been our strongest industry to date and will probably continue to be so for some time. However, as stated in the previous question, the publishing industry is one that we have had our eye on and have been working with and see a strong future with. There of course are other industries as well that AIDE will continue to target and work with such as Social Networks, Gambling, and many more. On the other hand side, traditional payment service providers have started integrating kanzaloo™ in their existing portfolio of payment solutions. So far, we are the only micro payment provider that has integrated its mobile payment solution into the pay.on platform of Arvato.

SGO: Virtual goods are taking over the world, how are you involved now and what is going to change?

Marco: We are really the pioneers in this industry. We started over 15 years ago and have been consistently providing unbeatable coverage and solutions to all of our clients who have maintained a strong, loyal commitment to us. In 2011 we will only continue to provide the best services and solutions to our clients while contributing what we have learned through the years to this ever growing industry.

SGO: What do you have in the pipeline for the mobile and tablet market?

Marco: First and foremost we are a payment company and that is our main focus. However, we understand the latest trends and needs from our clients and consumers. That being said we are constantly developing our products for the mobile and tablet market and in 2011 you will some of these solutions make ground and become more of an extension to what ATLAS Interactive offers already.

SGO: It is Christmas soon, if you had one wish to address concerning the industries you operate in, what would it be?

Marco: The biggest concerns we get from clients and industry players is the need to improve carrier relations. This is something we are extremely proud of since we have been around for over 15 years we have personal relationships with all of these carriers and it is because of this we are able to offer unbeatable rates and terms. We are very upfront and honest with all of our clients and the one thing I would say to them this holiday season is “Don’t worry!”. That is our job. Enjoy the Holidays!

ATLAS Interactive Germany and Gate2Shop, premium e-commerce provider for software,games and digital services are now working together. The Hamburg based specialist for content billing supports the British company Gate2Shop in the area of mobile payment services for the gaming industry.

Both companies have extensive experience in their market areas. ATLAS Interactive offers individual mobile payment solutions in over 84 countries for 15 years and includes several well-known gaming companies to its regular client base. Gate2Shop provides over 80 payment options in over 160 countries for e-commerce transactions. With the cooperation the company wants to expand the service particularly in the gaming sector.

“We have investigated the market for mobile and SMS-payment thoroughly”, commented Yuval Ziv, COO of Gate2Shop, the cooperation. “After a careful consideration of our requirements for country coverage, the cost factor, and easy integration options and flexibility, we found that ATLAS Interactive offers the right solution. I am convinced that Gate2Shop can work with the partner even more closely on the needs of game publishers.” Marco Priewe, Managing Director of ATLAS Interactive, added: “ATLAS Interactive is excited to add Gate2Shop to our ever growing client portfolio and we look forward to a successful partnership.”