Read the follow-up post in that Frictional link.

Basically, it looks like this...

Frictional was fine with GoG charging less to Europe when it was not so obvious since everything was in dollars.
Now that one can do a direct comparison between online stores in Euros, Frictional wants the same price in all stores.
Gog will not do this for "classic" games and Penumbra and the original Amnesia fall in that category. A Machine for Pigs being newer, apparently GoG agreed to a higher European price (hence regional pricing).

In the USA, anytime you buy something from an online retailer, you only pay sales tax if the company has a physical presence(store,warehouse,headquarters) in that state.
Example : I live in New Jersey. If I buy from Best Buy's web site, I pay sales tax because there are physical Best Buy stores in NJ. But, if I buy from a store online that has no presence in NJ, they are not obligated to collect sales tax.

Ah I see, that's why US has 0% tax in this case. Thanks for the info.

Some states have talked about trying to force online companies to collect state sales taxes for them, but so far it has been resisted.

This is completely true, though the government is working hard on changing it. The company I work for, for example, is currently being audited by the IRS (Internal Revenue Service, for non-Americans: the tax people) for non-payment of sales tax, and they seem to be trying to collect tax on supplies that I buy from out of state online retailers. Their position is that we owe the sales tax to the state regardless of where the purchase was made, and whether or not the retailer charged tax. That does seem to be the law in most states, although it is not widely enforced.

Edit: Ninja'd.

As far as I can tell, it's a throw-back to how mail order catalogs operated and was left alone for years to encourage internet commerce. Also, paying 50 different states sales tax can be logistically difficult, as each one must be gathered and payed separately.
But just like there is a problem between the price differences here, it creates loads of problems for local retailers. Especially with high dollar items. Ideally, whenever someone buys an item from another state without paying sales tax, it is up to the customer to individually pay that tax to the state himself.
An example of this is many people realized that they could save money by buying cigarettes from Native reservation web sites, since they don't collect sales tax or federal taxes on them. The states got so infuriated, they started extorting these companies for their customer's transactions, so they could bill them themselves. So, what would happen would be you would purchase these items tax free, then at the end of the year you would get a bill from the state for the tax you should have paid.
Just because a company isn't obligated to collect sales tax, doesn't mean the customer isn't obligated to pay it.

People keep blaming GOG's "system" but the problem is that GOG has no apparent system or consistency.

It's unclear the reason GOG would allow some developers to set regional prices but not others. If Frictional Games could just set their own (+15% to incorporate VAT) price then that would settle things. I understand GOG at one point claimed a focus on "fair pricing" but they allow other games (like Blackguards) to fluctuate as much as 32% in price by region. Someone suggested the difference might be that for games deemed as "classic" GOG will not allow price variance by region; but I think that sounds random and arbitrary (maybe even biased in the case of Nordic whose core catalog is "classic").

Now, developers with seemingly reasonable objections to currency exchange rates like Nordic or who are unwilling to eat regional taxes like Frictional are leaving but seemingly predatory/random regional pricing like with Daedalic is allowed. This looks like the opposite of customer protection.

I believe the reason is that GOG made a promise to cover up the difference in price with store credit, and they are not willing to do so for every game in the catalog but only for the ones they deem more profitable.

It still seems arbitrary; Jack Keane 2 and SpellForce 2: Demons of the Past are games that were recently released (Jack Keane 2 was released about 2 years ago and Demons of the Past was released 7 months ago) and yet, they are also abandoning ship. Meanwhile, the first Book of Unwritten Tales was released some months earlier than Jack Keane 2 and is actually staying. Of course, when I'm talking about release, I'm obviously talking about a general release and not just the GOG release.

That's not how it works.

It is called Value Added Tax, because the tax is added to the calculative value of the product. So for a game worth of 20 € 20% VAT would make the final sum to paid by the customer as 24 €.

And as all GOG sales are sales within Euro area, VAT should be paid from every sold game, even if the buyer is in the USA.

Of course, there is the tax-free sales protocol which allow tourists from outside of EEA area to get their paid VAT refunded when they leave the EEA area.

I don't know how this really works on the Internet and when the products are immaterial, but in theory, non-EEA area people could get their games tax-free, if they can be identified as people from other parts of the world.

This is not at all related to currencies used, payments methods or anything like that.


And as I have said previously, I have loads of games on GOG, but I have never, NOT ONCE, received a receipt which tells me the amount of VAT and which EU state has collected it. I don't know how GOG has managed to pull that one through, but at least in my country, every single receipt I have received from GOG would have been against what the law requires...

This is just my assumption, nothing official.

Thank you. I wish to hell the actual people involved could talk as plainly about what it is, rather than this roundabout "in scenario A, product B should be priced under scheme C, but unfortunately corollary D requires us to use scheme E". How refreshing it would be if they could just admit "Numbers make stupid users angry! Stupid users SMASH!"

I still have no clue how GOG decided what gets revisioned into regional pricing and what is non-negotiable. At this point it's such a hodgepodge.

I'm really disappointed with GOG, if it's true that mostly the new currency system is to blame for games getting removed and not the regional pricing. What good does it do most EU customers now that they can possibly save a few cents by avoiding currency conversion, when the trade-off is less choice and more regionally priced games?* Personally I couldn't care less about paying in Euro, I much prefer seeing the dollar prices anyway, and now I have three more reasons to like GOG less than before, due to this change. :(

(* Maybe some countries now get better prices than before due to regional pricing? Admittedly, for those customers it might be a good thing. But the games will be removed for them too, unfortunately.)

The US does not have a national VAT or sales tax. Each state (and within each state, sometimes counties or municipalities) sets its own sales taxes. As yet, Internet sellers are not required to pay sales tax to the state where the purchaser resides, unless the company has a physical presence in that state. So if you order something online from Walmart, you'll pay the sales tax of the state you live in because Walmart has stores in every state. If you order it from Bob's Big Bottles the eBay seller who lives in Iowa, and you live in Arkansas, you won't have to pay Arkansas sales tax.

Edit: It's also my understanding that GOG may have somehow gotten themselves identified as a US company, since somewhere on the site there used to be a reference to California law. This, and the payment processor in Cyprus, may be how they work around the EU VAT thing, but that's complete and utter guessing.