The UK government may have just ensured that our iTunes and App Store content in the British Isles gets more expensive. As part of a closing up of tax loopholes, digital purchases will now be subject to the full 20% VAT (value added tax). For those outside the UK to understand: Absolutely every purchase made within stores in the UK has 20% VAT included in the price. There’s nothing you can buy, without paying that 20%. Except for digital purchases.
Apple – and companies like it – have often used EU tax loopholes to sell downloads through other EU countries, like Luxembourg – for instance. In these cases, taxation can be as low as 3%. Planned changes will take effect from January 1st, 2015, and have the full support of the Chancellor of the Exchequor, George Osborne.
A statement from the treasury reads:
“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.”
It’s a pretty depressing piece of news for UK consumers. If it does increase cost of purchases by around 15% or a little more, it’ll discourage purchasing, which will more than likely lower revenue. Not increase it. That, or we’ll see Freemium apps becoming even more popular than they already are, and running up in-app-purchase bills to higher heights.
Via: The Guardian