E-books and iTunes to face price hike as EU tax rules
enter into force
BRUSSELS - E-books and downloaded music are among
products set to become more expensive under new EU
sales tax rules which entered into force on New
Years’ Day.
VAT on digital products such as
ebooks, music downloads, and apps used to be charged
in the country of the supplier. But as of Thursday
(1 January) VAT will be payable in the country where
the digital product is bought.
The move is an
attempt to harmonise VAT rules across the EU but
also a bid to prevent firms like Amazon, Apple and a
number of US internet service providers from routing
their European sales through low-tax countries such
as Luxembourg, where the VAT rate is just 3 percent.
All companies which sell telecoms, broadcasting or
digital services will be hit by the new rules.
In response, Amazon has indicated it will increase
the price of e-books according to the tax rate
levied in the host country.
To keep
Luxembourg from blocking the changes, which needed
unanimous support from all EU governments, the Duchy
will be paid up to €1.1 billion in compensation from
the other 27 EU countries to make up for the lost
tax revenues over the next three years.
Countries with higher rates, including the UK,
Spain, Italy and Germany, all of whom levy between
19 and 22 percent, will be the main beneficiaries.
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The UK government, which has a 20 percent VAT rate,
expects to the change to bring in an extra £300 million
per year (€375 million).
Luxembourg has come
under recent pressure over its low tax regime.
Along with Ireland and the Netherlands it is currently
subject to a competition probe by the European
Commission into whether tax agreements with US
multinationals constitute state aid.
Meanwhile, the so-called LuxLeaks investigation
uncovered evidence that Luxembourg’s tax authorities had
allowed at least 340 international firms to pay as
little as 0.25 percent tax on their profits.
Many of the decisions taken when Jean-Claude Juncker,
now president of the European Commission, was prime
minister.
Source::::
EUOB SERVER, dated 02/01/2015......... |