According to the recent UK budget report, a loophole in the tax system meant that tax on digital downloads is charged at source and not the country the purchase was made. This means that apps from countries like Luxembourg, included tax which is as low as 3%. In 2015 that’s all going to change as Chancellor George Osborn announced during his annual budget speech.
As of January 1, 2015 digital downloads will be taxed in the country that they’re purchased meaning that apps purchased in the UK will get our wonderful 20% VAT charges thrown on top.
I’m no maths genius but that’s going to hike up prices of that album you were going to download as well as that movie you were going to rent.
The budget document read: “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.”
This may be bad news for digital downloads, but good news for streaming services such as Netflix and Spotify who’ll still remain the same price when this tax change comes into place.