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Sunday 11 January 2015

Paying more for your digital downloads? Here’s why!

If you live in the UK or any of the EU countries and are in the habit of buying digitally provided services, then this post is for you. It doesn’t matter what you buy, whether it’s music, ebooks, software, apps, films, games, screensavers, even crochet or knitting patterns, I could go on for ever, then you have been paying more for them from the beginning of this year. In fact, anything you download from the internet to your computer, mobile phone, android tablet or iPad etc, is now costing you more!
The reason for this is quite simple. It’s the new EU VAT rules on the supply of electronic services to the consumer, that’s you.

The implementation of this legislation has caused a storm of protest from the suppliers of these services, many of whom have stopped trading because the rules are so onerous, so, apart from paying more for your knitting or crochet pattern, or your specialist software, you may find your favourite seller is no longer trading. And while you, as a buyer, are only affected if you live in the UK or EU, sellers worldwide have been affected by the changes with which they must comply, or risk penalties for non-compliance. But enough of the sellers, because this post is intended for you, the buyer.

The EU brought in this legislation to crack down on the big conglomerates like Amazon and Apple, who register in Luxembourg so they can sell their goods with only 3% VAT added, which is the Luxembourg rate. This was felt to be tax dodging, so the new rules stipulate that instead of applying the VAT rate associated with the seller’s country, they are now to be applied according to the rates of the buyer’s country.

The outcome is that if you buy an ebook, computer software, apps, music, films etc in the UK, which have to be downloaded, then you will be paying the 20% VAT rate instead of the previous 3% VAT rate, and that applies to the crochet and knitting patterns as well. However, think yourself lucky you don’t live in Hungary, because the VAT rate there is a massive 27%.

There is a catch though, and it’s due to all the EU countries having different VAT rates. If you go on holiday and download something using a local wifi connection, then you will pay that country’s VAT rate. Moral – don’t download anything in Hungary.

It’s ironic, really, legislation implemented by the EU to prevent tax dodging by the big conglomerates won’t add anything to their costs, because it’s the buyer who pays the VAT. And that is you!

So, if you download something and say to yourself, I’m sure that was cheaper in December, don’t blame the seller, blame the EU.

Chris Longmuir


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