Apple to instate country-specific app taxes in EU starting Jan. 1In an email sent out to iTunes Connect members on Wednesday, Apple reminded developers of an upcoming value-added tax (VAT) rate policy change that will see customers pay fees based on their country of residence rather than other EU locales with lower taxes.
As seen in Apple's email, provided by AppleInsider reader Gregg, VAT rates for apps are slated to change in all European Union territories starting Jan. 1, 2015, with the new policy potentially upping prices for customers living in high tax countries like the UK. App Store customers are currently charged a flat VAT across the EU.
The move comes after British Chancellor of the Exchequer and Second Lord of the Treasury George Osborne announced new laws in March targeting tax loopholes that allowed Apple to sell app downloads via low-VAT countries. For example, UK App Store customers are currently able to bypass a 20 percent VAT through Apple's routing of purchases through countries like Luxembourg, which has a 3 percent tax rate.
From a UK budget document released at the time:
"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 is unclear if Apple intends to apply the new tax rule to all iTunes purchases, including music, movies and e-books, though UK budget laws set for enactment cover all digital downloads.
Apple's note also points out that while App Store prices will change to reflect appropriate VAT rates, developer proceeds are to remain constant as they are calculated without tax.