EU Tax Changes

On 1st January 2015, the EU changes how VAT is calculated in cross-border transactions. How does this affect you as a consumer of apps and as a developer?

The short version: Apple have not announced changes of app pricing in Europe, so consumers will see no difference in 2015. Developers, however, will make slightly less money for each sale.

Following is the longer version.

Two important things. One is a change, the other is remaining. The status quo is retained on app pricing. Apple have not announced price changes and prices shown to consumers in the EU, unlike the US, always include tax.

The change is on how the tax is calculated. Previously, tax in the EU was calculated at the rate where the company (rather than the consumer) is located. Apple’s iTunes European base is Luxembourg, which is famed for having a relatively low tax rate of 17%.

From next year, the tax will be calculated at the rate of the country where the purchase is made. That is, when I’m buying from iTunes UK I’ll be paying 20% tax and when buying from, say, iTunes DK I’ll be paying 25% tax.

To work out your final figure the simplest way is just to read Apple’s documentation. But if you really want to do it yourself, take the figure seen in the App Store, say £1.49, take off the tax (20%) and then take off Apple’s split (30%). If there’s anything left, it’s yours. The worked example in this blog also still works.

The rates, taken from iTunes Connect, are as follows:

CountryVAT Rate
Austria20%
Belgium21%
Bulgaria20%
Croatia25%
Cyprus19%
Czech Republic21%
Denmark25%
Estonia20%
Finland24%
France20%
Germany19%
Greece23%
Hungary27%
Iceland24%
Ireland23%
Italy22%
Latvia21%
Lithuania21%
Luxembourg17%
Malta18%
Netherlands21%
Poland23%
Portugal23%
Romania24%
Slovakia20%
Slovenia22%
Spain21%
Sweden25%
UK20%

(I hope you don’t have any Hungary-exclusive paid-for apps.)

I would assume that at some point Apple will start to adjust App Pricing to equalise around the world. If nothing else, some changes in the Russian store are likely very soon!

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