As hungover said, I'm not sure where all these news articles are coming from. According to their website, they operate under EU VAT law which says they need to charge tax from the country they supply from, which is the Republic of Ireland. Thus the tax rate applicable to Electronic Software Downloads is 23% as is. Whatever happens, 23% is the maximum we will pay.
iTunes downloads wouldn't be classified as services. This statement would refer to things like their financial services where VAT is charged on the repayments and controlled in part by Apple Distribution International in Ireland; not AppleCare though:
If iTunes supplied from Ireland, the receipts would say Ireland instead of Luxembourg.
The reason to use Luxembourg is:
"Luxembourg has just half a million residents. But when customers across Europe, Africa or the Middle East — and potentially elsewhere — download a song, television show or app, the sale is recorded in this small country, according to current and former executives. In 2011, iTunes S.à r.l.’s revenue exceeded $1 billion, according to an Apple executive, representing roughly 20 percent of iTunes’s worldwide sales.
The advantages of Luxembourg are simple, say Apple executives. The country has promised to tax the payments collected by Apple and numerous other tech corporations at low rates if they route transactions through Luxembourg. Taxes that would have otherwise gone to the governments of Britain, France, the United States and dozens of other nations go to Luxembourg instead, at discounted rates.
“We set up in Luxembourg because of the favorable taxes,” said Robert Hatta, who helped oversee Apple’s iTunes retail marketing and sales for European markets until 2007. “Downloads are different from tractors or steel because there’s nothing you can touch, so it doesn’t matter if your computer is in France or England. If you’re buying from Luxembourg, it’s a relationship with Luxembourg.”"
Excellent catch Marvin. I gave a thumbs up to a previous poster who found that Apple was charging Irish rates for services. That was a good catch too except that he was incorrect about how Apple classifies song downloads so it didn't apply to iTunes.
Still, the UK prices are already well above whatever tax rate is applied in the US at $1.43 equivalent so there's plenty of room to absorb some increase.
If us Brits are going to be charged the UK VAT rate of 20%, purchases will be 3% cheaper.
Currently digital downloads from Apple originate in Ireland and are charged at the higher Irish VAT rate of 23% (throughout the whole of Europe).
AFAIK, Apple could charge the Luxembourg low digital VAT rate (after all iTunes SARL is based there) but they choose to appease the Irish taxman (who lets them off a hell of a lot of taxes in Ireland).
When I purchase from iTunes / Mac App Store in the UK I get an invoice from Lux. not Ireland
Grand titles for widely unpopular people. The current Chancellor is one of the most reviled men in the country outside of prison.
Not sure why, he is certainly doing a better job than his Labour predecessors. Still, I guess his is the sort of job whereby you're unpopular by default.
Not sure why, he is certainly doing a better job than his Labour predecessors. Still, I guess his is the sort of job whereby you're unpopular by default.
Is he? The UK suffered a double-dip recession, and only narrowly avoided a triple-dip recession, under his watch. The UK has also recovered far slower from the global economic downturn than many of its major international rivals. What's he done of any positive value? Cut the tax on bingo?
How many years can a government be in power before the 'blame the last government' excuse wears thin?
She's has enough Jems and cash what more does she want? You guys are getting ripped of cause i live in South Africa and pay an average price of R9.99 which $0.92 £0.56
"This is a significant change and in order to work out the country in which VAT due must be paid, you will need to keep additional information that was not required before. To make this as straight forward as possible, the EU Member States discussed and agreed what a business needs to do and the records that it must keep.
if the service is provided through a telephone box, a telephone kiosk, a wi-fi hot spot, an internet café, a restaurant or a hotel lobby, the consumer location will be the place where the services are provided
if the service is supplied on board transport travelling between different countries in the EU (for example, by boat or train), the consumer location will be the place of departure for the journey
if the service is supplied through an individual consumer’s telephone landline, the consumer location will be the place where the landline is located
if the service is supplied through a mobile phone, the consumer location will be the country code of the SIM card
if a broadcasting service is supplied through a decoder, the consumer location will be the postal address where the decoder is sent or installed
if the bullets above do not correctly identify where the consumer of your services is located you can select the correct consumer location. To support this, you will need to provide three pieces of non-contradictory commercial evidence (for example, evidence of the consumer’s billing address, their bank details, their internet protocol (IP) address).
To save you having to register for VAT in every EU Member State, where you supply broadcasting, telecommunications and e-services, you may opt to use the VAT Mini One Stop Shop online service (VAT MOSS)"
Pretty much every e-commerce site tracks billing address and IP, likely phone numbers too. All they have to do is total sales by region and note them down in a single tax return and they will be told the total VAT due and it will be sent to each country for them.
Companies will be required by law to do this just like they have to follow proper accounting rules just now. It shouldn't really be much of a burden to companies and the taxes are still paid by the buyers anyway.
Thanks for clarifying, some people reported they get some, others don't:
The applicability of tax to iTunes is state dependent. For example, in California, tax is only charged on tangible items, so downloads are tax-free. Other states have specific laws which tax downloads.
"This is a significant change and in order to work out the country in which VAT due must be paid, you will need to keep additional information that was not required before. To make this as straight forward as possible, the EU Member States discussed and agreed what a business needs to do and the records that it must keep.
if the service is provided through a telephone box, a telephone kiosk, a wi-fi hot spot, an internet café, a restaurant or a hotel lobby, the consumer location will be the place where the services are provided
if the service is supplied on board transport travelling between different countries in the EU (for example, by boat or train), the consumer location will be the place of departure for the journey
if the service is supplied through an individual consumer’s telephone landline, the consumer location will be the place where the landline is located
if the service is supplied through a mobile phone, the consumer location will be the country code of the SIM card
if a broadcasting service is supplied through a decoder, the consumer location will be the postal address where the decoder is sent or installed
if the bullets above do not correctly identify where the consumer of your services is located you can select the correct consumer location. To support this, you will need to provide three pieces of non-contradictory commercial evidence (for example, evidence of the consumer’s billing address, their bank details, their internet protocol (IP) address).
To save you having to register for VAT in every EU Member State, where you supply broadcasting, telecommunications and e-services, you may opt to use the VAT Mini One Stop Shop online service (VAT MOSS)"
Pretty much every e-commerce site tracks billing address and IP, likely phone numbers too. All they have to do is total sales by region and note them down in a single tax return and they will be told the total VAT due and it will be sent to each country for them.
Companies will be required by law to do this just like they have to follow proper accounting rules just now. It shouldn't really be much of a burden to companies and the taxes are still paid by the buyers anyway.
Thanks. I don't remember other countries in the EU doing this. But they must. What this means is that in sales tax the EU seems to be more harmonious than the US, as far as I can see. The VAT Mini One Stop Shop would be essential to the small business.
EDIT:
Actually now that I think, i do remember that the EU was harmonising VAT in 2015. Heres the Irish version:
This is a policy that will prove to be totally counterproductive. The english public are already squeezed by years of "austerity" measures (though none sees the politicians taking pay cuts). Adding VAT to downloads of music and apps will simply mean people will buy less which, in turn, will put less money into the chancellors pocket... it will also mean that people will start downloading music illegally again which will, sadly, hurt the artists, authors and developers. Perhaps a pay cut for those at the top of government would have been a better place to start to say nothing of reducing the mindless financial waste that all governments seem to be so good at!
Or maybe a pay cut at Apple?
And oh, Apple will sell less, but not 7 times less, so yes, the UK will have its fair share.
And oh, Apple will sell less, but not 7 times less, so yes, the UK will have its fair share.
Apple might, as people pointed out take the hit. Or they can pass it on to the developer. As far as i know Apple has to charge VAT on UK sourced development sold in the UK - and similar in other countries. The dev takes the hit.
Comments
Source: http://store.apple.com/uk/help/payments
Most quotes about Ireland lie. They are a convenience country with the goods being of 'no abode whatsoever'.
Apple seldom participate in contributing taxes when they can avoid it 100%
Who is the most evil, them or Google I'm unsure. A backdating law on tax for the big bad two would be quite a windfall.
Where does Amazon fit in?
As someone who lives in the UK, I wasn't even aware he was the Second Lord of the Treasury (or, for that matter, who the First Lord even is)...
The Right and Honourable David William Donald Cameron, MP - Prime Minister of the United Kingdom and First Lord of the Treasury
Excellent catch Marvin. I gave a thumbs up to a previous poster who found that Apple was charging Irish rates for services. That was a good catch too except that he was incorrect about how Apple classifies song downloads so it didn't apply to iTunes.
Thanks for clarifying, some people reported they get some, others don't:
http://forums.macrumors.com/showthread.php?t=663822
Still, the UK prices are already well above whatever tax rate is applied in the US at $1.43 equivalent so there's plenty of room to absorb some increase.
This article doesn't make sense.
If us Brits are going to be charged the UK VAT rate of 20%, purchases will be 3% cheaper.
Currently digital downloads from Apple originate in Ireland and are charged at the higher Irish VAT rate of 23% (throughout the whole of Europe).
AFAIK, Apple could charge the Luxembourg low digital VAT rate (after all iTunes SARL is based there) but they choose to appease the Irish taxman (who lets them off a hell of a lot of taxes in Ireland).
When I purchase from iTunes / Mac App Store in the UK I get an invoice from Lux. not Ireland
iTunes S.à r.l.
Grand titles for widely unpopular people. The current Chancellor is one of the most reviled men in the country outside of prison.
Not sure why, he is certainly doing a better job than his Labour predecessors. Still, I guess his is the sort of job whereby you're unpopular by default.
By who? By Labourites with very short memories of the total mess Brown and Balls left this country in?
Not sure why, he is certainly doing a better job than his Labour predecessors. Still, I guess his is the sort of job whereby you're unpopular by default.
Is he? The UK suffered a double-dip recession, and only narrowly avoided a triple-dip recession, under his watch. The UK has also recovered far slower from the global economic downturn than many of its major international rivals. What's he done of any positive value? Cut the tax on bingo?
How many years can a government be in power before the 'blame the last government' excuse wears thin?
It's the Lord High Executioner you have to watch out for!
It's a European-wide agreement:
http://www.hmrc.gov.uk/posmoss/index.htm?WT.ac=VAT_POSjan
"This is a significant change and in order to work out the country in which VAT due must be paid, you will need to keep additional information that was not required before. To make this as straight forward as possible, the EU Member States discussed and agreed what a business needs to do and the records that it must keep.
if the bullets above do not correctly identify where the consumer of your services is located you can select the correct consumer location. To support this, you will need to provide three pieces of non-contradictory commercial evidence (for example, evidence of the consumer’s billing address, their bank details, their internet protocol (IP) address).
To save you having to register for VAT in every EU Member State, where you supply broadcasting, telecommunications and e-services, you may opt to use the VAT Mini One Stop Shop online service (VAT MOSS)"
Pretty much every e-commerce site tracks billing address and IP, likely phone numbers too. All they have to do is total sales by region and note them down in a single tax return and they will be told the total VAT due and it will be sent to each country for them.
Companies will be required by law to do this just like they have to follow proper accounting rules just now. It shouldn't really be much of a burden to companies and the taxes are still paid by the buyers anyway.
Thanks for clarifying, some people reported they get some, others don't:
The applicability of tax to iTunes is state dependent. For example, in California, tax is only charged on tangible items, so downloads are tax-free. Other states have specific laws which tax downloads.
It's a European-wide agreement:
http://www.hmrc.gov.uk/posmoss/index.htm?WT.ac=VAT_POSjan
"This is a significant change and in order to work out the country in which VAT due must be paid, you will need to keep additional information that was not required before. To make this as straight forward as possible, the EU Member States discussed and agreed what a business needs to do and the records that it must keep.
if the bullets above do not correctly identify where the consumer of your services is located you can select the correct consumer location. To support this, you will need to provide three pieces of non-contradictory commercial evidence (for example, evidence of the consumer’s billing address, their bank details, their internet protocol (IP) address).
To save you having to register for VAT in every EU Member State, where you supply broadcasting, telecommunications and e-services, you may opt to use the VAT Mini One Stop Shop online service (VAT MOSS)"
Pretty much every e-commerce site tracks billing address and IP, likely phone numbers too. All they have to do is total sales by region and note them down in a single tax return and they will be told the total VAT due and it will be sent to each country for them.
Companies will be required by law to do this just like they have to follow proper accounting rules just now. It shouldn't really be much of a burden to companies and the taxes are still paid by the buyers anyway.
Thanks. I don't remember other countries in the EU doing this. But they must. What this means is that in sales tax the EU seems to be more harmonious than the US, as far as I can see. The VAT Mini One Stop Shop would be essential to the small business.
EDIT:
Actually now that I think, i do remember that the EU was harmonising VAT in 2015. Heres the Irish version:
http://www.revenue.ie/en/tax/vat/moss/index.html
The EU should do this with corporation tax, decide a tax and hand 12 percent to the EU and 12 percent to the country of "domicile".
Or maybe a pay cut at Apple?
And oh, Apple will sell less, but not 7 times less, so yes, the UK will have its fair share.
Or maybe a pay cut at Apple?
And oh, Apple will sell less, but not 7 times less, so yes, the UK will have its fair share.
Apple might, as people pointed out take the hit. Or they can pass it on to the developer. As far as i know Apple has to charge VAT on UK sourced development sold in the UK - and similar in other countries. The dev takes the hit.