Google lifts 2015 EU VAT burden on apps, games and streaming video providers under Apple pressure

Thu 27th Nov 2014

Google has made a dramatic change to its trading terms with providers of Apps, online gaming, video streaming and music through its Google Play store. The change will mean Google will become the legal seller of record to consumers. This will make it liable to charge and report VAT under the new cumbersome rules being imposed by the EU from 1 January 2015. Until now, Google had been merely acting as an agent for the providers, taking a commission from each sale.

Apple iTunes has always acted as the seller for its developers.  Read more about 2015 B2C electronic VAT services MOSS changes.

2015 EU VAT changes on electronic services

Google’s move comes ahead of the 1 January 2015 changes to the VAT rules on the sale to consumers of cross-border electronic, broadcasting and telecoms services, collectively known as Digital Services. Under the new regime, instead of charging the VAT rate of the country where the seller is located, providers must instead identify the country of location of each customer and charge the appropriate VAT rate in that location. This will create a big administrative headache since there are 28 EU member states operating over 70 VAT rates. In addition, providers will have to report and remit the VAT collected through new online portals, known as Mini One-Stop-Shop (MOSS) portals. You can review 2015 EU VAT rates here.

The changes are being introduced to bring electronic services into line with all other EU supplies of goods and services. The objective of these changes by the European Commission is to push tax compliance towards low-cost automation, and reduce the requirement to hire tax advisers.

Google follows Apple’s EU VAT policy

Google’s shift reflects the concerns of small and medium sized developers who have been overwhelmed by the new EU VAT regulations – not least having determine the location of all of their customers and charge the appropriate VAT rate. But it also comes from competitive pressure from Apple who have always taken care of VAT reporting for their sellers.