This is the best solution - the prices without VAT will be different in every country, but the prices with VAT will be the same. For example, a $5,99 game will still cost $5,99 in evey country (VAT included).

I wonder how this will affect games with regional pricing. After all, didn't some publishers say that the price was more expensive thanks to the VAT?

bump

This.

Wow, ignorant me always thought Germany had a pretty high VAT compared to others ... I stand corrected. :(


. I don't even see how this would ease life for businesses. Doesn't it make more complicated for them, if they need to have different prices for each and every country and know about each country's own VAT, instead of just applying the one from the country they're based in? Or do they mean it makes life easier for those businesses that suffer from the competition of other businesses that can offer more attractive prices than them?

I cannot doubt It will make it easier for tax consutants to charge considerable amounts for their services...

Dang, wrong line of work again! ;-P

Not only that it actually makes it harder for any international business, but it doesn't make any sense either. I mean, it's the business getting the money and paying the VAT on the value it, the business, is adding to the product, so why would the tax vary according to the customer's location?

Now imagine somebody living close to the border, taking a laptop or tablet, walking to the other side and suddenly the taxes change. What sense does that make?

Because the EU member states have observed that citizens react to their tax decisions. This is true for physical goods . Belgians f.i. react to excises on bottled water ( 1.5l bottle = 1 €) by going accross the border and buying their water in France (1.5l bottle = 35 cts ) . But the negative effect from that tax mobility is limited by distance / cost of transportation. But for online products, there is no such limit. Moreover, large online platforms usually have chosen countries with lower taxes. The new system aims, as I understand it , to share the tax cake of online sales between EU countries. It is also clear that some countries aim at increasing VAT rate to compensate for the lack of growth .

That seems to always be a given, but I'm still wondering what are those finance people smoking to come up with the idea that higher taxes and therefore prices make people afford more and/or better things, to allow for the increase in product quantity and/or quality required for growth...

cant say i am excited about this one bit :/

Sounds like a nightmare for GoG. Given that they'll have to use IP location to apply the correct rate of VAT (as it looks like these regs apply to supply of video games online), they will have run into massive compliance problems when it comes to their VAT returns (I can imagine the number of people here logging in via a VPN or proxy based elsewhere). However, on reflection, the Cypriot government doesn't strike me as one to care too much.

I suppose from a consumer standpoint, there isn't much reason to lie about your physical location as GoG is likely to still charge the same amount despite the location (at least for the time being - it would be a slap in the face should they abandon their pricing strategy so soon after launching it).

All I can say is that I sure as hell wouldn't want to be working in GoG's finance team at the moment - VAT is horrible to deal with at the best of times.

EUgh.

I agree that this may be a pain in the ass for many e-service providers, but the logic is sound. Since the financial crisis we have been fighting against banking oases that work on the same principle, ie. different taxation rates, allowing rich people to avoid paying their fair share of income back home.

Something similar can be seen in EU customs. Ever since the creation of the custom's union (about 10 years after the signing of the Treaty on the EEC which established these rules), all collected tariffs go to the Communities/EU budget.

Nevertheless, countries get to keep 25% of all tariffs as administrative costs. Now, some countries, like the Netherlands and Germany have large ports and move around a lot of cargo, meaning that those countries keep a much higher share of all collected tariffs as part of their national budgets.

The question of fairness notwithstanding, something similar can be seen in the digital market, with countries with low VAT collecting a disproportional part of all digital sales due to companies being established there. These new rules are meant to solve this issue and bring more equality to the functioning of the internal market. This was also noted by the article in the OP.