Digital Tax Increase to Take Effect in Europe
The changes to Europe's so-called value-added tax, or VAT - a tax on goods and services - are part of a continuing push by lawmakers to tax the region's digital economy more heavily.
Many of the world's largest tech companies selling digital products, like Amazon and Microsoft, now house their European digital businesses in Luxembourg, where the VAT rate is as low as 3% for e-book purchases. In contrast, countries like Britain charge companies a 20% sales tax for selling e-books.
"Luxembourg is going to lose an enormous amount of revenue," said Karen Robb, a tax partner at the accounting firm Grant Thornton in London. "There will be fewer compelling tax reasons for companies to stay in Luxembourg."
Europe's efforts follow similar attempts in the United States to pass an Internet sales tax that would force online retailers to collect sales taxes for state and local governments, even if the companies do not have a physical presence in the state.
"Tech developments are happening very quickly," said Gijsbert Bulk, a tax partner at the accounting firm Ernst & Young in Amsterdam. "Politicians are trying to find a way to tax the digital economy."
The unelected bureaucrats at the EU think low-tax nations like Luxembourg should be forced to surrender their sovereignty to help high-tax nations like France and Germany prop up their inefficient welfare states. More on this here.