The decision follows a chance in VAT laws in the region

Dec 2, 2014 10:22 GMT  ·  By

It looks like the recent EU Parliament non-binding measure to split Google’s search business into a separate company is not the only one that the company has been hit with.

Even though the non-binding resolution that was successfully voted late last month is not mandatory, it’s definitely another strong signal for Google that Europe is trying to limit its monopoly over the search market.

According to the European Parliament, its decision to pass the non-binding resolution was based on its attempts to ensure “competitive conditions within the digital single market.”

The EU Parliament’s ultimate goal would be to break up the search companies that are “shameless” when it comes to promoting their own non-search service through their search businesses.

Still, there’s a long way from passing a non-binding resolution and actually force Google into splitting its search business from other non-search services.

But things do not seem to stop here. Beginning January 1, 2015, Google will start charging developers Value-Add Tax (VAT) due to a change in laws in the European Union.

According to Google, starting early next year, the company “will be responsible for determining, charging, and remitting VAT for all Google Play Store digital content purchases for EU customers. Google will send VAT for EU customers’ digital content purchases to the appropriate authority.”

This means that apps and games in Google Play store will be automatically applied this tax value, so developers won’t have to change anything regarding the pricing of their products.

“Once the change is in place, you won’t need to calculate and send VAT separately for EU customers. Even if you’re not located in the EU, this change in VAT laws will still apply.”

Keep in mind, though, that in some countries prices that are shown in the Google Play Store must equal the amount paid at time of payment. Basically, this means that all taxes (including VAT) should be included in the price.

For the time being, the tax-inclusive pricing is already supported by Google in the following countries: Australia, Austria, Belgium, Brazil, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Israel, Japan, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, and United Kingdom.

In some countries, tax-inclusive pricing will be supported starting next year

Beginning January 1, 2015, additional countries will be included on the list of regions where tax-inclusive pricing is supported, such as Bulgaria, Croatia, Cyprus, Hungary, Latvia, Lithuania, Malta and Romania.

Google also confirms that in countries where devs have to remit VAT to the tax authority in that particular country, it will pass on the entire tax amount collected directly to the dev, and “calculate the 30% transaction fee off the net price of the product.”

It’s also worth mentioning that prices may vary by country, so depending on the payment method introduced, you might see different prices than those in the region you’re actually living in or visiting.

For example, it you’re visiting the UK Google Play Store, but add a US credit card as payment method, then you will see the UK VAT applied to prices, but users will pay US tax.

Last but not least, devs that are selling their apps and games in countries other than those mentioned earlier are fully responsible for determining the applicable tax rate for the monetization of their own products.

As soon as devs in these countries set the tax rate, it will be automatically applied when the buyer tries to check out from Google Play Store.

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