George Osborne’s latest budget could spell an end to 99p song downloads by closing a tax loophole that meant consumers were paying VAT at very low foreign rates on online purchases of books, music and apps.
The chancellor will bring in new laws making sure that internet downloads are taxed in the country where they are purchased, meaning web firms such as Amazon and Apple will have to charge the UK’s 20% rate of VAT. At the moment they are allowed to sell digital downloads through countries such as Luxembourg, where the tax rate is as low as 3%.
Given that intra-EU VAT rules are a matter of EU law I’m not certain that Osborne has the power to decide this unilaterally.
However, rolling around at the back of my mind is the thought that the EU had already decided to change this. Anyone know?