EU downloads Levy
Tax added to e-sales of U.S. digital goods
Under the new law, U.S. companies charge European customers value-added tax (VAT) on virtual goods including videos, music, software and computer games bought online, closing a loophole that allowed Stateside companies to undercut Euro rivals.
The tax, which comes into force in July, also will apply to broadcasting and Internet access subscriptions sold electronically. The rate of tax will vary across member states, from 15% in Luxembourg to 25% in Sweden.
Stephen Higgnet, a tax and e-commerce lawyer with London-based Olswang, told Daily Variety, "The law will see U.S. companies selling audio-visual material online uniquely disadvantaged. They will have to restructure their tax affairs to compete in the European market. It is also hard to see how the EU can police such an awkward taxation policy."
U.S. Deputy Treasury Secretary Kenneth Dam has spoken out strongly against the EU's "unilateral measures," condemning the risk to e-commerce, U.S. businesses and online service providers. The U.S. may lodge a complaint with the World Trade Organization.
The European Commission has defended the law, saying it will not affect digital sales to business customers, which represent around 90% of the market.
