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Digital Content Provider To Charge VAT In 2015

Starting from 1st January 2015, anybody selling digital content will need to charge VAT at the rate of their customer's country, as opposed by their own country. According to Pollen VC, 63% of developers are unaware of the changes and 35% don't know what to do about it. To help with this, Paddle, an e-Commerce platform for digital products, has published an overview of what developers need to know about the changes to VAT in January 2015. Paddle has also published a free VAT calculator, showing the rates applying to sales of digital content from 1st January 2015 in the 28 EU member states. Developers selling exclusively through marketplaces like the iOS App Store, Mac App Store and Google Play Store should not be affected by these changes because Apple already handles VAT on behalf of its vendors and Google looks to be doing so by 1st January 2015. However, developers who sell direct to their customers will be liable for handling VAT - they will need to identify their end customer's location in order to determine the correct VAT rate to apply. There are also changes to the filing regime - instead of filing a single return in the country in which they are VAT-registered, vendors will need to submit an additional return which aggregates all sales made in other EU countries (under mini one-stop shop (MOSS) simplification regime). Otherwise, they will need to file returns in each EU country in which they sell. Paddle's e-Commerce platform makes it incredibly simple to sell digital content like apps, games, eBooks and creative resources. Developers selling with Paddle don't have to worry about VAT liability since Paddle handles it on their behalf. Paddle's SDKs for Mac and Windows give developers have an easy way to manage their trial versions, licensing, payments, analytics and more. A separate report by Wire.co said that companies such as Amazon, Microsoft, Google and Apple will no longer be able to exploit a tax loophole that lowered the cost of online purchases of apps, ebooks and music from January 2015. These companies are able to offer reduced prices by leveraging their global footprint. By basing digital content services in Luxembourg, companies have been able to benefit from the more attractive rates of VAT there -- just three percent for digital services like ebooks (although its standard rate is 15 percent). This is much cheaper than the UK's VAT rate (20 percent) and the rate in many other European markets -- generally between 15 percent and 20 percent. However, in his latest Budget, George Osborne announced that the government will change the rules of taxation to make sure that services are taxed in the country where the consumer is located. So ebooks, apps and digital music may become more expensive for consumers unless the digital retailers bear the additional cost. The relevant part of the Budget said: "As announced at Budget 2013, the government will legislate to change the rules for the taxation of intra-EU business to consumer supplies of telecommunications, broadcasting and e-services. From 1 January 2015 these services will be taxed in the Member State in which the consumer is located, ensuring these are taxed fairly and helping to protect revenue." Another digital platform that will be affected by this new tax rule is social media platform Audioboo by Audioboom Group PLC's (BOOM.L). From hundreds of thousands of users, Audioboo's subscribers have ballooned to 2.5 million while its active users per month are now pegged at 13 million. Audioboom's chief executive officer Rob Proctor said in a recent interview that the London-based public company recently opened new offices in New York and Australia. Things are also looking up in the financial front with stockbroker companies like UK's Arden Partners recommending a Buy rating for the stock. Audioboom is a SaaS based digital social media audio platform enabling the creation, broadcast and consumption of audio across multiple global media outlets. Audioboom works with some of the biggest names in broadcasting across sport, entertainment and current affairs to bring their content to millions of listeners worldwide via Facebook, Twitter and other media platforms. The technology allows partners to embed playlists onto their sites and apps, use our mobile apps and functionality as listen again players and re- syndicate their content around the web. Audioboom also allows the monetisation of audio via the dynamic insertion of pre and post roll advertising into content as a user is listening, allowing contemporary advertising selection, depending on content genre and geographic location of the user. Audioboom has over 1,700 content partners, including the BBC, Telegraph, Guardian, CBS, Sky Sports, Premier League, Southern Cross Austereo, Reuters, CNBC, Universal and Fox.