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I heard someone report that a $99 iPad app actually cost $120 as UK VAT was applied... I'm aware that UK/EU sellers would involve VAT but the company in question is based in the US.

Should local taxes apply in this case, or only if they have an EU/UK subsidiary company?

I don't recall ever paying additional taxes on an app purchase in the UK.

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    Taxation is always complicated but in general in EU if company exceeds specific annual sales revenue it becomes VAT taxable. It applies also to companies outside of EU country which selling to said country. In this case seller adds tax based on buyer residency and transfers it to the state. Aug 5 at 9:26
  • @AivarPaalberg That is only true for digital services and not physical goods (I don't know about other services e.g. accounting)
    – mmmmmm
    Aug 5 at 9:57
  • As I stated - it’s complicated. There are EU directives and laws of EU member states. There are differences depending whether parties are from the same country, different EU countries or one from EU country and another outside of it. Additionally, seller may opt to collect taxes itself, delegate it to logistics company or wholly to the buyer. But nevertheless VAT applies to physical goods as well. Aug 5 at 16:00
  • FWIW, here's an interesting history of the VAT. In summary: it has increased from 10% in 1973 to 20% today. I'm sure you can feel and see the improvements made by the Govt as a result.
    – Seamus
    Aug 6 at 5:09

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Local taxes do and are applied as the purchaser is in the UK.

You should look at the invoice Apple gives for an App Store purchase.

It includes an item giving the VAT amount of 20% in the UK. and ends with

Copyright © 2022 Apple Distribution International Ltd.

All rights reserved

Hollyhill Industrial Estate, Hollyhill, Cork, Ireland. VAT NO. GB117223643

A bit more research and memory says that all digital downloads by UK customers have to charge VAT.

See the UK Government's VAT rules for supplies of digital services to consumers

Many third party payment providers do provide the service of charging and collecting VAT (e.g. from my recent purchases Paddle, Fastspring) However looking at my invoices US companies that have their own payments portal seem mainly not to charge, I think they are breaking the law but then again how would UK or EU tax authorities be able to make them pay.

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  • ah, so because it's Apple selling the app it's about their tax status, not the app-owner
    – Mr. Boy
    Aug 5 at 9:28
  • Actually no I think all software purchased in the EU/UK has to pay VAT even though many don't follow the law but the large diustibuters and third party payments do follow this.
    – mmmmmm
    Aug 5 at 9:55
  • Just to make it even more complicated, Ireland is not in the UK & the UK is not in the EU ;)
    – Tetsujin
    Aug 5 at 11:51
  • @Tetsujin True but currently many things still work as if UK was in the EU and to add to complexity many don't. In this case that doesn't matter too much as a UK download will require VAT whereever the company is.
    – mmmmmm
    Aug 5 at 11:53
  • A dismal practice IMHO... I wonder when they will begin taxing downloads from GitHub... or apps you write yourself?
    – Seamus
    Aug 6 at 4:49

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