The ever vigilant Swedish tax authorities are reaching into the pockets of Swedish app developers with a 25% value added tax, regardless of where the final sale of the product takes place. Starting this month, apps sold in the EU through third party distributors, such as Facebook or Apple’s App Store, will be taxed twice – once in Sweden and a second time at the point of sale. Swedish app developers are understandably unhappy, as the double taxation puts them under a severe competitive disadvantage in the apps market.
Third party distributors typically pay the VAT at the point of sale, as is required by EU legislation, but the Swedish tax authorities argue that the app developers are, in fact, the sellers and should therefore be obliged to pay the Swedish VAT. Per Strömbäck, spokesperson for the Swedish Games Industry, commented the following on Sveriges Radio.
We want Anders Borg (minister for finance) to put his foot down and decide that this should be an exception and that no Swedish VAT will be charged until the matter is investigated at EU level. Why should Swedish companies get hit?
Some might say that the actions of the Swedish tax authorities are in direct violation of EU regulations, but is it a clear cut case? Have app developers in other EU countries come across a double VAT? According to the The Local, the European Union plans to introduce new directives in 2015 regarding the taxation of electronic services. How they will affect app developers in the EU area remains to be seen.