While the Holiday season is often associated with deals and discounts, it seems like its end could bring a little discomfort to Windows Phone users in Europe. Starting January next year Microsoft is changing the European VAT rates that are charged on apps moving from a flat 15% for every country to country specific rates. Now, none of the individual countries have rates less than 15% and most of them even have it higher than 20%.
While the ultimate decision to change the prices of their apps will rest with the developers, with their margins hit, they might have no choice but to raise the prices of their apps (or the prices of in-app purchases). Microsoft has gently hinted developers stating, “you may want to start thinking about how this change could impact your EU pricing decisions.”
The move comes as a part of some European governments’ decision to avoid tax evasion by big enterprises who often set bases in countries with low tax regimes while reaping profits from countries with a higher tax.