It is only March, but thanks to the snakes and ladders nature of consumer legislation, 2015 has already witnessed several updates in the European digital rights arena which are set to have a major impact on consumers and developers in the online retail space in particular.
14-day returns on iTunes store purchases
In an effort to comply with a new EU Regulation which requires online retailers to offer a ‘right of cancellation’ as of June 2014, Apple has introduced a returns policy which allows European users of the iTunes store to return goods without offering a reason for up to 14 days after their purchase.
Apple has chosen to honour refund requests even for software which has been used within the 14 day period. Initially, this created fears that a de facto ‘trial period’ was in operation which would lead to an inevitable increase in the return of software. Commentators even questioned whether the practice might open up new ways to manipulate the music charts.
It has recently become clear, however, that users who attempt to abuse Apple’s new policy will have their refund privileges revoked if they apply for too many refunds in respect of used software within a short period of time.
The Regulation provides that companies can refuse the right of withdrawal once the “performance” of digital content has begun. This means that companies who offer refunds for used software still have the option to retreat from that policy if consumers abuse it.
Another development initiated by the EU has been the implementation of the ‘Mini One Stop Shop’ (MOSS), an optional scheme which allows Irish tech firms to submit their VAT returns online in one country, rather than several. In Ireland, this is operated via the Revenue Online Service (ROS).
VAT on digital goods levied locally
Previously, VAT on digital products such as ebooks, music downloads and apps was charged in the country of the supplier. Since 1 January 2015, however, VAT is payable in the country where the digital product is bought. For example, if an Irish customer purchases an e-book from a Luxembourg supplier, the e-book is now subject to VAT in Ireland (the place where the customer is located) and 23% is added to the cost. Under the old rules, this e-book would have been subject to Luxembourg VAT (as this is where the supplier is located) and only 3% would have been added to the cost. This represents an increase of 20% in the final cost to the Irish consumer.
Price hikes have already been initiated, with apps on the Irish iTunes store, for example, now starting at €0.99 as opposed to €0.89.
Concerns have been raised that Irish SMEs could now, in theory, have to charge and account for up to 75 different VAT rates in 28 countries. Yet while the change will hit online retailers, and certainly small businesses, it has actually been broadly welcomed by Irish companies. The VAT returns process is largely automated through ROS, and businesses should benefit from no longer having to compete with firms in member states such as Luxembourg whose lower rate of VAT gave them an advantage in the past.