January 1, 2015: VAT changes on the App Store: prices too?

Article published on December 18, edited as a reminder!

Yesterday we talked about the impact of the economy
on the sale of consumer products with the particular case of Russia. There
fall of the Rublethese last few days having
led to the outright closure of the Apple Online Store.
Today, it is another economic subject which will have impacts on
app developers, but also on us consumers.

Indeed, atJanuary 1, 2015, Apple will have to comply with
a new European rule concerning VAT. This must therefore be
paid not according to the country where the person who invoices is domiciled
(Luxembourg for itunes), but in functionfrom the country of
the buyer.

Result, the VAT which was currently 15%, rate in force at
Luxembourg, will pass for French buyers at the national rate of
20 %:

This applies to all countries that are part of the European Union,
Swiss residents for example will not be affected and will retain their own
VAT rate of 8%.

This change of VAT domiciliation is part of the
tax policies aimed at limiting the optimizations highlighted and
criticized in recent months.

In practice, developers will touchthe price of the application
less local VAT and Apple's usual 30% share. That
raises the question of what Apple will choose to apply on January 1st. Two
solutions are indeed possible.

Two possibilities for Apple

It is possible tomaintain current price thresholds
(0.89 euros, 0.99 euros, 1.79, etc…), but this then impliesa
drop in net income for the developerat the same selling price. HAS
It is then up to the developer to choose (or not) to move to another slice
to maintain a similar or higher income (because it depends on the thresholds
App Store). Problem: the price chosen for an application in
threshold term is the same worldwide, it is not possible to
choose a low price for Switzerland for example, and higher for
France.

Second possibility:Apple changes price thresholds for
impacted countriesby an increase in VAT. For example, for the
France, by increasing the minimum price of paid apps from 0.89 euros to 0.95
euros. This would correspond to the change that had been made insome
country in 2012when we went from 0.79 to 0.89 euros. Corollary, these
prices would then lose their "psychological" aspect of 1 cent below the
upper ten (0.89 and 0.99 in particular).

We can imagine that it is this second solution which will be chosen by
Apple.

Anyway, one way or another, the price of the apps on the App
Store should increase on January 1st!