Yesterday Google announced that they are imposing a 2% surcharge on their platform in the UK as of 1st November due to the Digital Services Tax.
This news comes just after Amazon announced their plan to increase sellers’ fees earlier this month in response to the tax rise brought in by the British government. The new surcharge will be applicable to ads being served in the United Kingdom, Austria and Turkey and are as detailed below:
- Ads served in the United Kingdom will see a 2% rise due to the UK Digital Services Tax
- Ads served in Turkey will see an additional 5% Regulatory Operating Cost
- Ads served in Austria will see a 5% rise due to the Austrian Digital Services Tax
According to City AM, the UK’s digital tax is intended to be a temporary measure until a global agreement is reached, resulting in a 2% tax charge for companies operating search engines, social media engines and online marketplaces with revenues above £500m for the meantime – but what does that mean for you?
First things first: as of Sunday 1st November 2020, Google will begin adding the applicable charge/charges to your invoice. You’ll be able to see these fees on your invoice as a separate line per applicable country, as well as within the “Transactions” section of your Google Ads account. It’s important that you remember that any taxes – e.g. sales tax, VAT, GST or QST – that apply in your country may also apply to the new fees.
Those who are paying through monthly invoicing or automatic payments will see their fees added in addition to the agreed account budget. So let’s say that your account’s budget is £100 and you accrue £5 in UK Digital Services Tax, you’ll be billed £105 plus any applicable taxes.
Alternatively, if you’re paying through manual payments, the fees may be charged prior to you fully spending your payment. This means that you could be left with a balance that is automatically deducted from the following payment. Let’s say that you accumulate £5 of UK Digital Service Tax for your ads served in the UK and you make a payment of £100. This would mean that you’d have an available balance of £95.
As always, we are on hand to discuss any concerns you may have regarding your account. Should you have any questions about the above information, please don’t hesitate to get in touch, or alternatively you can read Google’s article about country-specific charges.
After holding several positions within the retail industry for brands such as Leekes, Gap and River Island, Lucy brings both commercial and marketing experience to the AdFeeder team.