Netflix, Inc. (NFLX) To Increase Subscription Cost in Europe To Cover VAT?


In an article on Forbes, Joe Harpaz said that streaming companies like Netflix, Inc. (NASDAQ:NFLX) are changing the trends of content viewership around the world and cable companies are suffering because of the standalone streaming service. As a result, there is a massive revamp in the taxation policies. Harpaz said that Value Added Tax in Europe is experiencing a major change. For years, the tax was applied on the basis of service providers but because of global expansion of Netflix, Inc. (NASDAQ:NFLX) like streaming service and mobile platforms, the taxation will be done according to service provider and customers location.

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The author of the source quoted Anil Kuruvilla, senior manager for tax research at Thomson Reuters, who thinks that taxes can be covered from additional costs on customers. It is now a matter of time that Netflix, Inc. (NASDAQ:NFLX) will start increasing cost of its subscription from its European customers. For example, it could cost 10% more from its Danish customers. It can also opt for another model in which, the users will have to give extra money to watch specific seasons.

Location based taxation is coming in 2015 for all the Netflix, Inc. (NASDAQ:NFLX) customers. If a user has subscription of Netflix, Inc. (NASDAQ:NFLX) in Spain and he is watching Netflix season in France, the tax will be dedicated based on Spanish taxation laws and not on the French taxation laws, the source claimed. That means that mobile users of Netflix, Inc. (NASDAQ:NFLX) will be tracked based on their location in order to calculate the tax.

The source said that Netflix, Inc. (NASDAQ:NFLX) and other companies will need to devise a complete cloud-based taxation process and location tracking along with sorting out regulatory difficulties in the upcoming VAT era in 2015.

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