Most US publishers are unaware that they need to be collecting the value added tax (VAT) when selling online subscriptions to UK and EU audiences. That may be because printed periodicals and newspapers have been (and still are) exempt from VAT, but digital goods are not — that includes online and digital subscriptions.For those of you unfamiliar with VAT, it functions a bit like a sales, where goods and services are taxed at a percentage rate (for the UK, it’s 20%; rates in the EU vary by member country). However, unlike a sales tax, each business in the supply chain needs to collect and remit VAT to the government.So, for example, if a US-based company delivers a mobile app to a UK customer, they will need to collect the VAT (which is 20%). But if they sell the same app through iTunes to a UK customer, Apple will also need to collect a VAT, and will also take a 30% commission.Thus, VAT collection can really eat into profits. It also affects pricing, particularly on bundled subscription plans, since print subscriptions are not subjected to VAT but digital subscriptions are.Sarah Aldridge of Dennis Publishing in the UK wrote and explained how they address this taxation inconsistency:“We calculate VAT as 20% of the bundle increment price. For example on PC Pro an annual print subscription is £49.99, we charge an extra £10 for digital to make a bundle subscription £59.99. We calculate the 20% VAT on the £10 [which is an extra £2].”To learn more about VAT for UK and EU subscription sales, check out the Laws & Regulations briefing on Subscription Site Insider. You’ll also discover why you may need alternate payment methods and how marketing preferences differ.