Digital tax hike could add US$1b annually to EU coffers

London

EUROPE'S tax showdown could be headed straight to people's wallets. With the new year, a change in fiscal rules in the European Union (EU) is increasing the tax on many purchases of digital content such as e-books and smartphone applications.

Under the new rules, first approved in 2008, the tax rate on digital services such as cloud storage and movie streaming will be determined by where consumers live, and not where the company selling the product has its European headquarters.