Google’s Digital Service Tax

A quick update in regards to an email you’ll likely have received from Google recently, in regards to the taxes you pay on your Google Ads spend. If you missed this update then this article will hopefully fill you in on the changes, and if you’re already aware you can skip to the end where I have some short advice on what to do in preparation.

From November 1st 2020, advertisers in the UK will be charged an extra 2% on their media as Google begins passing on the new Digital Services Taxes (DST) that they are being charged (this also impacts ads running in Austria and Turkey at an additional 5%). This fee will be in addition to any sales taxes you currently pay such as VAT and will be shown on your invoice from Google as a separate line item.

What’s changing

The UK’s DST has been in the works for a couple of years and was announced in March. The tax is aimed at collecting revenues from digital companies with at least £500 million in global revenue and £25 million in U.K. revenue. Most notably this includes Google, Amazon and Facebook.

Amazon previously announced they’d be passing on the 2% tax to users starting September 1st 2020, however, there’s currently no news on whether Facebook plans to do the same in the UK. Based on how the others have gone, I would be surprised if they didn’t follow suit later on in the year (they’ve only announced passing on a 6% tax in Malaysia so far).

What you can do now

Unfortunately, there’s not much any of us can do other than prepare for the change in costs. At this point, it’s important to note that this tax will be added in after your account budget is spent, so if you foresee this impacting how much you will have available to spend on advertising, be sure to re-calculate your monthly budgets.

If you’re targeting international markets then there is a chance your ads may be appearing in Austria and Turkey so will incur additional costs again. If not essential, you should be looking at excluding those two markets from all campaigns.

If you have any questions on the above, please reach out and we can have a chat.

Marcus

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