In a clause buried in last week’s , it was announced that from 1 January 2015, digital services will be taxed in the member state in which the consumer is located to ensure they are "taxed fairly and helping to protect revenue".
Companies including Apple and Amazon sell virtual goods via offices in Luxembourg in order to take advantage of the country’s 3% tax rate, which compares favourably to the 20% VAT rate in Britain.
However, the Government is closing the loophole to change rules for the taxation of intra-EU business to "consumer supplies of telecommunications, broadcasting and e-services.
Many are if companies such as Apple and Amazon decide to pass on the additional tax rate to the consumer.
The crackdown by Osborne is likely to please traditional retailers who have between high-street retailers and online rivals such as Amazon.
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