"As of July 1, Meta is introducing what it's calling "location fees" to pay for the current digital services tax (DST) and other similar location-based fees the company faces in certain European countries. Until then, Meta will continue to absorb and pay those fees, as it is legally liable for the tax."
"For instance, if an advertiser spent $100 on ads to reach an audience in Austria (which currently requires a 5% fee), they will be charged $100 for the ad delivery, plus $5 for the location fee. So the total charge becomes $105 for those ads. And any applicable VAT will be added on top of the new $105 charge."
"Rimzan Faiz, client success manager, Meta at RoarADX (part of mar-tech venture platform Roar Global) said that for small brands or startups, the additional fee is a big hit. "They now have to bear this additional cost to target in those locations, which could be their core markets and might not be feasible," he said."
Meta is introducing location fees to pass digital services tax (DST) costs to advertisers in certain European countries beginning July 1. Individual European states have implemented their own digital services taxes targeting large tech companies generating revenue from users in their jurisdictions. The location fees vary by country: 5% in Austria and Turkey, 3% in France, Italy and Spain, and 2% in the U.K. These fees are calculated as a percentage of ad costs, with VAT applied on top. For example, a $100 ad spend in Austria incurs an additional $5 fee, totaling $105 before VAT. Meta previously absorbed these costs as the legally liable party. Marketers express concern that these additional expenses, particularly for small brands and startups, may make targeting certain core markets economically unfeasible.
Read at Digiday
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