BRUSSELS – Crowdfunding campaigns could soon lose some of their allure, as the EU looks at charging VAT on such investments.
The European Commission is currently weighting up the feasibility of levying VAT on the goods provided to participants in crowd funding campaigns.
Crowd funding facilities, such as Kickstarter, have gained immense popularity in recent years, with a number of well-known projects, such as Pebble watches and Oculus Rift gaining initial funding from such sources.
Currently backers to crowd funding projects often receive goods or discounts in exchange for their funding into a campaign.
The European Commission is now looking at the possibility of forcing the backers to pay VAT on the value of the goods they receive.
Under current VAT rules, backers could see VAT charged at a rate of as much as 23 percent, based on the country in which they reside.
The proposal of levying VAT on such campaigns has already drawn significant criticisms from some analyst, claiming that such a move will slow down the number of projects receiving finding through crowd funding sources.
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