I recently learned that starting July 1st, Meta plans to directly charge us, the advertisers, for Europe’s digital services taxes. This change will add as much as 5% to our ad spend, which is quite a noticeable increase.
The numbers. The fees will align with each nation’s specific digital service tax rates, which means:
- France, Italy, Spain: 3%
- Austria, Turkey: 5%
- UK: 2%
How it works in practice. Meta has informed us that if I run a $100 ad targeting Italy, it’ll cost $103, excluding any VAT. This directly affects my budget considerations.
The fine print. It’s important to note these fees are based on the ad’s target location, not where I, the advertiser, am based. Thus, even if I’m in the U.S., targeting users in France means I’ll adhere to their rate.
Why I care. This upcoming change will undeniably raise costs for my European campaigns starting July 1st. With no option to avoid it, I must prepare for increased CPM and CPA benchmarks, meaning my current budget won’t go as far, and my ROAS targets might need reevaluation.
Because these adjustments are based on delivery location, even non-European companies must take note. The reach of this change is broad.
The big picture for advertisers. Meta’s not alone; both Google and Amazon have similar strategies. It’s a significant shift that demands I, and others involved in European advertising, revisit our cost models to appropriately plan for these increased expenses.
The backdrop. Digital services taxes have long been contentious between Europe and Washington, adding a layer of geopolitical complexity to the already intricate compliance issues faced by global advertisers like myself.
Dig deeper. If you’re interested in more detailed information about how Meta is addressing Europe’s digital taxes, you can find additional insights in this Bloomberg article (subscription required).
Inspired by this post on Search Engine Land.
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