Meta Platforms will add “location fees” to ad buys
targeting users in six countries. This is not based on the advertiser's billing address or ad account country.
The new rule that passes on
costs of Europe's digital services taxes (DST) to advertisers takes effect in May with full billing on July 1. Fees will match each country’s digital services tax rate such as 3% for France,
Italy and Spain; 5% for Austria and Turkey; and 2% for the U.K.
DSTs are what is known as "
turnover taxes applied to gross revenue." Companies with low profit margins in specific regions say they would face an extremely high effective tax rate if they
absorbed these costs.
Meta emailed advertisers to inform them of the fees, which apply to digital ads served in countries even when the advertiser is not based there.
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“If you deliver $100 in ads to Italy, where there is a 3% location fee, you
will be charged $100 (ad delivery), plus $3 (location fee), for $103 total,” the company wrote in an email seen by Bloomberg. Meta declined to comment to the media outlet. “Note that any
applicable VAT will be calculated on top of the total amount.”
It's not clear if advertisers will pass on the tax to consumers.
Meta owns social networks Facebook and Instagram and messaging service WhatsApp. The
email also explained how the company had absorbed the fees until now. Google and Amazon separately charge similar fees.
Google began adding these as separate line items on monthly invoices in early November 2020 for the U.K. and Austria.Amazon began charging Regulatory
Advertising Fees to advertisers in August 2024 to offset government-imposed DST.
Meta's fees to advertisers will be added on top of the campaign budget. They are not deducted from it, meaning that the total bill will exceed Ads Manager spend.
Applicable local Value Added Tax (VAT) will be applied to the total cost, so it will look
like ad spend plus location fee, according to the company's documents.