Stop paying VAT on digital sales when earnings are under £81k
You can't currently avoid it. The reason the legislation was introduced was to prevent the big-name developers from setting up shop in a low-VAT country and selling apps to citizens of EU countries that would normally be paying a much higher VAT.  You need to register for VAT and file quarterly nil-returns so that you get that money back. It's a hassle, but probably worth it just to recoup those funds.  From an article in Kotaku from late 2014: You see, in the UK we have a rather sensible exemption on VAT for   businesses that earn under £81,000 a year. This allows people to run   small businesses - like making and selling games in your spare time,   for instance - without the administrative nightmare of registering as   a business and paying VAT on sales. Unfortunately, none of the other   EU member states had an exemption like this, so when the new   legislation was being put together, there was no exemption factored   in. That means that if someone makes even £1 from selling something   digital to another person in another EU country, they now have to be   VAT registered in the UK AND they have to pay tax on that sale at   whatever rate the buyer’s country of residence has set. That could be   25% in Sweden, 21% in the Netherlands, and so on. [...] There’s one piece of good news: even though anyone who sells digital   stuff now has to be VAT-registered in the UK, they don’t actually have   to pay VAT on sales to people in the UK if they earn less than £81,000   from it. (This concession was achieved earlier this month after   extensive lobbying.) But they’ll still have to submit what’s called a   “nil-return”, which is essentially a tax return with nothing on it,   every quarter in order to use the VAT MOSS service. That’s a lot of   paperwork. Obviously Brexit may have a significant impact on all this, so the rules might change.  This is the official Google Link to how they've implemented this and for which countries it affects: https://support.google.com/googleplay/android-developer/answer/138000?hl=en  Due to VAT laws in the European Union (EU), Google is responsible for   determining, charging, and remitting VAT for all Google Play Store   digital content purchases by EU customers. Google will send VAT for EU   customers' digital content purchases to the appropriate authority. You don't need to calculate and send VAT separately for EU customers.   Even if you're not located in the EU, this change in VAT laws will   still apply.
Note: I am not a lawyer. This is my personal opinion and interpretation. First, your source is European Law, which obviously doesn't apply outside of the EU. The EU cannot make laws that bind entities in other countries; so you cannot claim that the VAT was needed to be mentioned. Second, if you owe something, you owe it; it doesn't matter if it was forgotten to be mentioned. At best, you can say that under those circumstances you don't want the software anymore, and i would assume you can send it back and get your money back (minus a fee for having it used for a while...) - this gets quite difficult to calculate clearly, so it's probably not a good avenue to follow for you. As the company has to send the VAT to your country (they will not be allowed to keep a dime of it, and have to bear the complete cost for the handling), it is a debt you have to your government; they are just the entity responsible for collecting it. Still, if you just ignore them, they will probably suck it up, and your government will also not do a thing to you. If they only have your email address, they have no way of knowing if you even still have/use this address; for all they know, it could be you never got it. They also cannot simply charge your card, as they probably don't have the card data any more (they are not supposed to keep it after the transaction is complete, and they thought it was complete at the time). All in all, you should be safe to ignore it. It's between you and your god/consciousness, if you feel obliged to pay it, as technically you owe it. Simply if your stock is still rising in price keep it. If it is falling in price sell it and pay off your mortgage. To know when to do this is very easy. If it is currently rising you can put a trailing stop loss on it and sell it when it drops and hits your stop loss. A second easy method is to draw an uptrend line under the increasing price and then sell when the price drops down below the uptrend line, as per the chart below.  This will enable you to capture the bulk of the price movement upward and sell before the price drops too far down. You can then use the profits (after tax) to pay down your mortgage. Of course if the price is currently in a downtrend sell it ASAP. So, my econ 101 class taught me that a business operating at a point where revenue equals cost is successful. Failing is when costs are too high, and above that is profit.  As a society, we've chose to tax profits, not revenue.  The fact that many of Amazon's vendors (FedEx, ups, companies they buy hardware from, etc) are profitable and paying taxes on profits they wouldn't have without Amazon says something about the overall value they bring to the economy. Also, states collect sales tax on good sold. EU countries collect VAT. And all countries collect capital gains when shares change hands. The fact that there's low turnover in shares isn't really a problem. If you are an UK citizen and resident, then no. If you are an EU resident or non-EU resident then yes, but there are conditions. Source You can sometimes get VAT refunds on goods bought in the UK if you: You can’t get a VAT refund for: As bringing a laptop PCSpecialist is an online sale(I bought my desktop from them), I don't think you can claim VAT. Several things to consider: I don't see why your friend should pay any tax. It's not his income at all. And I am not sure where your income should be taxed in this scenario. Is he declaring it as his income somehow? The bank won't do it for him, the transfer as such should be transparent. On the other hand, money transiting on his account could in principle look suspicious, although €300 is unlikely to raise alarm. What I do know is that if you do pay taxes, 20% is not particularly high as such. There are four brackets of income tax (and tax-like contributions to the pension system) in the Netherlands, between 36.55% and 52%. Rates for personal taxes in the Netherlands are simply way higher than what you might be used to in Eastern Europe or what has been mentioned in comments.  In fact, if anything, 20% seems too low. I am at a loss guessing what it could correspond to, you could ask your friend how he came to that number. There various tax discounts (kortingen) and deductions (aftreken) that apply to freelance work (and some that apply to all incomes). €3000 yearly is quite low and would probably not be taxed at all if you were recently registered as freelance (zzp'er) in the Netherlands and had no other sources of income. But on the other hand, if your money is treated as being part of your friend's income, these wouldn't apply, as he is probably already benefiting from them. There are special rules for copyright fees. Not sure this is necessarily 100% kosher but I have met people who got paid that way for articles they wrote in trade publications. However, if you are employed by a company that exists in a tax haven and your services are provided to an employer by that tax haven company, it is the tax haven company that gets paid, not you. Under various schemes that company need not pay you at all. For example it may make you a loan which is not taxed (ie you don't pay tax on a loan, just as you don't pay tax on the money lent you by a mortgage company). You are bound by the terms of the loan agreement to repay that loan at a rate that the company finds acceptable. Indeed the company may find eventually that it is simply convenient to write off the loan as unrecoverable. if the owners/officers of he company write off your loans, how much tax will you have paid on the money you have had as   loans? The taxman can of course state that this was simply set up to avoid tax (which is illegal) so you should have a balancing scheme to show that that the loans were taken to supplement income,just as one might take a bank loan / mortgage, not replace it entirely as a tax scam. Hiring tax counsel to provide this adequate proof to HMRC has a price.  Frequently this kind of loophole exists because the number of people using it were sufficiently low not to warrant policing ( if the policing costs more than the tax recovered, then it is more efficient to ignore it) or because at some stage the scheme has been perfectly legal (as in the old offshore'education' trust recommended by the government a few decades ago). When Gordon Brown set out a 75% tax rate (for his possibly ideological reasons rather than financially based ones)for those who had these accounts , he encountered opposition from MPs who were going to be caught up paying high tax bills for what was effctively retrospective taxation, so there was a built in 'loophole' to allow the funds to be returned without undue penalty.  If you think that is morally wrong, consider what the response would be if a future Chancellor was to declare all IAs the work of the devil and claim that retrospective tax would need to be paid on all ISA transactions over the last few decades.eg: tot up all the dividends and capital gains made on an ISA in any year and pay 40% tax on all of them, even if that took the ISA into negative territory because the value today was low/ underperfoming. Yet this has been sggested as a way of filling in the hole in the budget on the grounds that anyone with an ISA can be represented as 'rich' to a selected party of voters. "You should ask your employer to issue an updated payslip showing the correct gross salary, deductions and net salary, and then repay to the employer the difference between the net salary in your old (wrong) pay slip and the new (correct) one. You should also get them to confirm that they have corrected any information they sent HMRC. At the end of the tax year, when you get a P60 showing your salary for the year, make sure that it is consistent with the corrected salary amount, and check that the tax it shows as being deducted is also correct for that gross salary for the year. If you are still employed by them then you could just ask them to withhold the overpayment in your next salary payment, at which point the income tax would sort itself out because PAYE is calculated based on cumulative totals. If the overpayment had happened at the end of the tax year (March) then there'd be some risk of it messing up your tax payments. In some cases it's also possible that withholding from the next salary payment could make a difference to the total national insurance you end up paying - broadly, if you earn below the ""Primary Threshold"" of £8164/year, you might lose out. If you earn close to the ""Upper Earnings Limit"" of £45000/year, you could end up gaining." "Legally: gods know. I would strongly recommend asking the Law asre of Stack Exchange to advise on that. Practically: What's the worst that happens? They audit, you say ""Yeah, I could probably have claimed these deductions but I didn't want to; is that a problem?"", they decide and either nothing happens or they issue you the unwanted refunnd. They aren't going to fine you for overpaying. Unless this would expose something criminal -- or you're a public figure and it would be embarassing -- this strikes me as falling firmly within the bounds of ""no harm, no foul""."