Normally, European countries only charge VAT on earnings where VAT is charged. However, some European countries are considering charging VAT to publishers on their AdSense earnings, meaning some publishers could be paying up to 83% tax on their AdSense earnings. The same would also apply to affiliate earnings as well. And from a business perspective, losing 83% of your AdSense income to tax would not make it worthwhile for many publishers to continue using the AdSense program. And especially those using PPC to promote their affiliate programs or AdSense earnings could discover that their break even point of aquiring traffic is suddenly much different than previously thought.

Find out more about VAT being applied to Adsense earnings on Jensense.