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.
