EU Plans to Tax Internet Sales

Arctic Fox writes: "In a bid to help European online sales, the EU is planning to tax online transactions. The article on Yahoo, says that the taxes will apply only to products downloaded from the internet, such as software,videos and music. They may elect to tax physical items (books, hardware,etc) at a later date. American companies will be forced to charge European customers the appropriate VAT in their home country. No details on how this will be enforced."

Comments

Already Happening

[gagravarr]

I ordered some CDs from amazon.com a few weeks back. Two days ago I received a notice that I needed to go to my local postal depot to pay a customs charge before I could collect my package

So, I found a map, located the depot, and trapsed over there. I handed over my card, and the guy said "So, you've been buying from Amazon have you? They're cracking down on all internet purchases you know?". I had to pay the VAT (sales tax) on my CDs bought in the states before I could collect them.

Apparently, almost all internet based purchases from major US sites are now already attacting VAT charges in the UK. I know a friend who bought from Think Geek got stung a few weeks before for the VAT on his purchase.

Tax all ya want...

[Dredd13]

.USians will simply point at Yahoo! Inc. v France, and point out that the US has already granted declaratory relief that US companies don't have to obey silly-ass foreign laws.

I strongly suspect "being forced to act as a tax-collector on behalf of a foreign country" would fall in the same boat. Heck, given the state of .US tax law, it wouldn't surprise me if it was considered seditious behavior. ;-)

D

So the difference from today

[Bender Unit 22]

So the difference from today is that it will save customs for a lot of work since they currently are sending me a bill for the taxes after I got the package. They are also months behind as it is.

Anyway before ranting about having to pay taxes on internet sales, I just wanted to say that the taxes already are there if you follow the law, but with the change so that the internet companies have to charge for the taxes, it should be easier for us buyers to get stuff from the internet without having to deal with all those mails and bills from customs afterwards.

The only big hurdle is I see it is a way to implement it without killing the small shops outthere.

This is news?

[sph]

They may elect to tax physical items (books, hardware,etc) at a later date.

Come on, is this 2002 or 1992? Seriously, the other part of the news (i.e. taxing online transactions for online goods) is totally valid, because it's not being done yet, AFAIK.

There is a concept of EU's taxation area, which includes pretty much the whole EU with a couple of exceptions (like Jersey). Since something like 1993 there has been the EU "Single Market", and most physical goods imported from elsewhere have been subject to VAT. If I order something from for example the US or Australia or Japan I have to pay VAT if the package gets caught in the customs. If I order something from the UK or France or Germany, who cares, it's from the taxation area, and taxes are assumed to have already been paid. Many European online vendors have VAT already included in their prices, and for example Amazon.co.uk charges the VAT based on the destination country.

At least some Canadian online vendors go around VAT by sending their shipments to the customer from some country in the EU. The package isn't subject to VAT if it's sent from France or Belgium. I don't know the legality of this, but the concept sounds somewhat dubious, despite allowing cheaper prices for the customer.

At least in Finland the key is to order less in one package, because our customs don't bother to charge less than 10 euros. I have something like 90 DVD titles (some of them being 5-6 disc boxes), with almost all of them being ordered from the net, and only 15 of them originate from the EU taxation area. I haven't paid VAT (22% in Finland) or customs (3.5%) for a single one of the imported ones, because I order only one or two discs at a time.

More information about VAT is available at European Union's VAT info page.

A lot of people here have missed the point

[wackybrit]

in saying.. "How is this going to help e-commerce??" and so on. It's simple.

Europeans already pay VAT (Value Added Tax) on purchases made within their own countries or the EU as a whole.

This means that buying stuff from the US can work out cheaper than buying it from your own country. So, by forcing US companies to tax EU citizens on purchases, this will force consumers to buy from e-commerce sites in the EU.

This sounds fair enough, but it's actually extremely unfair. For a start, many things are far cheaper in the US, or aren't ever available in the EU.

I'm a big Jewel fan, and her album came out in the US last year, so I ordered it from Amazon.com and paid about £15 in all, including delivery. Amazon.co.uk wanted £20!

I'd fully support the EU's ideas on this one if things in the EU were competitively priced. They're not. The EU business world is governed by cartels intent on driving prices as high as possible. It's only in the past year that CD prices have come down to US levels.. we used to pay up to three times more just five years ago!

So if the EU wants us to buy from EU stores, perhaps the EU should be a bit more like the US and open up its economy and not be so bureaucratic! If the US can have cheap gasoline and cheap CDs, I'm sure as hell the EU could too (since the EU is technically richer than the US and all).

Re:A lot of people here have missed the point

[vrt3]

Prices that are set by demand/supply give the best possible positive effect on society, so tells us free market theory. But that assumes that all costs are included in the price. Without government intervention however, only internal costs are included. For best effect, also external costs should be accounted for (such as environmental impact). This is what these taxes try to do, though not always in the best way possible.