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U.S. E-Commerce Sites To Collect EU VAT
A concerned US-based e-commerce company with inter writes "While we have all been fighting the Internet sales tax battle here in the U.S., the European Union of 15 countries has recently required that all U.S. companies with web sales to EU citizens start collecting the value-added tax on July 1, 2003. The Washington Post has a good article about this. It seems Ebay, AOL, and others caved in on this without much complaint. Can U.S. Internet taxation be far behind if we have to start collecting and reporting 15 different VAT taxes? And sorry Mr. or Ms. EU Citizen, your website subscription now costs 15% to 25% more, starting July 1. Hope you like this added value."
if companies in the US, especially small etailers, don't bother?
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I've been buying a lot online in the States lately because of the bonus I now get with the Euro being valued so high against the dollar. This will neatly compensate for the savings I make on the exchange rate.
However, there's nothing really new actually, because officially you were supposed to pay the VAT taxes when the product went through custom. The thing was, some packages would be intercepted in customs, and you'd get a bill for the VAT, and others wouldn't. Profit!
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"The chances of a demonic possession spreading are remote -- relax."
I've got to wonder why a US company would collect EU taxes. Wouldn't the destination country just do it when the merchandise is picked up?
Profanity - The sign of a small mind trying to express itself.
I can see a lot of consumers picking stores they know won't collect the VAT. After all, those stores will have a 15% discount on their items compared to the stores that collect VAT.
Living in Sweden (where VAT is a heft 25%) it has always been lucrative to order stuff on the internet from the US. I remember when buying a single CD from Amazon (inluding shipping) was cheaper and faster than ordering it from a local e-merchant.
This is especially true for software where you can download the product immediately after buying it. Last week I purchased Norton AV from Symantec. Price on Symantec's swedish store = SEK 620. Price on symantects US store = 350 SEK, That's almost a 50% discount just a few clicks away!
> you have to manage 15 different tax rates,
Actually it is worse! In my country, The Netherlands, there are two tarifs, a low and a high. Low tarifs (6%) are for food, drinks, books and some services. High tarifs (19.5%) are for other goods. (There is also a third tarif, but that is for construction, so not likely to be applicable.)
Other EU countries have two or three tarifs, so it can be hard. Not all goods fall under the same tarif in every country, so it will be hard to know what VAT (btw BTW is the Dutch acronime for VAT) to apply.
-- (:> jms cs.vu.nl (_) --"---
Well, government just has to get its taxes somewhere. So you either tax the money the moment it's earned (income tax), or the moment it's spent (VAT, special taxes on gasoline, alcohol, tabacco...).
:).
Income taxes can easily be enforced locally, but people don't like to have their hard-earned money taken away before they even saw it.
VAT and their likes _could_ be enforced locally, i.e. the place where the money is actually spent. So if I buy a TV in Luxembourg, I pay 15% VAT to the the local government, and if I buy it in Sweden, I pay 25% VAT. But this difference in taxes would create a shift of consumption towards the low-VAT countries, so the idea of locally enforcing VAT was frowned upon by several governments (usually in countries with a high VAT). Thus it never happend. VATs are due where you live, not where you spend your money.
"Tax-free shopping" is possible because of this. As a German citizen, you can buy that camera in Japan, get back that 5% VAT you payed, return to Germany, and pay the 16% VAT at the German customs . (Nobody does it and everyone claims that they had the camera before they left the country...)
Extending this idea of "pay VAT where you live" to the internet is only logical, as not doing so would open a loophole, and shops would go online just to save the VAT. Also, requesting that the individual customer pays his taxes (as it's done with tax-free shopping) somehow doesn't work as advertised, so goind after the businesses and requesting them to collect the taxes makes sense, in a way
Personally, I prefer VATs over income taxes, because _I_ can decide the time my money is taxed. If I want to save money, I can earn interest on my full income and I can pay the taxes the day I buy that new computer/gadget/house/whatever.
(On a sidenote, in Europe you usually see the prices printed including VAT, so nobody notices how much VAT they pay. You'd have to read the fine print on your receipt.)
Governments being what they are, obviously like to tax both ways instead of deciding on one sort of taxes. But I disgress...
rm -rf /home/leia
>"These remain challenging times for many American Internet companies," wrote Rep. Cliff Stearns.... "We ask that they be given a fair chance and a level playing field."
Yep, and so do the EU businesses (living in equally challenging times)- who want VAT levied on purchases made outside the EU, just as they currently are on purchases made within the EU
So, although this will hurt my wallet, as I buy good online from outside the EU, I will benefit by the increased taxes raised by my government, and by the level playing field which now operates between Us/ EU companies.
It *wont* affect US purchases, so US readers can continue flying the 'no-tax' flag all they like
http://milkshake.dexy.org
Because we also pay Income tax.
I don't mind the idea of paying tax. It's just the idea of paying tax when you earn it, paying tax when you spend it and paying tax when you even save it.
Why can't we just get taxed once.
But the most evil tax has to be inheritance tax. Even when you die you end up paying tax.
"You have to check shipping rates for each country now, don't you? Can't you check tax rates at the same time (maybe even in the same place)?"
I somehow doubt either the USPS or my PC Postage software is going to add this to their existing services. Nor do I want them to, because this will raise their operating expenditures and in turn raise their rates.
This doesn't suprise me. These kind of things are to be expected because the US put on a hefty steel toll on their exports around a year ago. The European Union got pissed at that and since that, it's been quite a war between us. But I don't care, right? This is what the European Union was all about: Creating a unioned power that would balance out the American superpower on the international market.
What's so bad about being lazy? What if there was a war and nobody showed up?
Up until now, you were supposed to notify your taxing agency yourself that you purchased a product abroad, and that you were due VAT on that purchase. Of course nobody (except the extremely silly) ever did this, and pocketed the VAT he was supposed to pay.
From now on the burden of processing and declaring the VAT is put on the retailer side (as it is in the EU now). You are still due import taxes, and your parcel will still be stopped for customs. For the consumer point of view, this will increase prices with 20% - 25% for all goods acquired overseas.
Mind you, that companies with a VAT number do NOT have to pay VAT for these operations if it is deductible. The extra burden in online shops will not be the VAT percentage they are supposed to add (which is relatively simple), but checking valid VAT numbers.
Okay... I'll do the stupid things first, then you shy people follow.
[Zappa]
Unfortunately, that's not always the case. One of my friends found this out the hard way, when she ordered a whole load of cosmetics from a supplier in Australia, where they were selling considerably cheaper than the UK. She was told that what she was paying the supplier covered everything including charges for getting the stuff to the UK, but then got hit with an extra tax bill running to several figures when the stuff arrived.
If you disagree, post your argument. (-1, Overrated) isn't your personal censorship tool for views you don't like.
All that having been said, I would prefer the elimination of income tax and capital gains tax in favor of a federal sales tax (even if said tax were 30%)...
The whole problem with tax code is that there are special considerations to help stimulate the economy.
If you tax sales rather than income, that has an unfair effect on people scraping to get by, while assisting people that save their money, not contributing back to the economy.
Flat income taxes are the only way to go. In Hong Kong, you pay (IIRC) 15% flat tax on income. It really sucks your first year (when you effectively have to pay tax for two years with one check), but it's a great system. People are still afriad of Inland Revenue to some extent, but the tax dollars aren't wasted on a huge auditing system. Filling out your paperwork takes a couple minutes, then a half-hour in line if you need to file in person.
First off, I am Japanese, and I will use this to my advantage because you EU members won't disreguard this as a ranting American that way.
I am a marketmaker, and I trade currency. I look at things like this all day every day, so I am perfectly aware of what your ignoring America will do.
1. It will hurt you! Despite having a powerful currency now, you lack stability (look at trends before the conflict in Iraq, note past war trends, equate to find that you will not be happy to see where your boost came from and how America is set to rebound against you). The truth is you need American business to survive in the international economy, but all you do and all you ever have done is try and keep everything inside Europe, and that is what created the extreme weakness in your economies before the EU.
2. America will be untouched by this. As it is American business makes more off the Japanese than they do off of the entire EU. I'm pretty proud to say this, and I will appreciate the increased business that will occur between countries that are very trade-friendly with America like Japan.
So basically if you are so positive about closing yourselves in from the rest of the world, and putting-off countries whos buisiness and products you need to survive, have fun. Your being so arrogantly inward looking will be your demise, and if you continue such trends I will laugh and say "I told you so" when your new Euro collapses in on itself over the next 10 years or so.
How about the fact that Britain refused during the late C19th and early C20th to put tarriffs on imports, even from countries like the USA, Australia, Canada, France, Germany etc. who did have tarrifs, and very high ones at that, against British finished goods?
Or the fact that 'Imperial Preference' The British tarriff system, did not, infact begin until the mid 1930s
You could of course be referring to 'Customs and Duties' but these apply equally to goods produced in the UK as to those imported.
Or maybe the British policy of looting goods from Imperial posessions like India, but that is Free Trade only in a satirical sense, and unrelated to external Imperial Trade.
I do understand your criticisms, but they truly only apply prior to the repealing of the Navigation Acts in 1849 which allowed non British ships to dock at British ports for the purpose of trading goods and wares, and the repeal of the Corn Laws in 1846, which set a precident followed by all future governments until the 1930s of removing all barriers to the import of goods.
Which is the era commonly referred to when discussing British Free Trade.
Economic Left/Right: -0.62
Social Libertarian/Authoritarian: -3.69
Yeah right, as if we Europeans agree about anything. Speak for yourself please.
There's a lot to like & dislike about the US and there's a lot to like & dislike about Europe too.
I don't like euro-socialism one bit and I agree with the American/British invasion in Iraq and I'm still a European.
X.
And sorry Mr. or Ms. EU Citizen, your website subscription now costs 15% to 25% more, starting July 1. Hope you like this added value.
Nope. You don't have to pay EU VAT on a service that is rendered in the US (such as a website subscription). You DO have to pay VAT on goods imported into the EU, even if those goods lack material manifestation.
Of course, the line between goods and service can be difficult to draw at times.
Does anyone out there (current level 5 posters havn't had this info) have a SITE we can go to, to learn the specifics of this?
Since we're a very very small company we won't be putting up any "headquarters" in europe.
Who do we pay? How frequently do we pay? What laws do we need to follow in terms of documentation? How long do we need to hold onto records? Where to we go to find out if tax rates have been changed, or even what they are?
It's one thing to demand a VAT... it's another thing entirely to make sure we get the proper information in order to implement it correctly.
they can easily enforce this
through the EU banks.
see, the EU could really simply say "mmh, this EU guy paid 15.99$ to amoebasoft.com, and we diidn't see any VAT coming back. Stop all payments toward aomebasoft.com's bank account.".
And poof, there you are, no more EU business.
i had a sig, once..
There is no way in hell I have the time or resources to keep track of VAT rates for fifteen different countries. It's possible that if I did a lot of business with EU states that I would have no choice, but for the smattering of EU customers that I have, I'm not going to bother with it. As far as I'm concerned, any transaction conducted with me here in the United States is taking place within in the United States and is subject to US laws. If I were buying something from Europe, I would operate under the reverse assumption and pay the local taxes -- which I presume would be collected by the seller and included in the price.
Provided there's no actual enforcement, I plan to ignore this. If I get a notice from an EU tax agency that I need to pay up or face extradition on tax evasion charges, I will cut a final check to the Europeans and not deal with them in the future.
This is not, BTW, some flag-waving anti-European rant on my part -- I like the EU a good deal better than my own country -- but from a business standpoint, it isn't worth the hassle to me. I'm not sure this is such a hot idea anyway. I'm not viscerally opposed to sales taxes on net sales -- it would help curb the obliteration of thousands of local businesses by giants like Amazon -- but it ought to be collected by the seller and the seller's government. For the seller to have to keep track of the buyers' governments and their innumerable laws is an unreasonable burden on trade. Giant corporations have the resources to deal with that sort of thing; small businesses do not.
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