European Commission Proposes "Digital Single Market" and End To Geoblocking

An anonymous reader writes A new initiative from the European Commission proposes a reformed "single digital market", addressing a number of issues that it sees as obstructions to EU growth, including geoblocking — where services such as BBC's iPlayer are only available to IP addresses within the host country — and the high cost of parcel delivery and administration of disparate VAT rates across the member states. The ramifications of many of the proposals within the Digital Single Market project extend to non-EU corporations which have built their business model on the current isolationism of member state markets.

Comments

Re:Never going to happen

[chrisvdb]

> And that has been getting worse with the EU... not better.

Can you give me some examples? Our family business has been importing and exporting goods (motor vehicles) from all over Europe for over 40 years, and I can tell you that things have improved GREATLY because of the European union. Just to give you an idea, when the business just started a motor vehicle imported from for example Italy could not be registered in other European countries without making alterations because regulations were so different. In addition all the paperwork that was required would easily take up several hours per vehicle im/exported.

Absolutely crucial

[j1976]

The situation since new-year is absolutely horrendous. At January 1st, the VAT rules changed so that digital goods have to be taxed using the VAT rate of the buyer's location, and using the tax law of the buyer's home country. That is: a web shop of any size have to keep track of up to 80 different VAT rates, and the disparate tax law regarding VAT of 28 different EU countries in order to deduce which VAT rate and goods classification is applicable on each single transaction.

As a telling example: In several countries an e-book is only an e-book if it has an ISBN number (usually with a lower than standard VAT rate). Otherwise it's a digital service (with a higher VAT rate). In other countries it's a e-book as long it's a digital text. Or humorously enough, in the case of France: It's only taxed as an e-book if it doesn't have pornographic content, otherwise it's taxed as a digital service.

A good start would be what is proposed in the press release: Harmonized VAT rates and rules for digital goods.

Re:Absolutely crucial

[arkhan_jg]

The reason behind it was to stop companies (e.g. amazon, apple and google) setting up shop in the lowest tax countries in the EU (luxembourg and ireland), and thus by only charging a low rate of VAT when exporting to the rest of the EU. This enables them to beat smaller domestic companies on final price, pay less tax overall, and funnels what little tax is collected into these tax havens. So the bigger EU countries were seeing a hefty fall in their direct VAT receipts, and loss of business from domestic companies to these giants that can relocate where they like, thus employment costs and indirect tax losses.

Fixing it by harmonizing VAT rates would require treaty changes and be politically hard to hand one of the big financial levers to the european central bank, especially given not all countries are in the eurozone - imagine the US forcing all state sales taxes to the same rate, set by the fed, and you get the idea.

Thus making companies pay VAT in the buyer's country, not the seller's. What they should have done though is put in a threshold, so companies/sole traders below a certain size were exempt, but that was opposed by some so it was dropped, and well, here we are where a mechanism intended to help small traders against the multinationals is a lot easier for the big boys to follow, particularly the requirements to keep id information about buyer location. Once they roll it out for physical goods too, it's going to be such a cluster f**k.

Hopefully though, the rise of MOSS compliant payment processors should make the system easier to follow - you just put a disclaimer up that final price will be based on the buyers VAT rate, and let the payment processor calculate the right rate and store the records.

Re:Never going to happen

[Karmashock]

The italian olive oil situation is a good example.

There are olive groves there that have been supplying oil to local villages as well as exporting for time out of mind. And new EU regulations are requiring that the oil go through all sorts of additional regulatory steps as well as package it in specific EU approved bottles.

The people in the area would typically just come by with a jug and fill it up with fresh oil as needed. But that is being made illegal.

The result is that the small growers must sell not directly to customers but to a big business bottling plants that are ultimately going to be the only legal way to sell the oil. Importing and exporting the oil previously was also not a big deal... but again, regulations.

Can I ask what country you are based in? Because the worst effects of this stuff hit the poorer and less developed countries the hardest. The richer and more developed countries if anything benefit from it. The trade controls have consequences for segments of the economy less capable of dealing with the red tape.