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EU Plans to Tax Internet Sales 440

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."
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EU Plans to Tax Internet Sales

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  • Two words: off-shore.
    • I have no idea how they could enforce this without activly scanning all file transfers. Even then, how can they prove the file you're transferring isn't free? What if anyone can download the file, but you pay for a key to unlock it, a key they send via email? Looks like the companies who built the Great Firewall of China [] now have a new market.

      On a related note, going through customs recently got me wondering about import duties on electronic file downloads across borders. Since the import duty is supposed to be on the value of the item (not what you claim you paid for it -- "I got this Rolex for $5"), then what is the "value" of Apache []? Should I claim warze even though I pay nothing for them? Should I shut up, lest I give them ideas?

    • All your questions answered here: FAQ []


      How would these proposed VAT rules be enforced in the case of non-EU companies?

      These proposals would require VAT registration only in the case of larger operators (over 100,000 of sales to private consumers per annum in the EU). Smaller operators and those with only occasional sales into the Community would be excluded from the scope of the tax.

      In the case of larger operators, it is in their own interests to be seen to be in compliance with their legal obligations (including VAT obligations) arising from Internet trading because they themselves want to ensure that others respect their obligations in respect of the operators' rights, for example as regards copyright or other intellectual property rights. Legitimate operators certainly do not want to give credence to the idea that Internet is a zone where laws do not apply - the incentive to voluntary compliance should not therefore be underestimated.
  • If I download software from a UK site I have to pay VAT (17.5% sales tax) - why should it be cheaper to download it from the US.

    And before all you anti-state libertarians jump in, remind me - how many millions of Americans have no health insurance because you won't pay for one?
    • Maybe, just maybe, because it's not the *job* of the government (well, the US government, anyway) to provide/administer/control health care to the masses? See, the funny thing is, when you don't live in a socialist country, you don't just get everything handed to you on a silver platter. You do, however, get the freedom to choose what you want and don't want.

      Besides, the government does a bad enough job with what it's already responsible for, why should we trust it to manage health care?

    • A) How in the name of God is it my responsibility to pay for other's health insurance?

      B) People who don't have health insurance almost universally (there are exceptions) don't have it because either they choose not to have it, or because they made poor choices which resulted in their inability to have it. Geez, even fast food places offer health insurance to full-time employees! At Chick-Fil-A here in Georgia they offer it at no cost to the employee!!!

      C) Well, whys hould it be cheaper...hmm maybe because we're not a part of the EU and we shouldn't subject to your silly socialist laws and regulations (wake up, socialism does not work in the real world! It results in a crap economy, crap education, and crap health care, and eventually, pissed off citizens!) We're a sovereign nation. Instead of trying to get us to enforce your laws, try getting ISPs in your country's to enforce it. Charge a small user's fee. Then you'd make money off people who didn't even make online purchases...
    • If I download software from a UK site I have to pay VAT (17.5% sales tax) - why should it be cheaper to download it from the US.

      I don't have a problem with the UK taxing its citizens regardless of where they purchase the item. But that doesn't give them a right to force U.S. companies to act as the tax collector. How are they going to stop UK citizens from evading the sales tax? Not my problem.

  • They must be, cause there sure is hell isn't any way they're going to get me to re-write my shopping cart to implement that over priced VAT crap...

    Sorry guys, do like the US. Leave it up to the consumer to pay their state's sales tax (like that's ever done!@$%)
  • Unconstitutional? (Score:2, Interesting)

    by Anonymous Coward
    In the USA commercial activities across state lines are regulated by the federal government. This EU directive clearly interferes with the power of the federal government. Should the existence of the EU be outlawed by the US Courts?
    • Re:Unconstitutional? (Score:3, Interesting)

      by Alan Cox ( 27532 )
      There are some europeans who would love that to happen. Maybe we can rule the US illegal in turn and all live happily ever after

      The EU is closing the same hole that exists in the US where due to historical weirdness there is no sales tax for interstate trade. From an EU point of view it removes a tax loophole for offshore bodies and creates a non discriminatory regime.
      • There are some europeans who would love that to happen. Maybe we can rule the US illegal in turn and all live happily ever after

        Yes, I've noticed that both Norway and France have had a recent surge of support for anti-foreigner fascist parties. Yeesh, wasn't World War II enough for you folks, do we have to go through this again? Hostility and violence do not reduce cultural differences.

        The EU is closing the same hole that exists in the US where due to historical weirdness there is no sales tax for interstate trade.

        Wrong, there is sales tax for interstate trade. However, since Rhode Island has no authority over California, there is no way that Rhode Island can force a California-based company to collect sales tax on their behalf. Therefore, it is up to the purchaser to report his purchase and pay the tax. Obviously, no one does this. I'm not sure how this situation is any different. How is, say, France, going to force Walgreens to collect sales tax when someone orders a couple boxes of Rogaine? Walgreens has no international presence, so I can't imagine how they'd do it.

    • Re:Unconstitutional? (Score:2, Interesting)

      by fini ( 571717 )
      The US Constitution doesn't apply beyond US borders, and EU directives don't apply in the US as well. If an US company doesn't want to engage in overseas trade in Europe, they're all fine and aren't required to do anything towards this directive.

      However, if a US company wants to ship stuff in Europe from the US, well, they have to pay the tariffs and taxes, very much like it would work the other way. Otherwise, EU customs are free confiscate or surcharge the imported goods, and, if the US company has assets and representative within EU jusdiriction, they can also sue them in court for tax and tariff fraud.

      Let's say Barnes and Nobles refuses to pay the VAT on books exported to Europe, while Amazon accepts to pay. The customs will block B&N shipments everytime they can, probably with the help of the carriers who obviously want to maintain good relations with the Customs services. B&N will have a lot of disgruntled customers walking to Amazon. QED, B&N will prepay the VAT or get out of the EU market. For virtual stuff, software, music, the same reasoning applies by blocking some IP addresses, for instance.

      Shipment impounding on VAT payment are already happening and this EU directive simply aims at making compliance easier and less costly for importers.
      • The VAT has to be collected on the web sites located in the US. US citizens has to implement the action required by the EU law. It is perfectly legal for a US citizen to sell to Europeans, without collecting the VAT. (The obligation of the European customers to the EU is not a concern for the US seller. )
        EU therefore has interfered with the sovereignty of the USA. USA (or any country), being sovereign (according to any national constitution), must not allow other countries to enforce their laws within its terrirories, without international agreement. Else the USA government (or that of the country in question) fails in its basic obligation: protecting its sovereignty.

        The US citizens do not pay tax to EU, and they did not elect the officials in European governments. Thus they have no obligation to the EU in any way, to implement the VAT or whatever.

        If the EU carries this out with a treaty with the USA, that's another matter. But right now there is no treaty.

        Things like this will just increase in the future. The only way to resolve them will be to redefine the concept of sovereignty, to that of the "sovereignty of the Earth", and to the unification of the planet under a global government.
  • Mirror Time! (Score:1, Offtopic)

    by FFtrDale ( 521701 )
    Can you say, "Mirror Site," boys and girls? I knew you could!
  • No details on how this will be enforced."

    Well, that hardly surprises me. How do you tax something ethereal?
  • enforcement? (Score:3, Interesting)

    by NeoSkandranon ( 515696 ) on Tuesday May 07, 2002 @06:59PM (#3480806)
    I recall my German teacher saying that on her trips to Germany, she paid the VAT or equivalent thereof, but when she got home to the States she could contact the German Consulate and send in her reciepts and was always able to get a refund on the taxes that didn't apply to non-citizens...perhaps that could be done here?
    • Backwards thinking are you.

      She gets refunds because she's a US citizen purchasing goods and bringing them home, where in theory she has to pay a duty to US customs.

      The EU charging VAT on downloads applies to European citizens purchasing products from US companies. If they came to the US and bought a $500 packaged software here, they would pay a duty on import to the EU. The theory is that downloading is similar to carrying in and therefore the product is subject to customs rules.

  • Already Happening (Score:5, Informative)

    by gagravarr ( 148765 ) on Tuesday May 07, 2002 @07:01PM (#3480821) Homepage
    I ordered some CDs from 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.

    • When did the UK join the EU? This is about software. Most times buying something from overseas (even in the US) you have to declare the object (unless they ship it as a gift) and pay tax on it if applicable.
      • When did the UK join the EU?

        Steps towards UK membership (from the EC-UK website):
        • 1961 Four years after the Treaty of Rome had been signed by the original six members, the United Kingdom applied to join. Ireland and Denmark also submitted applications, followed in 1962 by Norway.
        • 1963 Negotiations went on until 1963 when President de Gaulle of France vetoed the United Kingdom application. This caused negotiations with all the applicants to be stopped.
        • 1967 The four countries applied again but the French refused to allow negotiations.
        • 1973 Following further successful negotiations the United Kingdom, Ireland and Denmark joined the Community on 1 January. Norway did not join because a majority of its people voted against it in a referendum.
        • 1975 In 1975 a referendum was held in the United Kingdom which confirmed the membership.
    • conversely I had a computer game ($10 game, $15 shipping) arrive here last week no proble. took 2 days from gamestop near dallas. Had 2 copies of the packing list on the outside, didnt get done by customs (landed about 1AM at east mids, was in the exeter depot by 6AM and here by 8AM).

      Shipping and handling is not counted for customs, so perhaps £6.70 wasnt worth the vat (£1.20 extra), or perhaps UPS had something to do with it.

      Nice of them to put "If seal broken check contents" tape arround the box though :)
    • This isn't at all unusual - they've been doing it religiously to me for yrs.

      I first bought from the USA in 96 and got charged VAT AND IMPORT DUTY.

      Some items are import duty exempt (varies from 0% to 22%) and some are VAT exempt (17.5% in the UK) and you have to pay BOTH + handling fee.

      Tip - have the shipper mark it as a gift worth $35.
      • I've ordered a lot of stuff to Poland (not in the EU but in Europe for all the Americans out there [I'm kidding... sorta]) from the US and UK - books, clothes, shoes, car parts (tuning), software, music, movies (both DVDs and VHS). Stuff worth thousands of dollars.

        The only thing I've ever been taxed on a was a 6 GBP cable I ordered from Matrox in the UK.
    • Imagine- they have to individually inspect all the incoming packages, sort and store a bunch of them, enter your address into a database, send you a notice, and deal with you when you get there- all for what, 17% of a $40 sale? I don't see how this can pay!
      • Typically, they charge the shipping agent who then claims it back off the receiver. I imagine that (say) Fedex ships loads of stuff over in an aeroplane with a manifest itemising everything on the plane and pays a bulk charge to UK Customs and Excise. The Customs men problably only check the occasional shipment to make sure that the shipping agent stays honest.
    • If you buy anything from outside the UK valued at over £13 and have it brought in third party then yo are meant to pay both duty and VAT on it.

      You;ll find this normally does not happen as there are so many parcels coming through that it would be impossible for customs to deal with them all. Net result is they ignore most (but not all)m smaller items and low value items.

      Occasionally you will be unlucky and have a small package targetted. This happened to me with some t-shirts I ordered from the US.
  • of something that happened when I was in highschool.

    Me and a friend snuck out one night and t.p.'d a guys house that we knew. We even told him we'd be coming. But we waited until like 2 or 3 a.m. and he fell asleep watching out for us.

    It was awesome - he woke up, looked outside and thought it had snowed. It was great - we told all our friends about it. I told my folks. They thought it was very funny.

    Then they talked to my buddy's parents. And my dad comes to me and says, "Gary's parent's did not like what he did. They grounded him. It wouldn't be fair if nothing happened to you- you are grounded too."

    The EU is saying "Hey we can't screw our own companies and rake in the taxes because the consumers have options. We have to make sure we screw everybody."


  • The article is pretty vague on the specifics of what gets taxed. Is a subscription service subject to the VAT? So if someone wanted to subscribe to a web publication, would the tax have to be paid?

    If not, then there's a workaround for this tax: Call it a "subscription" to a particular area of a web site where the product is downloadable "for free" by all subscribers to that section.

    And if the subscriber is an educational institution, you can charge them a "subscription fee" for every person in the school and get around that pesky per-CPU pricing. Sweet!

  • HUH? (Score:2, Redundant)

    by drDugan ( 219551 )

    In a bid to help European online sales, the EU is planning to tax online transactions

    quick post here -- but how exactly will TAXING online transaction HELP online sales?

    seems like a real nonstarter, or simply a mistake

  • by Dredd13 ( 14750 ) <> on Tuesday May 07, 2002 @07:04PM (#3480852) Homepage
    .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. ;-)


    • 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. ;-)

      It would seem to lead the company to be officially an 'agent or acting on behalf of a foreign government'. I don't see how it's enforced if the company has no presence in the other country. It also seems the collection plays havoc with US tax laws. If I'm a company and collect sales tax, obviously that is not ultimately taxed on federal returns. However, if I collect VAT for some foreign country, I don't see anyplace that'd legally be deductible... does anyone else??

  • The EU can't do much about sites run strictly by outfits in the US. Mom and pop type online stores are far too numerous (and many don't even ship to Europe, anyway).

    What ths is really aimed at is the Yahoo's and Amazon's, who do maintain a presence in the EU. Because they have offices and such in the EU, that does place them under EU jurisdiction, to some extent.

    Amazon has at least one order fulfillment center in the EU (I want to say in Rotterdam, but I could be wrong). Yahoo has offices in Munich, Paris, London, and other EU cities.

    In short, if you don't want to be charged, the best course may simply be to never physically do business in the EU. Don't open a Parisian office. If you need to be in Europe, Switzerland's not in the EU.

  • Impact? (Score:3, Insightful)

    by neksys ( 87486 ) <grphillips AT gmail DOT com> on Tuesday May 07, 2002 @07:08PM (#3480889)
    The Deloitte [] and Forrester [] research companies measure progress in the growth of e-commerce and forecast that by the end of 2002, online sales are expected to exceed $1 trillion, consisting of business-to-business sales of $842 billion and business-to-consumer sales of $180 billion (5). What effect could an Internet sales taxes have on these projected online sales? A study by the National Bureau of Economic Research found that the imposition of sales taxes could reduce online spending by as much as 30%. A 30% reduction in projected online consumer sales of $180 billion means $54 billion in lost retail sales. A 5% tax rate on the remaining $126 billion in sales would yield $ 6.3 billion in new sales tax revenues, but result in a net loss of $ 47.7 billion to the economy. Even if a 3% sales tax resulted in a more moderate 10% reduction in online sales, the $18 billion loss in sales volume would far exceed the $ 4.86 billion in new sales tax revenues.

    These are striking numbers, even if US-centric. The EU should really be careful before instituting any such thing...
  • Help internet sales? (Score:2, Interesting)

    by dhwebb ( 526291 )
    How does adding a tax help anything? It gives users a reason not to buy online. Besides, what about shareware. The demo product is free, therefore $0 tax. Now the license # that I paid the vendor to email me is not taxable. Not to be insulting, but its nice to know the EU is just as whacked out as our US policies.
  • by Bender Unit 22 ( 216955 ) on Tuesday May 07, 2002 @07:12PM (#3480926) Journal
    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.
  • Fuck that! (Score:3, Interesting)

    by seldolivaw ( 179178 ) <> on Tuesday May 07, 2002 @07:12PM (#3480928) Homepage
    I worked for a dot-com in the UK which had to charge VAT on all purchases, based on the location to which it was shipping the item. The rules were different for every country -- the price threshold at which the tax applied, the tax rate itself, the types of items to which the tax applied -- and it was a nightmare to code a system which could handle every possibility. Enforcing this rule will only further discourage American companies from shipping to Europe -- something they're already aggravatingly unwilling to do.

    When are governments going to grasp the idea that none of them have any jurisdiction over the Internet?
    • I worked for a dot-com in the UK which had to charge VAT on all purchases, based on the location to which it was shipping the item.

      This is even worse, because it applies to items which aren't even being shipped. What do we use here, IP address? What about proxy servers? It's a nightmare.

      When are governments going to grasp the idea that none of them have any jurisdiction over the Internet?

      (Un)fortunately if governments gave up jurisdiction of the internet they wouldn't be able to tax their people any more. More and more sales and employment are based on information. I can work for a software company completely over the internet, both in work and in payment. You can be sure that the government is going to want to collect income tax on that employment.

  • What?! (Score:3, Funny)

    by alexburke ( 119254 ) <`ac.ekrubxela' `ta' `todhsals+xela'> on Tuesday May 07, 2002 @07:17PM (#3480958)
    In a bid to help European online sales, the EU is planning to tax online transactions.

    In other news, in a bid to help women feel safer while walking alone at night, the government is planning to legalize rape.

  • To hate the French.
    Sorry. That was rude and mean... but honestly... even the FRENCH hate the French. :-)
  • Are they going to tax "sharing"?

    Seems like a poweful disincentive to actually obey copyright law to me (but what do I know?)

    • Are they going to tax "sharing"?

      I think it was Greece that required all anarchists to register with the government (I find no evidence of such a law online, it may be apocryphal.) With Zen governance like that, you can do anything.

      From an infrastructure standpoint, how would they tax downloaded information? There are a couple of ways-
      1) The simplest way is to track the credit cards of everyone in the country. I have no idea what kind of credit cards Swedes even have (WTF is a "eurocard"? Is that real?) but I bet they use them for 95% of internet commerce. You could do the same thing with online checks, if europeans use those. You just make all the nations financial institutions report it to big brother whenever they transfer money out of the country. I bet Sweden does this already. This way you can enforce it entirely in-house. This would "catch" 95% of transactions.
      2) Tax incoming data. Anytime you get more than X data over the course of some length of time, the government assumes it costs money. They tax you at some rate, unless a vendor turns in an electronic receipt for the purchase. Vendors that wanted to sell to europeans would have to play ball or their customers would get footed with crazy bills. "Maximum disruption, minimum benefit?" Yes, but I doubt the people in brussels care. This has the advantage of "catching" people who got their credit cards from the bank of antigua; a tiny sliver of the population who might otherwise escape. It would also tax filesharing.
  • You can pass any law you like, but it can only apply to people within your jusidiction. They CANNOT force foriegn companies to do anything. If they are taxing based on the purchaser's location then it must be the purchaser's responsibility. This pretty much requires that customs seize the import until the buyer pays the tax. I wanna see them try that with internet downloads LOL!

    There are good reasons there's is no state tax on interstate commerce in the US. You start getting really stupid situations otherwise.

    • If you go to the store, and you buy a DVD, and the clerk does not charge you sales tax, is it then your responsibility to pay the sales tax? There are laws in the US that requires the vendor to charge sales tax. [there's a special case of interstate sales that where the individual is responsible for]. For a company to do business in a country, it is _their_ responsibility to make sure they follow the laws of the country that they are doing business with. This is the same reason that Yahoo got sued because they allowed people to auction Nazi memorbilia on a site that can be access from Germany.

      It is the responsibility of the company to make sure they comply with all local laws that they do business with.

      Now you are right. It is very difficult, if not impossible to enforce this. That is partially the problem with the US attempt to tax the internet.
      • There are laws in the US that requires the vendor to charge sales tax.

        Right, but businesses have to comply with their local tax laws. California can not force a New York store to collect tax.

        For a company to do business in a country, it is _their_ responsibility to make sure they follow the laws of the country that they are doing business with.

        The only rational interpetation is that the company is doing business where it is located.
        (A) It is impossible to reliably determine the location of someone on the internet.
        (B) It is impossible for a company to be aware of and comply with every local law in the world. (Expecially since different local laws can have mutually exclusive requirements.)

        This is the same reason that Yahoo got sued because they allowed people to auction Nazi memorbilia on a site that can be access from Germany.

        I believe it was France, but that's irrelevant. Yahoo-France was in compliance with the law. They went after Yahoo-US. I believe they got a "conviction", but they had no juridiction and zero enforcement power. These are idiots then got to stand around with their thumbs up their asses while they congratulated themselves on their "victory".

        They can make it illegal for their citizens to shop at Yahoo-US. They can confiscate imports. They can not in any way regulate foriegn activities.

  • This is news? (Score:5, Insightful)

    by sph ( 35491 ) on Tuesday May 07, 2002 @07:58PM (#3481255)
    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 [] 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 [].
  • by rediguana ( 104664 ) on Tuesday May 07, 2002 @07:58PM (#3481261)
    Does anyone else think that this is in return for the US stance on imported steel? I just saw an article on CNN about trade issues between the EU and the US, and thought hey, this makes sense from an EU perspective, if they are going to up barriers to exporting EU products to the US, then lets make it harder for US companies to make money from the EU - by removing the pricing advantage by addition of tax. I don't think this is really a taxation issue, I think its partial retaliation for the US imposing restrictions on imports into the US from the EU.
  • by wackybrit ( 321117 ) on Tuesday May 07, 2002 @10:00PM (#3481976) Homepage Journal
    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 and paid about £15 in all, including delivery. 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).
    • Take a look at the things that are more expensive over here. It won't take you a long time to realize where the cartels are located. Yupp, USofA. DVDs are more expensive, because of Hollyweird. The major RIAA members are just as much american as the major MPAA members.
      The only thing I know off-hand that is more expensive in europe because of reasons european is gas/oil.
    • 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.

      I don't dispute your point; if US companies don't charge the tax, European companies are definitely at a disadvantage. It also would prevent the EU from raising taxes to, say 50%, because that would cause everyone to start buying from the US.

      However, the proposal (as I've read about it) is very one-sided. It neglects to take any account the fact that the merchant has to:

      1) Know the tax rates of every EU country, and keep up to date on them.

      2) Send money to these countries at some point in time -- when, monthly? Yearly? Maybe not all on the same schedule. And for all I know the EU may specify that I have to pay in Euros, meaning that there could be conversion issues -- for example, if I collect $100 US in VAT, which is 150 Euros, and then by the time I pay it 150 Euros might cost me $150.

      I haven't read the proposal, but this seems at least possible. Plus US banks aren't that friendly to those trying to send money out of the country, and frequently charge very high conversion rates.

      Finally, it neglects to consider the fact that a government outside of the US is trying to govern US citizens. Now I realize that there is contact between the citizen and a EU citizen, but as a US citizen I have no ability to voice my opinion, through a vote, as to laws that are suddenly applying to me except to not sell to EU customers.

      I'm troubled that the EU could "govern" me somehow just because I have some kind of relationship with an EU citizen. This is an important legal concept. Could this extend to other things, like, for example, running a web page that a EU citizen can view? Could I be pulled into German court because I have a page which glorifies Hitler, even though this is permissable in the US? (not that I'd want to make such a page, it's just an example). Could I be pulled into court because I cursed at someone on Usenet?

      The law may be fair now, but it could definitely be changed. What if the EU decided to "tax" bytes transmitted to it via the internet? Although it's far-fetched, it's not outside the realm of possibility -- after all, who ever thought that they would try and force US citizens to collect their taxes?

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

      That's an and a British problem not an european problem. (a consumer association research i saw some years ago showed that prices in GB were 1.2 times the european average - and this was before the strong pound and weak euro)

      Just recently i changed from ordering my books with into ordering them from a mainland online store ( and it's about 2/3 of the price - the books are cheaper (english language books too), the sending costs are cheaper (as in zero) and i get the books as soon as each becomes available as oposed to have to wait for the whole package.

      On the other hand it helps to know some mainland europe language.
  • Opposite Goal (Score:2, Insightful)

    by rnicey ( 315158 )
    This will of course have the opposite effect of making them money. Some entities increase charges when they need to make more money, this is typical of more socialist ideals and popular in Europe*. Others lower prices to make more money. This often sounds odd, but it's the principal of the bargain and reliance on good old marketing and upselling. Typically more a US ideal.

    In England they need more money for whatever, so they raise taxes. In the US they lower taxes to stimulate the economy and produce more overall wealth.

    As a US based company with British tech we get to see both sides of the coin quite clearly, and as a money making machine we're very confident of which works best. Here we sit processing an awful lot of credit card transactions every second, mostly for US customers because it's easy. Do you think any court in this land will force us to spend heaps of money supporting foreign tax laws? Do you think we're going to release those records without such an order?
    Even if we were forced to charge said tax, what would actually happen is it would be cheaper and more cost effective for us to not do business with those countries. End result: Those countries have less imports from the US. Their loss not ours. A good lesson in shooting yourself in the foot.

    Same thing. Thinking of opening an office in London... Any idea how much company tax and fees they pay over there? Waaay to much. End result is we declined and the UK lost out on a company branch that produces loads in tax every month. Greed got them poor. Plain old stupid.

    Robert Inc.

    * Typically, IMHO, etc. etc.
  • I hope governments around the globe just tax the motherfucking living shit out of everything commercial on the Internet. Then the e-carpetbaggers will either go broke or start looking for another medium to fuck people over with... but at least the Internet will return to the global information opportunity it used to be before all this commercialization damn near destroyed it.
  • Decides who?
    Is the public opinnion in the EU supporting this?
    I strongly doubt it.

    There's 2 things that this can show:
    1 - EU is a closed society
    2 - EU is feudal and non future-minded

    When are we going to allow eachother to get out of poverty and live happily together?
  • If you accept that they have no way to enforce this with companies that don't have a physical presence in an EU country(no US court will help them with this), logically they will be forced to block non-compliant web sites from EU countries. I can see it now:

    1. EU finds high traffic/high volume download for money web sites that doesn't charge VAT
    2. They send an informational message explaining you have to collect the tax from EU users
    3. Some time passes, web site still isn't collecting VAT
    4. Harsher message is sent threatening to block IP addresses from all EU countries.
    5. More time passes. They block the web site, no one in the EU can access it.

    Now it will be a bit difficult to "block" the IP address, but given the few number of paths into any country and the small number of companies running them, I believe it will be possible for them to shut off most access to a non-compliant site. By doing this they create a situation that might convince someone to reconsider collecting the VAT tax.

    Even if smart users can "hack" their way around it, the company will find it's EU sales reduced to near zero. Plus if done right it could cut off email and other access(the block would work both ways). It's a very big stick and it's well within their reach.
    • Until the 3rd everything is correct. 4 and 5 do not exist. Believe me, there is no such thing as blocking out traffic from the EU.
      I dont' know if you are a citizen of the EU- well I am.
      Where would you start the blockade? Which countries would agree? who would not? Even if we are all members of the EU, we are still COUNTRIES not states.

      It takes AGES for the government of the EU to pass a law or something, because each and every country must first accept it, but most do not...

      They are way too busy to get their own shit in check than blocking of sites which do not comply.

      The next thing why blocking pages would be impossible is because there is no "top level IP organisiation" or whatever you might call them wihtin the EU. Every provider is on it's own.

      So, why would Providers shut a path to a site down when other do not, thus creating an advance for them?

      I think your vision might work in the states, but here in the EU the structure between the parts (states, countries whatever) is to loose to get into this. Well let's be happy about that ;)
  • The internet tax in addition to 8.5% state sales tax in Calif* + 3.5% Tennesee export tax would easily push total taxes over 15%.
  • by Dragoness Eclectic ( 244826 ) on Wednesday May 08, 2002 @08:41AM (#3483693)
    EU shoots itself in the foot yet again...

    Guess what? EU tax laws are NOT ENFORCEABLE IN THE UNITED STATES! Officials of American companies that don't have a foreign subsidiary that can be pressured (like Yahoo France was) will no doubt roll on the floor laughing hysterically, and then start counting the extra sales they'll pick up by underpricing the companies that do have to abide by EU stupidities.

    The EU cannot enforce this outside the EU, and they know it--look at their FAQ! The "enforcement" section is all about voluntary compliance--which will no doubt be a lot like the "voluntary compliance" where customers are supposed to voluntarily add required state sales taxes to mail orders here in the U.S. NOBODY IN THEIR RIGHT MIND PAYS TAXES VOLUNTARILY!

    If I want to give my money away, I give it away to a church or charitable organization, not the eternally-corrupt, wasteful government.

    In the U.S., mail order companies are only required to collect sales taxes in states in which they have an actual storefront presence because there are Constitutional problems with forcing a private business to act as a tax collector in another state. The same laws and issues will prohibit any legal requirements to collect taxes for a foreign authority such as the EU. If Lousiana can't force a California mail-order business to collect sales taxes from a Louisiana customer, what makes those idiots in the EU think they can?
  • This tax is simply unfair. With a mail or catalog sales, a tax is added if the retail company has a physical operation in the same state as the customer. However, my understanding of the European tax, and proposals for such a tax in the U.S., is that a with an Internet sale, a tax is added regardless of the retail company's physical location.

    I truly do not see a substantial difference between these two methods of sales to provide for a different method of taxation: the provision of information for a product is provided to the customer in the same fashion:

    1. With a catalog, the customer is sent and reads information concerning the product in his/her state, compared with the Internet, the customer receives and reads information concerning the product in his/her state; and
    2. The transaction is conducted in the customer's state. With a catalog, the customer is typically at his/her state of residence and phones the retail operation to place an order --- with the Internet, the customer is typically at his/her state of residence and communicates with the retail operation, via a similar mode of transmission, to place an order.

    If transactions via the Internet are to be taxed, it should be done fairly --- only taxation if the customer resides in a state where the retail operation has a physical operation: like mail-order sales.
  • Are the EU countries going to collect sales tax for the individual states in the US when US residents but goods from companies in the EU? How are they going to track where the purchaser is? The sales tax varies not only from state to state, but often from county to county within the states. The EU has no intention of having their companies collect sales taxes for the States in the US. This is one sided legislation on people over which they have no authority.

Today is a good day for information-gathering. Read someone else's mail file.