U.S. E-Commerce Sites To Collect EU VAT 919
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."
last week's news? (Score:4, Informative)
Re:last week's news? (Score:3, Insightful)
I was under the impression that in the UK VAT is not applicable to second had goods. i.e. you buy a car from a guy down the road, you don't pay VAT on it.
So why would EBAY have to add VAT to second hand goods sold online?
Re:last week's news? (Score:5, Informative)
Re:last week's news? (Score:3, Informative)
This is true, the VAT is charged on the eBay fees, which are a service. You would be amazed, however, at the number of VAT-registered people who sell goods on eBay and charge VAT on all of them, even the second hand ones. This is technically known as fraud.
What will happen? (Score:4, Interesting)
Re:What will happen? (Score:2, Funny)
Re:What will happen? (Score:5, Informative)
if I buy something from the US and have it shipped by air freight to me in the UK, then I am supposed to put my hand up and give Her Majesty's government the tax.
Back in reality, Customs can and do stop parcels and insist you tell them what's in it. However, they ignore most of the stuff for private citizens and only go after the stuff for companies.
This is a good demonstration of why Income Tax is a much better form of taxation than Sales Tax: it's easier to enforce local taxation that way.
J.
Re:What will happen? (Score:4, Insightful)
Re:What will happen? (Score:3, Interesting)
VAT was introduced as a temporary measure (a tax on luxuries) over two centuries ago to fund the Napoleonic War. We have little or no idea what people's spending patterns would be like if it had never existed.
<an aside>:
We only have VAT still because governments never remove taxation that is not being protested. So this temporary measure has been expanded till razor-blades and tampons are taxed as luxuries!
Don't let me start on Inheritence Tax!
</an a
Re:What will happen? (Score:2, Insightful)
And this tax is a valid regulatory control, which is necessary for proper government.
But then again, I am in favour of hi
Re:What will happen? (Score:4, Informative)
That's income tax you're thinking of. VAT is a recent innovation.
Re:What will happen? (Score:4, Informative)
Re:What will happen? (Score:2)
but the issue here is digital downloads. I can sit here in the UK and pay online to renew my, um, website subscription and not have to pay any VAT. How are Customs and Excise going to know? Jolyon
Re:What will happen? (Score:2)
Personally I am amazed so many companies said OK. I prefer AOL's solution of moving to Lichstenstein!
J.
Unfortunately, customs *do* go after individuals (Score:3, Interesting)
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 getti
What will happen? It'll be a hassle, that's what! (Score:2)
Nothing... (Score:3, Interesting)
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 immediat
Re:Nothing... (Score:3, Insightful)
so that means that even with vat, the makers of the widget are jacking the price up about 42%.
sorry to muddle the discussion with silly things like math, but i guess i'd just wonder why you aren't more annoyed at american companies ripping you off then at the rate your gov't
Re:What will happen? (Score:2)
Probably nothing, just so long as you never go to Europe.
Re:What will happen? (Score:4, Insightful)
1) The small retailers will not bother with the hassle and expense of collecting tax for a foreign nation. The EU will not bother going after these retailers either, and all will be well.
2) The EU will force all EU ISP's to block net access to the small retailers' sites.
3) The EU (perhaps even with help from the US) will try and make these retailers reject sales from the EU.
This sounds like an administrative nightmare. The beauty of the Internet is that I can sell goods to anyone in the world who wants them, with a minimum investment in a website and the means to process credit card payments. This requirement could spell the death of that idea, and I find it incredibly selfish of the EU. What if every country made this a requirement? As a small retailer, I would suddenly find I have to collect taxes for the EU, certain US states, Russia, the Ukraine, Zimbabwe, Thailand, Australia, Venezuela... imagine the nightmare of doing administration for all this. Are they somehow counting on no other country implementing a similar policy?
The EU should be allowed (Score:3, Insightful)
I should read the news (Score:3, Insightful)
Anyone in Finland catch this on the news?
Re:I should read the news (Score:2)
It was an EU directive that got passed into law over a year ago, that will be coming into effect at the end of the month. So there is no particularly good reason to run the story this week rather than last week or next week.
Darn (Score:5, Interesting)
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!
Re:Darn (Score:2)
Re:Darn (Score:3, Insightful)
Where "you" means "customer." This is different because they're now requiring the shops to collect the tax at the POS.
At this point, I'm think it's easier to simply say "sorry, we don't sell to Europe" than it is to try to figure out "please add 20% for EU shipments."
Re:Darn (Score:3, Insightful)
You think? In case nobody has noticed yet, the U.S. and the EU have been gearing up for a major trade war, and this is just the latest step. This is essentially the EU trying to stop its' citizens from buying U.S. products.
The last big thing was the war with Iraq. Before the war, a significant amount of Iraqi oil was purchased with Euros, and that meant
Re:Darn (Score:3, Informative)
Sorry, but that's not entirely true. The EU is funded from VAT, and it wants the money; whether the money comes from sales to local or foreign companies is very much a secondary concern. This will avoid a tax loophole, nothing more (that is, that customs don't have the man-power to manually check every single non-VAT-registered import shipment).
Of course, on another note, VAT isn't a flat tax in many (most?) EU countries, but varies from product to product (for example, books in the UK are VAT-free, clothi
Re:Darn (Score:3, Insightful)
3. U.S. States begin requiring collection of state sales tax by Euro companies. EU decides this is actually all too difficult and anti-trade, and backs off.
Re: (Score:2)
A Note to Europeans about taxes.... (Score:3, Insightful)
How can you collect sales tax on a used item? The tax was already paid here by the original purchaser.
Most items I sell are used or "prepurchased" or involve a service. None of these items are taxable here and are considered sold at yard sale or at auction. Neither of which in my state are taxed. For some reason, some live (in person) auctioners charge tax here, but they aren't suppose to. They are told to by local governments who "slip it in"
Again, if something is used, taxes have already been paid and it's benefits to society have also created revenue generation, which in turn, is more tax collected. Say I buy a printer at retail. I pay the sales tax. Then, I use said printer to print my envelopes, receipts, business cards, correspondence, pictures to sell, etc etc - generating more income for my business. I have also used said printer purchase to make more money to spend and thus taxed, giving even more money to the government for the printer!
A lot of people that collect tax on eBay and especially Yahoo NEVER pay that back into the government. This is like the bogus people that collect tax at flea markets or for service calls.
I will hope that eBay will just add the VAT to the total bill so that we don't have to collect it and pay into some sort of escrow.
Comment removed (Score:5, Informative)
Re:A Note to Europeans about taxes.... (Score:2)
Sales tax applies to used and new items both. Do you think secondhand CD/DVD stores and thrift shops don't charge sales tax?
Re:A Note to Europeans about taxes.... (Score:2)
If I, as a businessman, buy a printer, I get the tax back as a refund from the government. When I sell it to a customer, I pay the tax on that (probably higher or I wouldn't be in business for long) price. In reality, I just pay the difference unless I sit on the printer for a while.
Re:A Note to Europeans about taxes.... (Score:4, Insightful)
You can't. And no-one's saying they will. They're talking about eBay themselves collecting the VAT - not the *sellers* on eBay! You never pay eBay for the items - you pay the seller. The seller then pays eBay a listings fee and this is what will be taxed - not the item.
The exception perhaps would be new goods, but that would be up to the selling vendor to ensure they charge people the appropriate tax for their region.
Already being avoided... (Score:2, Informative)
MoJo
Re:Already being avoided... (Score:2)
Yes, the purchaser was always requiried to pay VAT, and this was done usually at their local post office, where they also pay any customs and duties. However, this law means that your Jersey-based company (as well as one based in New Jersey or anywhere else in the world) will hav
Well, will only make me stop shop (Score:5, Insightful)
Re:Well, will only make me stop shop (Score:5, Informative)
That's very much the reason, just add the word fairly to supporting. Just like all American companies have to pay VAT for the stuff they sell, all domestic European companies have to pay VAT when they sell online services. As these American companies apparently do not, they would have a clear unfair advantage in competition.
It would be rather idiotic to support the competitiveness of foreign companies with tax-free status, while taxing domestic companies. The situation would, of course, be different if online services had a tax exemption status also in Europe.
The case is somewhat similar as the hormone beef quarrel. European farms are forbidden by law to use hormones to beef up the beef. American farms are not. Therefore, if hormone beef imports from America are allowed, they have an unfair advantage over domestic producers, and the actual result is that consumers get the unwanted hormone beef on their tables anyhow, regardless of the laws that intended to prevent that in the first place. That's why they have changed the target of prohibition from production to selling and importing. USA of course doesn't like that.
Re:Well, will only make me stop shop (Score:3, Insightful)
Nonsense, that's the exact opposite of the reality. Where on earth did you get t
Re:Well, will only make me stop shop (Score:4, Insightful)
I think you are missing the point. Social equality and social justice are the bedrocks of democracy (I take issue with evening out income). You cannot have equality of opportunity without giving everyone the same starting point. In (most of) Europe anyone with high enough grades can go to any university. In the US, Forest Gump can go to Yale because his dad is wealthy and the director of the CIA whereas as some poor kid with an IQ of 200 may never be able to afford to go to university (may have to look after sick parents who cannot afford health care for example). That is not equality of opportunity.
Re:Well, will only make me stop shop (Score:3, Informative)
I call bullshit on you. I make less than 20 000 dollars a year, yet I still pay Federal, State, and Social Security taxes. Perhaps, if you'd look at the facts rather than listening to liars with an agenda...
Re:Well, will only make me stop shop (Score:3, Informative)
The fact of the matter is that billionaire CEOs routinely get cars, jewelry, real estate or other valuables without paying for them.
More accurately, they get use of valuables without actually obtaining ownership, since obtaining ownership would equate to income. No tax law can touch this.
BTW if I knew of the specific loopholes I would not be posting here
Well, I do know a couple of people who are accountants for large (multi-billion $) companies, and they are the source of my knowledge about how the
Re:Well, will only make me stop shop (Score:3, Funny)
That is the whole point (Score:3, Funny)
That is the real point of this. If the governments in question were really interested in collecting taxes, they would be doing so at the customs level, improving oversight and checking of incoming packages. Something t
Re:That is the whole point (Score:4, Interesting)
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.
Re:Well, will only make me stop shop (Score:5, Informative)
There is an allowance of £18 (or £36 for "gifts"), but any package worth more than that is subject to both import duty and VAT at the point of entry to the EU. The importer (i.e. you) is responsible for paying this.
The issue here is around services and products with no tangible substance. When do these enter the EU? The ruling basically means that sales of these items takes place within the EU, and therefore the vendor is liable. The other option would be to say the purchaser is importing the goods, and make them liable. Obviously, this would be much harder to actually collect on, as you have to rely on individuals to a) declare it, and b) know they need to declare it.
It's all about levelling the playing field between EU and non-EU vendors. Previously, we had the perverse situation of EU vendors having to pay more tax on sales in their home market than non-EU vendors.
This is a Good Thing (tm) (Score:3, Insightful)
So? (Score:2)
Allways should have done, legally speaking, and products allways do as well. To get around it you simply need to set up a stateside bank account and a remailer address with a friend. No Problem.
Simple Greed (Score:2, Insightful)
When I order goods from the USA in future, I will have to pay:
In truth this sounds to me like an alternative method of adding a 15-25% Tarriff on non EU Goods and services and really should face reciprocal tarriffs from the USA etc.
Whatever happened to the British idea of Free Trade, looks like we've sold it down the sewer for a piece of the Euro pie :(
At least I won't have to charge these silly fees to my customers in other EU count
Re:Simple Greed (Score:2)
Umm, I thought the British idea of free trade was removing all of the resources of a colony for free, until the colonists revolt and become allies?
Re:Simple Greed (Score:5, Insightful)
What will happen next month is that the VAT will be collected by the retailer, and they will be responsible for sending it to your government. The duty will still be chargeable on import (I assume), but you won't need to pay VAT twice.
Re:Simple Greed (Score:2)
Seeing as UK companies have to add VAT, isn't this actually making things fairer in the UK? Otherwise non-UK companies would have a bit benefit over UK based companies, which of course is not in our interests.
Re:Simple Greed (Score:3, Interesting)
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
Why collect here (Score:3, Interesting)
Web subscription (Score:2)
Did you need another reason to keep your money in your pocket? Now you have one.
How can this behoove (sp?) the US? Isn't everyone complaining about the economy? Isn't foreign purchases a great way to get much needed dollars?
And doesn't the US regularly ignore the demands of the rest of the world anyway? (last sentence not meant as a troll)
Re:Web subscription (Score:2)
Don't monkey with our finest tradition!
Re:Web subscription (Score:3, Insightful)
Get the point? If EU doesn't get compliance otherwise, they have plenty of weapons to force the card associations to do the enforcement for them. Don't file EU VAT re
Damn Euros! (Score:5, Funny)
Give me Liberty or give me, er, hold on . .
If I had a hammer, I'd hammer, no, not that one . .
No taxation without representation! No tea for me!
Crap! Isn't there an old bumper-sticker worthy phrase for this nonsense?
Restraint of trade? (Score:2)
If you're based in the US, you have to manage 15 different tax rates, and do 15 times as much paperwork. If you're based in the EU, you can use your local rate, and do it once instead of 15 times.
Re:Restraint of trade? (Score:2, Interesting)
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 th
Re:Restraint of trade? (Score:2)
The situation before - where an EU based company would have to charge VAT but a US based one wouldn't, was biased towards US based companies. This way is fairer.
Besides, this only applies to big companies that are likely to have offices based in the EU anyway.
VAT (Score:5, Insightful)
Assuming that governments have to collect taxes somehow, why is this a bad way to do it, as opposed to income or corporate tax?
Although many Americans give the impression that they think all taxes are evil, over here in Europe we quite like having things like free health care for everyone, tidy streets etc. We think that it makes for a fairer and more civilized society, even if it means that we are all a little poorer (in monetary terms) than you guys. Many of us find the attitude of some Americans - that taxes and social government are 'evil' - frankly a bit bizzare.
Although I guess it is understandable looking at the current state of politics in the USA. How is it that you guys no longer seem to be bothered about such essentials of democracy as transparency and avoiding rid of conflict of interest in your political leaders?
Re:VAT (Score:5, Interesting)
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.
Why Sales Tax is Bad (Score:5, Insightful)
Because in a fair tax, the rich pay either the same, or more than the poor. Income tax handles this -- either with a flat percent or with increasing brackets. The problem with sales tax is that while Mr. Millionaire might buy more things than you do, he doesn't buy *proportionally* more things -- a man can only drink so much beer, after all.
So as a total percentage of income, Mr, Millionaire pays *less* sales tax than you! Not very socially progressive, eh? Not surprisingly, the rich have always hated income tax and preferred sales tax for exactly this reason.
Re:Why Sales Tax is Bad (Score:3, Insightful)
no, the rich make there money from the work of others.
Sales tax is not proportianal enough to make a healthy society. A healthy society is neccessary to maintain balance between classes.
"They pay more money while it is they who drive productivity and wealth in our society"
please explain to me how cutting a work force from a profitable company and paying CEO's millions, if not Billions of dollars drives
Re:VAT (Score:3, Insightful)
I find it frankly a bit bizarre that Europeans constantly use t
Re:VAT (Score:4, Insightful)
No, it's not. Customs and duties are collected at the point of entry, not the point of sale. This means the cost of the infrastructure to collect these is paid for by the destination. The EU wants VAT collected at the point of sale, which means that it's now the store's responsibility to conform to EU laws, not the purchaser's.
"In the case of products bought from non-EU companies that are physical items, customs collect the VAT and import duties."
Again, note that it's collected from the purchaser, not the store.
"but since nobody would actually bother to do it, now non-EU online services will be required to collect the VAT for the government if they want to sell to EU consumers."
So what you're saying is that international businesses are being penalized for the actions of the EU's own citizens? What, it's OK so long as it's not the US doing it?
"VAT is not a tax on the stores, it is a tax on the consumer."
It's a tax on the stores because the stores are the ones that have to pay for the infrastructure needed to collect some other country's tax.
Re:You're so silly (Score:5, Insightful)
That's complete BS. All receipts that are to be kept in any kind of official records MUST have the VAT amount and precentage shown, so all the stores are obliged to write such a receipt if asked (due to which allmost all modern cash registers print it automatically).
I guess, it's also a question of what you are used to, but I really got irritated in most US shops due to the fact that the listed prices did not contain VAT. IMHO it's nice to know how much the thingy your are about to buy will eventually cost with out calculator..
Only for digital (non-physical) goods (Score:5, Informative)
Since non-physical, i.e. transmitted via the net, goods don`t go through customs, they have to find another way to tax it.
This is uncalled for... (Score:2, Insightful)
That 15% to 25% is a tax which (theoretically) will go to fund other services, just like any other tax.
I appreciate Slashdot doesn't pretend to be unbiased, but can we please keep the flamebait out of story submissions.
What kind of tax do you prefer? (Score:2, Interesting)
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
US now subject to same laws as EU - bug deal (Score:3, Interesting)
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
AOL UK's unlevel playing field (Score:5, Informative)
But, because AOL UK is based outside the UK, AOL doesn't have to charge its customers VAT.
Good thing right? No. Bad thing. Very bad thing.
Whereas the UK-based companies, including almost all of the small private startups (many started by people who had previously run bulletin boards, etc), had to charge their customers VAT and then pass on that tax to the government, AOL used loopholes in the VAT legislation to avoid having to charge VAT yet it charged its customers the same amount that the tax-paying ISPs did.
In effect, AOL was able to charge its customers more for its services yet compete at the same level as everyone else - whereas the competition's prices included 17.5 percent VAT, AOL's prices included 17.5 percent extra profit.
Clearly, this has provided AOL with an artificial competitive advantage.
Breaking down the costs shows this more clearly:
AOL: £15.00/month charge, £15.00/month to AOL, £0.00 VAT to government.
UK-based ISP: £15.00/month charge, £12.76 to ISP, £2.24 VAT to government.
To make the same amount of money from each customer, the UK-based ISPs would have to charge £17.63 (£15.00 plus 17.5 percent).
Obviously, providing internet access costs money, and it's the difference between what you can charge and what it costs you that generates your profit. Well, in this case, it's like AOL has an extra £2.24 per customer for free. This isn't so much of a problem if operating costs are small, but it's a pretty big one when costs and charges are almost similar - and we all know just how cut-throat the ISP industry is don't we?
It's clearly ridiculous that two companies both providing the same service to the same customers in the same country should be effected by taxation so differently. And, of course, this point has been made by many within the UK internet community many times. However, until now, nothing's been done about it.
Some of the larger ISPs disadvantaged by this situation have threatened to take their operations overseas too, so as to put themselves in AOL's priviledged position, but this has never really been an option for the smaller guys that have been around from day one and that have hung on in there - relocating your business overseas isn't cheap and easy.
Even if AOL starts paying VAT now, the damage has already been done. Almost a decade of tax-free operation has allowed it to become one of the most dominant UK ISPs - all that extra cash has bought it a lot of extra TV and radio advertising as well as CDs.
I'm not in favour of taxation for taxation's sake but I am in favour of a level playing field. And, in AOL's case, the field's finally being levelled out.
Re:AOL UK's unlevel playing field (Score:3, Informative)
AOL UK uses the same setup as other UK ISPs - the same infrastructure, hardware, backbone, etc - and an AOL customer's experience is th
The whole thing explained (Score:5, Informative)
Let me explain how this VAT thing works as i've read a few incorrect statements.
When you are an EU customer and are importing goods, or buying a service, from a company in another EU state you will have to pay the VAT to either your own state, if you have a VAT number (i.e. you a re a company or a professional), or to the state from which you're buying from.
Let me give a few examples:
Company A in IT buys from Company B in DE:
A pays the net price to B and IT VAT to the Italian state.
A, because is a company, will subtract the VAT payed from the amount it owes to the state.
Individual A in IT buys from Company B in DE:
A pays the net price + DE VAT to B.
B will in turn forward the DE VAT to their own state.
Now that's the situation in the EU. If you're buying from the USA the things are a little bit different:
Company A in IT buys from Company B in the USA:
A pays the net price to B and the IT VAT + customs to the Italian state.
Individual A in IT buys from Company B in the USA:
A pays the net price to B and should pay IT VAT + import tax to the Italian state.
What really happens is that, often, A will not pay the VAT nor the import tax because the package is not checked at the customs.
This is, however, illegal.
What is going to change:
This may seem strange, but is just a way to enforce the law which will, however, put some hassle to USA companies.
We already pay VAT - just not direct (Score:4, Informative)
Just because it ships from the US retailer without paying that tax at, say $100, doesn't mean that is the end price for us the consumer. As well as paying your retailer in dollars I have to pay my customs in pounds. It's not a simpe one-click purchase and then delivered two weeks later.
This is a procedural change to close the loophole by which many packages get through without duty paid, and to stop the customs warehouses being clogged with unclaimed thinkgeek.com packages, and which will mean, hopefully, that my parcel doesn't wait in customs a week while I arrange to pay additional import fees.
Currently importing from a US retailer is not worth the hassle for me as a consumer. Perhaps this change will make those retailers more attractive to me.
Why is tax bad? (Score:5, Insightful)
But where is the money really going? If we assume for a moment that you have a government who spends their collected taxes wisely (not always true, I'll admit), then that money gets put to good use.
Such taxes will be used to pay for health care (here in the UK we have a nationalised health service, paid for by taxes), transport infrastructure (roads, rail, air etc.), education (again, here in the UK, schooling is paid for by taxes, and university education is mostly paid for by taxes), police, ambulance, fire services etc. etc.
If EU citizens were shopping in the US via the web, because it is cheaper, those taxes wouldn't be being paid, and the services that rely on them would be underfunded.
I can only speak from a UK perspective on this, but while our education, health etc. services are free from many US-citizen's perspectives, they are terribly underfunded. General elections are usually fought on the basis of taxation, and the population votes for the party offering the lowest taxation (a simplification, but it's almost this simple) -- so there is little growth in the amount of money that can be spent on public services.
To put this in perspective, a few months ago I saw a news item announcing good news: NHS patients with a specific serious heart problem had their operation waiting times cut by 6 months: the waiting time for the surgery was now just 18 months. I ask those Americans reading this: would you buy health insurance that had an 18 month waiting list for major heart surgery?
If I was faced with the choice of being able to buy a DVD for £15 rather than £20, or having a health service that actually worked, guess which I'd opt for.
To clear things up a little... (Score:4, Informative)
To verify this, quoted from Europemedia [europemedia.net]: "From the first of next month, a new EU directive will be enacted, forcing all internet companies to impose VAT (value-added tax) on all digital sales. This amounts to a tariff of between 15 and 25 per cent on items such as software or music downloads, any transactions as part of online auctions and subscriptions to internet service providers, sold over the internet anywhere within the European Union."
In other words, the tax is on services and digital products sold to EU citizens on the Internet. It's still annoying (and hellish for small shareware shops to deal with!) but at least it doesn't affect the cost of physical goods... yet.
And in the case of online auctions, this means that the EU will tax the service eBay provides, not the actual product supplied from seller to buyer.
Jouni
Help with specifics! (Score:3, Interesting)
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.
We're going to do it (Score:3, Funny)
I work with a porn site; starting July 1, US residents will pay $19.95, EU residents will pay $29.95. We have to charge more than the EU tax to cover the administration costs of sorting out 15 different tax zones.
And we'll certainly make it clear to EU residents *why* they're paying 50% more than people who live in the US. On the bright side, they won't really have a choice of going somewhere else, as any remotely major competitor of ours will also be charging more.
My petty side hopes that the US passes a law that EU internet companies have to collect state and local sales tax for the location where US buyers are. I reckon there are about 45,000 different local sales taxes in the US. The administrative costs alone would basically force EU companies to just not sell to US residents.
Cheers
-b
Mr. EU Taxman can bite me (Score:3, Interesting)
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.
Sounds like a god deal to me! (Score:4, Insightful)
AOL, eBay, etc have to comply because they have operations in the EU. Small companies, located entirely in the US can safely ignore anything the EU says because their laws don't leave their borders any more than a US law can apply to a company in the EU.
This is just a larger version of the fun we get inside the US with sales tax. Buy from a small outfit and you don't pay sales tax unless you are unlucky enough to be in the same state. Which, btw, is why so many mailorder/online retailers avoid establishing operations in high population states.
Re:taxes (Score:2, Insightful)
Re:Eh? Do you really TRUST them with your money:? (Score:4, Insightful)
Re:Eh? Do you really TRUST them with your money:? (Score:3, Insightful)
On the down side, don't they still have conscription in Switzerland?
I am very anti conscription (except in times of war where it comes essential for the survival of citizens of the state (and/or their civil rights), as in the two previous world wars).
Not least because it's h
Re:Eh? Do you really TRUST them with your money:? (Score:3, Informative)
Re:Eh? Do you really TRUST them with your money:? (Score:4, Funny)
Don't be ridulous - I can buy a HumVee and drive anywhere I want, when I'm not in my private jet.
Organised public transportation is communism - it takes your freedom!
Re:I agree (Score:4, Insightful)
Really? Sweden does not have an Air Force? A Navy? An Army? Does not Sweden produce a very capable set of fighter jets, SAABs?
Does not Sweden still cling to the archaic concept of a draft [algonet.se]?
Are Swedish military personnel not currently deployed to such places as Afghanistan and Kosovo?
Thus in Sweden, I can live almost as well by not working as working.
IOW, an apparently otherwise intelligent young male, can live as a leech on the ass of everyone else, contributing nada. And brag about it.
The only reason you don't pay anything towards a military is because you don't have a job, and thus pay no taxes.
Yeah...that sounds like my kind of paradise.
I get free medical care.
"Free", only because you are a leech with no job, and pay no taxes.
And my country is free of racial tension because we have strictly limited immigration from trouble makers.
IOW...instead of allowing immigration, and possibly helping some poor slob who wants a better life, you selfishly keep your 'paradise' for yourselves. Must maintain that Nordic racial purity. Keep out anyone you don't like the looks of.
Re::-( more tax. (Score:2)
If the VAT is differentially charged by nation, it stands to reason that each country will get it. Minus a percentage remitted back to the Commission for setting this racket up in the first place.
I am a supporter of further integration, but this is anti-competitive, pure and simple, with the costs being paid by consumers and businesses alike.
One thing that I dislike intensely about this is that the EU currently does not charge businesses VAT for components sold within the Union b
Re:Ops (Score:2)
Yes, we have sales tax, but the worst I've seen is 10%, while VAT is typically never less than 15%. And it is the buyer's responsibility to pay this tax, not the responsibility of the out-of-state merchant to try to keep track of each and every state and local sales tax in the entire country.
Re:The EU is a real mess.... (Score:2)
This may come as a bit of a shock, but no one fcuking hates you at all, we are not what the American news service says we are.
And before you rant off on remember, it seems perfectly justified for your country to go against the rest of the UN and do things you think its best, you try and enforce your law on the rest of the world perhaps its
Re:The EU is a real mess.... (Score:5, Insightful)
As for socialism, well, the EU institutions as such and the treaties that founded them really are fairly liberal (in the non-American sense, where liberalism is considered freedom, etc).
I think your comparison with the USSR is quite a bit off. We're talking about old and stable democracies with market economies.
Actually, we don't care... (Score:5, Insightful)
We organise things (like health care) the way we like them, and we organise things (like taxes) the way we like them.
We are big and economically powerful enough that major (and minor) American companies *have* to comply with our laws if they want to benefit from our large market.
And if Americans don't like it, don't like us, don't like the way we do things, don't like the EU, guess what? We don't care...
Re:Actually, we don't care... (Score:3, Interesting)
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.
Re:Nop... (Score:2)
I'm not going to maintain a database just to keep track of what countries are currently members of the EU. Maintaining my own business and dealing with my own state and local tax structures is expensive enough without trying to figure in some laws of some country 3000 miles away. I'm far more likely to simply say "Sorry, we don't sell to EU members. Please send all complaints to
Re:Nop... (Score:3, Interesting)
Re:Nop... (Score:3, Interesting)
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.
Actually... no import taxes != VAT (Score:3, Interesting)
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 f
Re:Reading the actual article? (Score:3, Insightful)
The unfair trade advantage comes from the fact that the U.S. government does not require EU-based company X selling digital goods to collect and remit state sales tax to the State of California finance department when a kid in San Francisco buys a copy of Opera.
As it stands, when I buy online from an EU company, I either pay no sales tax, or the VAT is pocketed by the government in which the company is based. That's hardly what I call fair.
Nonetheless, what surprises the hell out of me is that, given mos