Boston E-Party looms, as EU set to tax online sales

Ministers poised for sign-off

The European Council of Economic and Finance ministers (ECOFIN) is set to agree the imposition of Value Added Tax on online sales today. ECOFIN agreed this in principle in December, but after today's sign-off it will have to go through the European Parliament, after which legislation will go into force.

ECOFIN has bigger fish to fry today than VAT - aside from lunch, the agenda concerns updates on the economic Stability and Growth Pact, the Euro transition and the budgetary framework for European enlargement. But it's made its mind up already anyway.

At the December meeting it invited EU member states "to work to develop and implement as soon as possible an appropriate electronic mechanism on a non-discriminatory basis for charging, declaring, collecting and allocating tax revenues in connection with e-commerce supplies with taxation in the place of consumption."

Today it will agree a "temporary interim solution, time-limited to three years, to be extended, for practical reasons, by the [ECOFIN] Council acting unanimously on a proposal from the Commission, based upon the Swedish Presidency compromise incorporating a simplified revenue reallocation mechansim and a commitment to the introduction of an electronic solution as soon as possible and no later than three years after implementation of the Directive."

As you will no doubt detect, we appear to recognise that we are not currently in a position to cut loose the full-scale, all-singing, all-dancing, all-taxing electronic version, but that we are sufficiently hazy about software development to believe that, er, it'll be OK in about three years.

You will find a brief explanation of how Europe proposes to enrage US vendors and trade officials, possibly triggering an electronic Boston E-Party, here. ®

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