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Freeserve Anytime moves to Madeira

Cheap VAT for all

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Freeserve is moving tax domicile for its Anytime unmetered ISP service to Madeira, taking advantage of the island's cheapo VAT regime.

The company reckons it will make annual savings of around £4.5m, paying £13m into the EU, against £17.5m today. Of course, it's the exchequer of Portugal, Madeira's owner, what gets the money, not the UK. Madeira's VAT rate is 13 per cent, compared with 17.5 per cent in the UK.

Freeserve today confirmed a Sunday Telegraph report that it is prepping the rebrand for its UK service under the name of Wanadoo, its French parent. The exercise which will see 2.5m customers see their email addresses changed is expected to cost £30m. So the VAT saving will go a little way to funding this.

The change of tax domicile for Freeserve Anytime will 'marginally' reduce the advantage of AOL, the American giant which pays no VAT on its ISP services in the UK, according to Freeserve. This unlikely tax loophole ends in July, 2003, when the EU ECOFIN directive comes into force. Clearly, that's not soon enough for Freeserve, which claims that AOL will save another £40-£50m before its cosy personal finance regime is closed.

Freeserve is setting up a new company in Madeira which will be operational from September this year. The ISP says its users will not notice any difference. What not even in price?

This is a wizard wheeze: Reg Merchandise is upping sticks as soon as we can afford the airfare. ®

Related stories, link

Freeserve press release

EU closes AOL UK VAT loophole (but not yet)
Freeserve goes legal in AOL VAT spat
Freeserve punters to get Wanadoo email addys
Pluthero quits Freeserve for Energis

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