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eBay is to start charging value added tax (VAT) in Europe from July 1 to comply with EU legislation on digital services.

eBay warned punters back in March that new EU legislation meant that it would have to start collecting VAT on its digital services from the summer.

These taxes apply to all seller fees paid to eBay - such as insertion fees and final value fees - by sellers who reside in the European Union.

Business sellers who have VAT registration numbers will not be charged VAT on eBay fees.

As eBay explains: "These taxes apply to all seller fees paid to eBay - including insertion fees, feature fees, final value fees and service subscription fees - by sellers who reside, have a permanent address, or are established in the European Union. Under the EU regulations, we will apply the VAT rate applicable in a seller’s country of residence. For example, sellers who are registered on eBay as residents of the United Kingdom will pay 17.5 per cent regardless of where in the EU they list items."

eBay is also using the tax hike to increase, at the same time, some of the fees it charges people for using its service.

In a statement the company said: "We will raise some fees, reduce others, while keeping some the same."

A spokeswoman said that it was "too early to say" if the increased charges will affect eBay's business in Europe. ®

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