Feeds

Non-EU net firms fail to register for VAT

Boston e-party looms

  • alert
  • submit to reddit

Website security in corporate America

UK Customs and Excise expects at least 80 per cent of online trade from non-EU companies operating in Europe to follow new VAT laws due to come into effect tomorrow.

Although e-commerce giants like eBay and Amazon and ISPs like AOL have all registered to pay VAT there are concerns many smaller firms are either ignorant of the new rules or have deliberately decided to flout them.

UK Customs and Excise reckon that 90 per cent of business-to-business transactions by value and 80 per cent of business-to-consumer trades will comply the EU's VAT on e-commerce directive, The Financial Times reports.

According to the company around 22 non-EU companies have registered for VAT in the UK.

Customs and Excise has powers to compulsorily register firms. However if push comes to shove and a non-EU refuses to pay then it may be difficult to enforce any UK court order on overseas firms.

The new tax measure is designed to level playing fields, iron out distortions and close loopholes that have effectively meant that providers of digital services from outside the EU have been able to market them tax-free while European online firms have had to charge VAT.

The new rules apply to a number of e-services such as Web hosting and downloaded games, music and software. From July 1, suppliers of e-services from outside the EU will have to pay Value Add Tax (VAT) at the rate due in an EU customer's country.

VAT rates in Europe range from between 15 per cent to 25 per cent depending on the country. The new scheme allows businesses the option to register in a single member state of their choice.

AOL, whose services have been tax-exempt up till now, and Amazon have moved their European operations to Luxembourg. Luxembourg imposes low VAT rates of just 15 per cent.

For Amazon the move means it will may the same (low) VAT across all of its European operations, instead of charging different rates of VAT based on each individual country's tax laws.

AOL said that it would absorb the tax hike and has no plans - at the moment at least - to pass on the charge to its UK customers. AOL's UK rival Freeserve, which lobbied aggressively for a change in the law, estimates AOL has saved £150m since 1996 because it was not obliged to pay VAT.

eBay, meanwhile, has introduced increased fees in the UK and Germany to reflect the new tax burden it faces in those countries. ®

External Links

Customs and Excise support site for VAT on e-services

Related Stories

July 1 is 'VAT Day'
Freeserve gets frisky at AOL's expense
eBay to charge VAT in Europe
AOL centralises European ops
Boston E-Party looms, as EU set to tax online sales
Europe to levy tax on US, non-EU web sales

Internet Security Threat Report 2014

More from The Register

next story
Hey, Scots. Microsoft's Bing thinks you'll vote NO to independence
World's top Google-finding website calls it for the UK
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Apple CEO Tim Cook: TV is TERRIBLE and stuck in the 1970s
The iKing thinks telly is far too fiddly and ugly – basically, iTunes
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Found inside ISIS terror chap's laptop: CELINE DION tunes
REPORT: Stash of terrorist material found in Syria Dell box
OECD lashes out at tax avoiding globocorps' location-flipping antics
You hear that, Amazon, Google, Microsoft et al?
Show us your Five-Eyes SECRETS says Privacy International
Refusal to disclose GCHQ canteen menus and prices triggers Euro Human Rights Court action
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Security and trust: The backbone of doing business over the internet
Explores the current state of website security and the contributions Symantec is making to help organizations protect critical data and build trust with customers.