Freeserve is considering relocating its broadband operation to Madeira to take advantage of the island's lower VAT rate.

The FT cites Freeserve boss, Eric Abensur, as confirming that the matter is currently being discussed. He told the pink paper that a decision whether to move the ISP's broadband business to Madeira would be made "later this year".

This isn't the first time Freeserve has upped-sticks in a bid to reduce its tax bill.

Last July Freeserve confirmed that it was moving its business for its Anytime unmetered ISP service to Madeira to take advantage of the island's 13 per cent VAT rate, as opposed to 17.5 per cent in the UK.

Freeserve's motivation behind this latest move appears simple enough. Having lost €92m last year it seems it will examine any avenue to reduce its losses. Furthermore, the issue of VAT is always a good excuse for the ISP to bash its rival AOL, which, under current rules, is exempt from paying VAT in the UK.

Last September Freeserve was given the green light to challenge HM Customs and Excise's decision not to charge VAT on AOL's Internet service in the UK.

However, the judicial review - due to begin shortly - has now been delayed until October because a key witness is on maternity leave. ®

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