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EU Dictates New Taxes

 2:15 pm on Feb 14, 2002 (gmt 0)

In what is sure to be only the first salvo in a rapidly escalating form of a trade war, the EU has declared that all foreigners must pay a local tax when selling goods in the EU. The so called VAT (Value Added Tax) is to be collected locally on all internet sales.


"This measure will remove the obligation for EU firms to apply VAT when exporting to world markets."

Under the agreed system, companies outside of the European Union must pay the VAT rate in the country where their customers reside, through one portal country of their choosing. That country would then pass on the VAT of the consumer's country.



 2:33 pm on Feb 14, 2002 (gmt 0)

Tue, 12 Feb 2002 16:15:18
boston-e-party.org has been reserved

anyone care to join me :)


 3:32 pm on Feb 14, 2002 (gmt 0)

Why in the world should the EU force a Euro company to add VAT to their bills, while allowing companies from outside to sell VAT free?

As I said before [webmasterworld.com] - there have been long talks over this, with the US government tying to delay this by all means. One day, was their position, one day we will have a worldwide agreement Until then we have the right to sell cheaper to EU citizens than you!

Also note this: this is nothing more than what has been applied all the time on B2B commerce, which makes for 90% of e-commerce.

So not a big deal anyway.


 8:50 pm on Feb 14, 2002 (gmt 0)

I can't see this has anything to do with taxes at all - it is trade protectionism.

It's far worse that appears for most US companies. In order to fight back, the US is likely (already talking about it) to levy new taxes on EU goods. Which of course leads us right into the era of the first net taxes for the US too.

(sorry I didn't see that other thread).


 9:56 pm on Feb 14, 2002 (gmt 0)

[trade protectionism]

Shaky political ground here, Brett.

Neither the US, Europe or the US follow any trade law unless it benefits them.

Imposing barriers to trade is just another political/economic negotiating position.

The US is as guilty, (maybe even more), eg the change in stance on the Kyoto Environment situation - change of govt - new political decision driven by US Industry.

We can probably find similar examples for any country we care to examine.

Not pointing fingers here - hate EEC nonsense as much as the next man - but all of this stuff is just commercial decisions dressed up as politics.

....errr IMHO, of course


 10:17 pm on Feb 14, 2002 (gmt 0)

>trade protectionism
Sure is.
Just to make clear: In the EU companies selling stuff online to EU citizens have to add VAT to their bills.
Until now companies from outside the EU did not have to add VAT. They could sell cheaper.

Now, companies from outside the EU have to add VAT too when selling to EU citizens.
It's not that any US company has to pay something a EU company does not.
That's all.
Just leveling the playing ground.

If there is VAT on online sales, then it must be imposed on all online sales. No way around it.

The only possible alternative would have been to drop VAT on online sales completely.

Which perhaps would have been a nice or even wise thing to do.

In the US VAT on online sales just got delayed, right? I seem to remember some talk how it could be imposed in practise, but with the Bush administration the thing got dropped quickly - vaguely right?


 10:26 pm on Feb 14, 2002 (gmt 0)

"This measure will remove the obligation for EU firms to apply VAT when exporting to world markets."

That obligation never existed, at least not when exporting from Germany. The whole thing sounds quite ridiculous, as there is simply no way to enforce it.

There's also no way for a small to medium business to keep track of similar regulations that might be in place in every other country of the world. When I'm shipping to Elbonia, I'll happily ignore even the possibility of any kind of import tax there. They will have to nail the recipient, if they want anything out of the deal. They already to that with customs charges, so it won't involve any extra work.


 10:37 pm on Feb 14, 2002 (gmt 0)

"In the US VAT on online sales just got delayed, right?"

They're still not sure what they want to do about it. We've never had to pay sales tax (our version of VAT) on anything ordered through catologs or the internet (unless the company is located in the same state as the buyer). There are a few congressmen who have been pushing to tax the internet but I believe the majority are still against it (for now).

If the US does decide to tax the internet the whole thing will probably become a huge mess. Our sales tax is decided by local goverments rather than the federal goverment. The taxes not only change by state but by city/town as well. So if the US was to tax the internet we would either have to make a change or keep up with the sales tax of hundreds of thousands of different cities across the country.


 7:14 pm on Feb 16, 2002 (gmt 0)

personally, i think everything would be so much easier if every country abandoned all the sales taxes and added them all to income taxes and local taxes. result is same tax income, less hassle, less paperwork, lower administration costs, level playing field for everyone.

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