IP: EU to impose VAT on digital goods and software, from WSJ

[Dave Farber <farber () cis upenn edu>]

> [I'd be happy to forward other views. Anyone wanna defend this? djf]
>
> > From: "Ronald Nehring" <rnehring () atr-dc org>
> > To: "Declean" <declan () well com>
> > Subject: e-Freedom: EU to impose VAT on digital goods
> > Date: Wed, 1 Mar 2000 09:29:21 -0800
> > X-Mailer: Microsoft Outlook IMO, Build 9.0.2416 (9.0.2910.0)
> > Importance: Normal
> >
> > The dumb idea of the day award goes to the European Union, which is drafting
> > a plan to require all US and other non-EU countries selling digitized goods
> > to Europeans to register with the EU and calculate/collect/remit the VAT.
> >
> > Anyone want to take a stab at just how the EU would enforce a tax collection
> > obligation on companies without a "nexus" in the EU?  Maybe they can take
> > the Chinese route of blocking access to any .COM site that isn't registered.
> > Yeah, right.  The hackers would have a field day with that one.
> > Alternatively, maybe the EU has found a new role for the British SAS.
> > Perhaps the next James Bond film could be called, "The World (of Taxes) is
> > Not Enough."
> >
> > -- Ron Nehring, Americans for Tax Reform
> >
> >
> > Wall Street Journal
> > 3/1/00
> >
> > EU Proposes VAT For Digital Goods;
> > Plan Would End Tax-Free Bargains From U.S.
> >
> > By Handelsblatt correspondent Joachim Hoenig and Wall Street Journal Europe
> > staff reporter Brandon Mitchener
> >
> > BRUSSELS -- The European Commission is drafting plans for a value-added tax
> > on digital products that would end the days of tax-free U.S. software
> > delivered over the Internet, according to people familiar with the
> > situation.
> >
> > A draft directive scheduled to be presented to European Union member states
> > in late March foresees a range of VAT rates on so-called "virtual goods,"
> > including software, music, videos, photos and educational products.
> > Under the plan, VAT rates would depend on whether a buyer is a company or an
> > individual and in which of the EU's 15 member states a seller is located, or
> > in the case of non-EU vendors, where it is registered. The proposal would
> > also introduce a change in EU tax policy by treating some products as goods
> > when delivered by post but as services when they are delivered online.
> > While the change would help to level the playing field between European
> > software makers and their U.S. rivals, the proposal faces resistance from
> > parts of Europe's nascent e-commerce industry, which already wrestles with
> > VAT rates that ranging from 0% to 25% -- depending on the country and the
> > product -- as well as from non-EU companies worried about its potential
> > impact on trade.
> >
> > "We're worried that any rules relating to e-commerce will be too complex and
> > companies will have to deal with too many jurisdictions," says Douglas
> > Gregory, International Business Machines Corp.'s chief lobbyist in Brussels.
> ...
>
> > The commission sees the rapid spread of virtual goods -- some of which
> > currently go untaxed -- as a potential threat to its tax base. VAT, levied
> > on the final consumption of all goods and services within the EU, accounts
> > for nearly one-fifth of the tax revenue among EU member states and 44% of
> > the EU's own &100 billion budget.
> ...
>
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