VATMOSS

[drplokta]

For the benefit of the EU, here's how taxing things that are both sold and delivered over the Internet works.

Can we tax them based on the location of the vendor? No, because vendors will simply relocate to a jurisdiction that doesn't tax such transactions (e.g. Amazon in Luxembourg).

Can we tax them based on the location of the purchaser? No, because we never discover the purchaser's location during the process of sale and delivery.

Can we tax them based on the location of the purchaser's IP address? No, because the purchaser can choose to use a proxy or VPN in a jurisdiction that doesn't tax such transactions.

Can we tax them based on the location of the purchaser's payment account? No, because the purchaser can open an account in a jurisdiction that doesn't tax such transactions.

Can we tax them based on the purchaser's self-declared location? No, because the purchaser can lie.

Is there any other way to determine the purchaser's location? Not as far as I know.

Can we harmonise tax rates for any of the above across 194 different countries? Ha ha ha ha ha.

Therefore, such transactions can't be taxed at all, and the EU should simply give up trying, and only tax things that can be unambiguously located within a single taxation jurisdiction.

Comments

[bart-calendar.livejournal.com]

This is why America doesn't tax online sales.

[sbisson.livejournal.com]

Except where it does.

[bart-calendar.livejournal.com]

I thought it was only if you made an in-state online purchase?

[autopope.livejournal.com]

Which runs into all the same objections Dr Plotka just pointed out. (Except it's a nominally monolingual trade bloc, which makes things slightly easier to manage -- if you've ever tried filling out a foreign tax form in a language you don't speak.)

[fanf]

With the added fun that in some US states sales tax can vary per county or per municipality.

[kevin-standlee.livejournal.com]

California has lots of different local sales tax rates, and no minimum turnover threshold. SFSFC (parent non-profit of the 1993 San Francisco and 2002 San Jose Worldcons and of the 2018 San Jose Worldcon Bid) had to take careful note of this when running our art shows, for which we had to collect and remit the sales tax for the specific jurisdictions in which our events happened.

Fortunately for us, convention memberships are not subject to sales tax in California.

[drplokta]

I believe that some US states require their residents to declare and pay tax on their out-of-state online purchases. I also believe that compliance rates for this are not high.

[kevin-standlee.livejournal.com]

Forget about online purchases: many states (California among them) says that you have to pay "use tax" (effectively the same thing as sales tax) on any goods purchased outside of California. This has significant impacts on the northern border, because Oregon (the state just north of California) has no sales tax at all. However, about the only time California can enforce this is on bigger-ticket items like cars where you have to register the vehicle.

The fact that most people ignore the use tax actually shows up in commercials, such as one for a local chain doing a "we pay the sales tax" event that had the character saying he was asking his brother-in-law to buy him a barbeque grill while he was in Oregon and the announcer saying, "Don't bother; just buy it at [store]." The law is effectively unenforceable.

Similarly, I think the EU asserts that a US-based company selling to the EU has to pay VAT. Good luck collecting. That's why I think you'll see some EU-based micro-businesses virtually relocate themselves to the US or Canada or somewhere else friendly.

The sad thing is that rule changes intended to take out Amazon's tax-avoidance scheme are actually going to benefit Amazon because so many micro-businesses are likely to find that one of the only ways they can do business is to give most of their profits to Amazon.

I sort of wish that the regulators would just come out and say, "We want everyone to work for a handful of Big Corporations so we can tax and regulate them more easily."

um, sort of (taxing online purchases in the US)

[bibliofile.livejournal.com]

AIUI, that depends on the delivery's postal address and whether the vendor has any brick-and-mortar locations. I've had state sales tax applied to my online purchases only when a) I buy a concrete thing, which b) I have delivered to a state in which c) the vendor has a brick-and-mortar store.

So if I order something online from Sears, which indeed has physical shops in my state, I pay state sales tax. If I buy something at a Sears near me, I pay state and local sales taxes.

OTOH, if I purchse something in a shop and have it shipped out-of-state, I don't have to pay any sales tax. This practice predates online shopping by decades, and I believe it parallels the charging of VAT for (say) British goods shipped to the US.

(IANAE, mind; I just know from experience how things seem to work.)