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

[kevin-standlee.livejournal.com]

I take it that the reason that ebooks aren't considered "books" for the purpose of the VAT exemption is that they're considered "services" rather than "goods," which alas is consistent with the model of the universe that Amazon, Microsoft, et al would like to impose in that you never own any intellectual property at all; you only lease it from them and they can take it back at their pleasure. (Leases are apparently considered services.)

Mind you, I was always surprised that physical books were VAT-free in the UK. They aren't tax-free in any US jurisdiction that has a sales tax of which I'm aware. Certainly I pay sales tax purchasing books in California where I work and Nevada where I live. Even if I were to order a paper book from Amazon, I'd pay Nevada sales tax because I live in Nevada and the Amazon warehouse from which it would likely ship is (until the end of this year when it moves to Reno) in Fernley, not just the same state, but the same city in which I live. (And no, they don't have a will-call, convenient as that would be for us northern Nevadans.)

I freely admit to not being a VAT expert and only learning much of this VATMOSS stuff by way of being the US agent for Wizards Tower Press, which may well have to relocate to the USA in order to stay in the business of publishing ebooks.

[vicarage.livejournal.com]

VAT was originally seen as a luxuries tax, so certain items, like bread are exempt, when biscuits are not. Railway tickets are exempt too. And books were not considered a luxury. I'm sure you know that Jaffa Cakes are viewed as essentials too.

The distinction has blurred over the years, but is an example of the confusing morass of exceptions any international sales tax collecting organisation has to face.

American sales tax seems more sensibly applied to all things, except for the fiddly Parks Department levies in each city, and daft idea that its not included in the prices on the shelves