EU to add VAT to all e-commerce purchases made in US

Rolo Tomasi

The strength of the euro over the dollar was beginning to make purchasing from the US a very attractive proposition, but it appears that is about to change.

http://www.washingtonpost.com/wp-dyn/articles/A36150-2003Jun9.html

Imposter

I liked this bit.

The debate has attracted the attention of the Bush administration, which has said that subjecting U.S. and European companies to different tax schemes could amount to an illegal trade practice.

"We have to consider not just how the VAT plan will affect us today, but also how will this impact where U.S. businesses will want to go in the years ahead," a senior Treasury official said last month in an interview. "At this point, the [VAT directive] looks like it could put a crimp in those plans."

In a letter last week to U.S. Trade Representative Robert B. Zoellick, a bipartisan group of a dozen House lawmakers urged the White House to challenge the agreement before the World Trade Organization.

"These remain challenging times for many American Internet companies," wrote Rep. Cliff Stearns (R-Fla.), chairman of a House trade panel. "They are fighting hard to make their businesses work and to reach global markets, thus helping drive the American economy. We ask that they be given a fair chance and a level playing field."

Especially the last bit about "helping drive the American economy" and "We ask that they be given a fair chance and a level playing field"! Seems like all things are only 'fair' if in America's advantage!

Victor

Originally posted by Imposter
Especially the last bit about "helping drive the American economy" and "We ask that they be given a fair chance and a level playing field"! Seems like all things are only 'fair' if in America's advantage!

Of course it's unfair, american businesses don't know how to operate VAT, European ones do

wobble

It can not so hard to operate VAT. I mean u add a presentage to the cost and send it to the gov. (Granted this will cost money to do).

Also in the US they have their own taxes per state. So how do they combat this? I assume that if you buy cloths in NYC online you will be taxed and if you buy em in Boston you will not (Assuming the company is in CA). Is this the case?

Also if companies here sell to US do they charge VAT?

Wobble

Victor

Originally posted by wobble
Also in the US they have their own taxes per state. So how do they combat this? I assume that if you buy cloths in NYC online you will be taxed and if you buy em in Boston you will not (Assuming the company is in CA). Is this the case?

As best I know American state sales taxes are only charged within the state, typically at 6-10% (I'm not sure if businesses get rebates). Inter-state transactions are not charged sales tax. Hence mail order and internet sales are so popular in the US, the tax system actively encourages you to sell to other states. So a California-based company selling something for US$1,000 to someone in New York work charge exactly US$1,000, but more to a California resident (US$1,000+tax).

Clothes under US$100 in New York do not attract sales tax, so thats a poor example of how the system works.

Originally posted by wobble
Also if companies here sell to US do they charge VAT?

No, exports outside the EU do not have VAT charged.

dahamsta

As best I know American state sales taxes are only charged within the state

True in most cases, but my host charges me "state tax" for my servers in Texas, based on some logic they explained to me several times and I still don't get. I'm awaiting my credit card bill with interest next month, if they try and charge me VAT on top of it I'll go absolutely spare.

http://forum.rackshack.net/search.php?s=&action=showresults&searchid=660961&sortby=lastpost&sortorder=descending

adam

Originally posted by dahamsta
True in most cases, but my host charges me "state tax" for my servers in Texas, based on some logic they explained to me several times and I still don't get. I'm awaiting my credit card bill with interest next month, if they try and charge me VAT on top of it I'll go absolutely spare.

http://forum.rackshack.net/search.php?s=&action=showresults&searchid=660961&sortby=lastpost&sortorder=descending

adam

From that forum:

I can see a lot of US companies sayin who the hell are you, go sit on it we're not paying you anything.. I doubt the US gov. would agree to that (if they haven't already lol) and the EU can't force anything on their own.

That sort of hits the nail on the head.There are so many trade disagreements between the U.S and the E.U from time to time, I doubt , the U.S treasury would accomadate, the E.U on this one.
It would be seen also as a barrier to trade.

Most likely, the only way such a plan could be implimented is via good old customs and exise , and now that I think of it , don't most declared packages from the U.S over a certain value get charged any how...., it's probably simpler for the post office/couriers if they have to collect 21% vat on everything.
mm

Victor

Originally posted by dahamsta
True in most cases, but my host charges me "state tax" for my servers in Texas, based on some logic they explained to me several times and I still don't get. I'm awaiting my credit card bill with interest next month, if they try and charge me VAT on top of it I'll go absolutely spare.

Is the real problem that the states don't want to share the tax cut of the sales?

http://forum.rackshack.net/search.php?s=&action=showresults&searchid=660961&sortby=lastpost&sortorder=descending

When the US starts collecting taxes and sending them back to Europe the US will have gone full circle.

:rolleyes: Hey, don't trade with us if you don't want to pay taxes.

tribble

Very few US companies will actually ship outside of the US - It's bizzare.

The one i found to do so did not charge me sales tax but did hit me heavy for the shipping (1kg fed-ex $80).

3 weeks after arrival Fed Ex sent me an unexpected $150 tax bill.
I've never paid tax on other (far eastern) orders.
But the bastids got the wrong address (it was delivered to me by neighbours) so good luck to them finding me.

tribble