The new Directive will mean that AOL in the UK will have to
charge its unmetered access customers VAT at 17.5%. It is presently
exempt. The proposed Directive, agreed recently by the Council of
Economics and Finance Ministers of the EU, requires non-EU
businesses to register for VAT in the EU and charge VAT at the
standard rate in force in the member state where their customers
reside.
Member states are due to sign up to the new Directive at a
meeting of the Council in February 2002. A meeting will be held in
January 2002 to agree the ultimate date by which each member state
must implement the Directive into domestic law.
Freeserve argued in today’s statement that “the long-standing
Business Brief, which treats AOL in the UK as a supplier of content
rather than telecommunications services, and gives AOL in the UK a
VAT saving of at least £30 million a year, is now more discredited
than ever before.”
Commenting on the new proposal, John Pluthero, CEO of Freeserve,
said:
“I am bitterly disappointed that despite the
new European proposals, Customs and Excise still refuse to make an
announcement in relation to the VAT treatment of AOL. The UK
government has been sitting on this issue for at least one year
and, despite attempts by us to raise the matter with the Treasury
Minister, Paul Boateng, he hasn’t even acknowledged our
correspondence. Having previously blocked this proposal, Freeserve
is calling on the UK government to now implement the new Directive
into UK law at the earliest possible opportunity.”
