Under the new rules, any company not registered in the EU but
which has annual sales of internet services and paid-for TV in
excess of 100,000 Euros (£62,000) to EU customers will have to
register in a member state and pay VAT at the prevailing national
rate.
The Directive will not affect the delivery of tangible goods
such as books or CDs ordered on-line.
Non-EU companies currently selling products on-line such as
books and CDs are presently exempt from VAT while their EU
competitors are not. The new laws aim to create a level playing
field between European companies and those outside the EU.
However, Stuart Eizenstat, US deputy treasury secretary, said
Washington had “serious concerns with both the substance and
process” of the proposed Directive and added that the EU could
hinder the development of e-commerce.
Tax consultants have suggested that the scheme will be difficult
to enforce on non-EU companies and therefore it can only work if
non-EU companies co-operate voluntarily.
