Europe resists US pressure on online VAT

Europe resists US pressure on online VAT

The European Union Council of Ministers has resisted pressure from the American government over its plans to reform VAT charged on digital products, in a move that will favour EU-based suppliers over competitors in the US.

Sealing a formal political agreement on the proposal and sending it back to the European Parliament for further discussion, ministers stuck to their line that foreign importers of digital products, such as music or computer software downloaded from the internet, should pay VAT, as the goods are consumed within the EU.

This despite a strong worded statement by US deputy treasury secretary Kenneth Dam, who said the Bush administration has ‘serious concerns about the European Union proposal’.

The US objections particularly focus on the fact that under the new system, non-EU sellers of digitally delivered goods or services would have to charge VAT, at the rate applying in the European consumer’s country of residence. Conversely, EU companies selling digital products to EU consumers would continue to charge VAT at the rate of the companies’ country of establishment.

Dam added: ‘US sellers may be required to charge VAT on sales to an EU consumer at a rate higher than their EU competitors’. In addition, US sellers may be subject to more onerous administrative and compliance requirements than are placed on their EU competitors.’

He claimed the proposals may break OECD guidelines and World Trade Organisation rules.

Share

Subscribe to get your daily business insights

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata
Professional Services

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

3y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

3y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine
Accounting Firms

Turn Accounts Payable into a value-engine

3y

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021
Making Tax Digital

Digital Links: A guide to MTD in 2021

3y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource