Guernsey closes shop on VAT loophole

Guernsey has followed its neighbour Jersey by blocking attempts by British
retailers to exploit a tax loophole to sell CDs and DVDs free of VAT following a
ruling in the European Court of Justice against UK optician and eyewear retailer
Dollond & Aitchison earlier this week.

Yesterday, Guernsey ruled that UK retailers would not be allowed to set up
distribution bases on the Channel Island. The decision was taken to protect its
“reputation and integrity”, the FT reported.

Jersey is the main distribution base for UK retailers that make use of a
controversial tax relief allowing VAT-free imports of goods valued under £18.
They now have a year to find a new base.

The tax break is now available only for exports from non-European Union

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