Source close to the EU says a decision on the controversial issue has been delayed and will not be settled until the presidency change from Sweden to Belgium this next month.
The move, which has disappointed observers, means traders in digitised goods from outside the union, such as US-based suppliers of downloadable music and software, will continue to have an advantage over EU competitors.
Chas Roy-Chowdhury, head of taxation at ACCA, said: ‘I think we need to stop EU traders from paying VAT now. All we are talking about is more talks and no action in the foreseeable future.’
Britain has proposed suspending VAT on digitised goods to level the playing field for traders within the EU competing with those selling goods such as music from a third party state.
There is a Swedish proposal on the table that a third party trader would register for VAT in an EU state and then charge the tax at the rate of the countries in which customers live.
Britain believes this to be impossibly complex but has gained no public support for its moratorium from other member states.
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