Fury over digital VAT trade

The proposals, developed by the French and as yet unseen except by US trade officials, will also include a threshold of E5,000 (£2,900) for payment of VAT on digital goods instead of the E100,000 (£58,000) touted in a recently published EU draft directive.

US officials are said to be incensed by the French proposals. A Belgian idea suggests forcing traders to register in one country which would act as a clearing house for the incoming VAT.

Dawn Primarolo met EU finance ministers in Luxembourg on Tuesday and was due to discuss the vexed issue of digital goods. Currently traders from outside the EU, but selling digital goods within member states, cannot be forced to hand over VAT.

One British tax expert said: ‘It will be a long haul before anything is decided. Care has to be taken or we could start another banana war.’

ACCA’s head of taxation, Chas Roy-Chowdhury, said the EU should have just one rate of VAT across all member states.


VAT nightmares lurk for dot.coms

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