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Old 4th June 2003, 07:54 PM   #1
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Default EBay to charge VAT on Euro Sales

sorry gang across the pond, but the folks in Bruxelles have caught up with the web and EBay is imposing VAT on sales on its site. The following appeared in today's Wall Street Journal:

<b>EBay to Start Collecting Tax
On Transactions in Europe</b>

By NICK WINGFIELD
THE WALL STREET JOURNAL ONLINE


Internet auction site eBay Inc. warned users it will begin collecting tax on transactions on its European sites at the same time it will raise most fees for merchants in its biggest European markets, separate moves that could crimp near term growth in its increasingly important overseas businesses.

The San Jose, Calif., company posted messages on its European auction sites saying that it will begin collecting valued added tax on the fees it charges European sellers beginning July 1. EBay is making the change to comply with European Union regulations that go into effect on that date requiring collection of VAT on digital services, including music and software downloaded from Web sites.

In some cases, the new tax will add hefty new costs to the fees sellers pay eBay to vend their wares through its auction sites. Sellers in the United Kingdom will pay a VAT equal to 17.5% of their eBay seller regardless of the eBay site within the European Union on which they list merchandise. At the high end, Swedish sellers will pay 25% of their seller fees, while German sellers will pay 16%. Registered businesses, as opposed to individual sellers, may be able to qualify for exemptions to the tax.

Sellers in eBay's two largest European markets -- the U.K. and Germany -- and several other countries will also be stuck with higher selling fees this July. In the U.K., for instance, eBay will increase to 6 from 5 the fee for listing a vehicle on the site -- a 20% increase that includes the 17.5% VAT. While eBay will remit a VAT for sellers throughout the European Union, seller fees in many of its newer markets, including Spain, France and Italy, won't change, meaning eBay will actually recognize less revenue from sellers in those countries.

EBay spokesman Kevin Pursglove said the company can't predict how significant an impact the changes will have on its international business, which brought in 30% of its $466 million in transaction revenues in the first quarter.

"Historically what we see is when there is a fee increase, no matter how moderate, we do see a short term lag in the number of listings," said Mr. Pursglove. "It usually takes a month or a month-and-a-half until it bounces back."

Write to Nick Wingfield at nick.wingfield@wsj.com
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Old 4th June 2003, 09:07 PM   #2
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Quote:
"Historically what we see is when there is a fee increase, no matter how moderate, we do see a short term lag in the number of listings," said Mr. Pursglove. "It usually takes a month or a month-and-a-half until it bounces back."
"No matter how moderate" - that`s funny

Here the new pricelist:
ebay`s new pricelist for Germany

In the notification email I got from ebay a couple of hours ago they say: "However we will not overall surcharge the VAT on all fees "

In a way that`s true

They increased the most important fees from at least 25% to over 100% in some cases. I did not make the math. but guess the average increase in fees is in the range of 30%.

After the substantial increase of parcel post shippings of our Postal Service since March this year definitely one more reason to decrease my ebay activities in the future.
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Old 4th June 2003, 09:51 PM   #3
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wow...so that's why i've been seeing recently so many ebay.de sellers saying they will ship only to germany. i was wondering what the reason was.

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Old 10th June 2003, 10:11 AM   #4
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Default now everyone is doing it

From this morning's Washington Post -- how do you folks over there live with high income taxes AND VAT?

<em>EU Stirs Up Internet Sales Tax Debate
Value-Added Tax Could Provide Ammunition for Supporters of Taxing E-Commerce in the United States

By Brian Krebs
washingtonpost.com Staff Writer
Monday, June 9, 2003; 6:29 PM


The term "laissez-faire" comes from France, but it's the United States that has applied the economic term in its purest sense to business on the Internet, banning Internet-specific taxes and dragging its feet on taxing e-commerce retail sales.

Europe's latest economic policy export isn't getting such an enthusiastic embrace from the American lawmakers and the business community .

On July 1, the 15-nation EU will begin collecting the VAT, or value-added tax, on sales of digital goods and other electronic transactions from U.S. and other non-EU companies. This means that American companies selling downloadable music, movies, games and software to customers in the EU might have to collect taxes that could boost the total cost of their products in Europe by as much as 25 percent.

For companies like America Online and Internet auction giant eBay, it means additional costs for restructuring their European operations, as well as possible price increases for their customers.

For the U.S. business community, it presents a radically different philosophy on taxes. VAT is one of the EU's primary revenue sources, and online consumer sales in the union always have been subject to it. In the United States, however, building a consensus on taxing e-commerce sales has proved far more difficult. More than 30 states are collaborating on an Internet sales tax framework, but the hurdles to putting it in place are numerous. While some major Internet retailers are collecting sales taxes, they remain the exception rather than the rule.

If the EU is successful in requiring VAT collection by American firms, observers say it could set an important precedent for taxing Internet commerce in the United States.

"Governments from South America to China are looking to Europe as the source of the latest in regulatory innovations," said Gary Litman, vice president for Europe and Eurasia at the U.S. Chamber of Commerce. "I can see a lot of countries looking abroad and saying, 'If Brussels can regulate this, why can't we?'"

Jonathan Todd, a spokesman for the European Commission, agreed. "Some of the opposition to this measure appears to be driven by the fear that it could serve as a precedent for taxing e-commerce within the U.S.," he said.

The EU's decision to tax digital sales from all over the world is born of a desire to tax e-commerce companies equally. American companies now enjoy a price advantage over EU-based businesses because they don't have to pay VAT, the EU says.

U.S. businesses say VAT will put them at a disadvantage because they either must comply with 15 different tax codes, or establish a European office. European companies, by contrast, only charge the tax rate of the country where they are located.

E-commerce companies in the United States have been reluctant to open up their coffers to state taxes, but many of them already are complying with the new EU rules. Last week, online auction giant eBay Inc. said it would start charging its sellers VAT to comply with the new regulations. The company in its annual report said the change could slow the expansion of its fast-growing international unit, which accounts for nearly 30 percent of its sales so far this year.

American companies have two general options for complying with the VAT. They either can register their business and set up a headquarters in one EU country, and pay that country's tax rate. If they do not set up a physical headquarters in Europe, they would pay the tax rate for the country where the customer lives -- ranging from 15 percent in Luxembourg to 25 percent in Sweden.

Dulles, Va.-based America Online said last month that it would move its European headquarters to Luxembourg. The move, which included a significant expansion of its office, major technological changes and the addition of two dozen new employees, was costly, a spokeswoman said, but beat the alternative of complying with 15 tax codes.

"Doing nothing just wouldn't be a viable option for us," said AOL International spokeswoman Mia Kulla.
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