In June, the Commission said that non-European companies must
charge VAT for on-line sales of software and music and that the
companies could choose the EU country in which they wanted to
register and pay VAT. The level of VAT in the EU varies from
country to country. The lowest rate is in Luxembourg, at 15%,
making it the obvious choice of VAT registration for any US
company. However, according to BBC reports, the French government
is now arguing that, because this will deny France of tax revenue,
US companies should register in all EU states. Not surprisingly,
the US does not support this view.
Belgium has instead suggested going ahead with the plan to
register in any EU state but requiring that the revenues are shared
among all EU states.
In the US, legislators are trying to address the issue of
adapting sales tax laws to e-commerce. Twenty-seven states are
participating in a Streamlined Sales Tax Project to a system which
hopes to overcome the problem of there being 7,500 sales tax
jurisdictions in the US with widely varying rules on the
calculation of taxes and the products to which they should
apply.
