The latest draft of a proposed EU directive covering VAT on
e-commerce has been welcomed by the European e-business Tax Group
(EeTG). The group has called for its immediate adoption to stop
what it describes as the continuing distortion of competition.
European businesses are finding it hard to compete with non-EU
businesses due to the current rules on application of VAT to
e-commerce. The EeTG claims that adoption of the directive will
help businesses located within the EU to compete internationally
and maintain European jobs.
As things stand, European companies when engaging in e-commerce
must apply VAT to their prices regardless of whether they are
selling inside or outside the EU. However, US services are not
subject to sales tax (the equivalent US levy for traditional
sales), and the EeTG points out that US companies can undercut
European rivals by up to 25%. The directive would introduce a
single European VAT collection model where sellers form outside the
EU register once and subsequently apply local VAT charges.
The EeTG believes that this will level the playing field in
e-commerce.
