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Anorak | Amazon’s about to get more expensive

Amazon’s about to get more expensive

by | 25th, October 2012

THE EU has finally woken up to that despicable little bit of tax dodging :

Amazon is to be stripped of its huge tax advantage on the sales of electronic books after the European commission ordered Luxembourg to close a VAT loophole.

Amazon is registered as a Luxembourg company and pays that country’s VAT charge of 3% when it sells an ebook to a British reader, rather than the 20% it would have to charge if it were UK-based.
….
The European commission – which oversees European Union law as the EU’s executive arm – on Wednesday gave Luxembourg 30 days to increase its VAT rate on digital services from 3% to 15%. This will close a tax loophole that has encouraged companies such as Amazon, Skype and Netflix to be based in Luxembourg to benefit from the 3% rate when selling throughout the EU.

The way this little bit of law works is odd. Anything that was zero rated (or exempt) when VAT came in originally can stay there. But any new products that come along must have that 15% minimum VAT rate applied to them. Thus physical books can remain VAT free but

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Posted: 25th, October 2012 | In: Money, The Consumer Comment (1) | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink