VATMOSS

[drplokta]

For the benefit of the EU, here's how taxing things that are both sold and delivered over the Internet works.

Can we tax them based on the location of the vendor? No, because vendors will simply relocate to a jurisdiction that doesn't tax such transactions (e.g. Amazon in Luxembourg).

Can we tax them based on the location of the purchaser? No,

Comments

[bart_calendar]

This is why America doesn't tax online sales.

[sbisson]

Except where it does.

[bart_calendar]

I thought it was only if you made an in-state online purchase?

[autopope]

Which runs into all the same objections Dr Plotka just pointed out. (Except it's a nominally monolingual trade bloc, which makes things slightly easier to manage -- if you've ever tried filling out a foreign tax form in a language you don't speak.)

[watervole]

Why not tax based on the delivery address?

[kevin_standlee]

Because you don't need a physical delivery address for non-physical goods, such as e-books, knitting patterns, WordPress themes, etc.

This whole VATMOSS mess is a case of people who haven't a clue about how the internet works trying to figure out a way to tax it based on business models that don't work anymore.

[andrewducker]

All of this assumes that perfection is necessary.

Taxing based on payment account and IP address will be accurate for 95% of people. Sounds good enough to me.

[kevin_standlee]

Even if it does, the fact that the sales threshold for reporting is zero -- that is, any sale of any sort is taxable -- is absurd. It's going to impose overhead accounting costs on very small businesses that are such that the most economical thing they can do is shut down.

The UK threshold for goods sales (GBP81,000) is fairly generous, but even the most-common EU threshold of EUR35,000 would be more sensible than zero.

[andrewducker]

I entirely agree.

[drplokta]

You're neglecting to account for tax changing people's behaviour. It's 95% accurate now, because there's no great advantage to having an IP address or payment account in a different country. If you can save hundreds of pounds a year in VAT on your books, games, movies and music, then people will set up one-stop shops offering proxies and payment accounts in tax-friendly jurisdictions, and consumers will use them.