European Tax for Australian E-Tailers

Australian companies selling goods and services via the Internet to
European consumers may soon be taxed for the transaction.

The landmark proposal is currently being considered by the European
Commission, and would see all companies selling to European consumers fall
within Europe’s taxation net, regardless of the retailer’s physical
location.

The move is a strike to level the international e-business arena,
according to analyst firm PriceWaterhouseCoopers (PWC).
Currently, European-based Internet companies must charge a Value Added Tax
(VAT) when selling to consumers in the European Union.

If this new tax is approved, companies outside Europe would have to
register for the VAT and add at least 15 per cent to the cost of items sold
to Europeans online.

The proposal would affect the sale of physical items online, paid
streamed media, downloads and distance learning, according to PWC.

“The tax would only affect companies with annual sales of more than EURO
100,000 (AUD$ 157,040; US$ 91,080). However, companies would also be able to
register for the VAT in one country, so they could choose one in the European
Union with the lowest rate,” said PWC tax partner Paul O’Brien.

“The proposal has driven the Australian Taxation Office, which has
established a working party on Internet taxation, to look toward what
happens in Europe when forming its own e-commerce taxation policy,” said
O’Brien.