EU: No new taxes

EU ministers have decided that there should be no new or additional tax applied to electronic commerce. This was the result of a decision taken by the EcoFin Council on 6 July in Brussels, in anticipation of the OECD Conference on electronic commerce in Ottawa 6-8 October. In taking this decision EU ministers have largely concurred with a proposal unveiled by the Commission on indirect taxation of electronic commerce last month. In particular, ministers have stressed that electronic transmissions, including the supply of virtual goods, should be considered as services, as far as VAT is concerned. The basic rule to be applied for services supplied by electronic trade should be taxation at the point of consumption. In other words, services provided for consumption within the EU should be taxed in the EU, while those provided for consumption outside the EU should not be subject to VAT; VAT paid ‘upstream’ in relation to these services should entitle the taxpayer to a deduction.