Hacker News new | ask | show | jobs
by BerislavLopac 4203 days ago
The main problem with these changes is that they require the seller to collect information about the buyer's location. It makes all the sense for physical goods, but it is nigh impossible for digital ones, and pretty much misses the whole point of online economy.

In my opinion, the VAT should be charged based on the delivery address; for digital goods, it would be ideal that all purchases are considered local, and the countries could have an option to introduce a separate "digital VAT rate" that would apply to such purchases.
1 comments
toyg 4203 days ago
This suggestion, in practice, would not stop Amazon and Google siphoning VAT money form around the EU through Luxembourg, Jersey or Ireland. If I settle in a country with low "digital VAT rate", I'll still hold an advantage over EU companies based elsewhere: I can charge lower prices, or I can charge regular prices and pocket the difference. This is exactly what happens today.
link
BerislavLopac 4203 days ago
Nope -- what happens today is paying Luxembourg VAT for physical goods delivered from UK to UK, which would be prevented this way. Digital goods have no "location", so the only way to charge VAT is to assume it was a "local" purchase. And what is wrong with countries competing with VAT rates?

Alternatively, a pan-EU VAT rate for digital goods only might be a better approach, and probably easier to implement than a universal VAT rate.

link
toyg 4202 days ago
> what is wrong with countries competing with VAT rates?

it's a race to the bottom that destroys tax revenues. It benefits small "pirate" countries to the disadvantage of large ones that are actually responsible for creating the large markets where real profits are generated. Tax-rate competition has always existed, but globalisation and technology now make it too easy to exploit it in a way that only benefits big business and screws entire populations.

> pan-EU VAT rate for digital goods only might be a better approach

Pan-EU rates for most things would be a better approach. VAT is just the most egregious example. If we have a single market, we should have a real level playing field, including things like taxation, workers rights and environmental standards. We're getting there in a number of areas, but it's hard to make progress on tax because of political implications (and because of pressure from businesses who benefit from the current state of affairs).

link