Quote:
Originally posted by *KK*@Jan 2 2003, 12:46 AM
how in the world would the EU enforce collection on VAT?
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So far I have heard of 4 models:
1. None EU companies would be required to appoint a local fiscal representative who would be responsible for the company´s compliance with VAT rules. But again - who says ANY none EU would do that voluntary.
2. The standards for secure Internet payments (e.g. SSL/SET) should be required to include a field which would disclose the identity and location of each customer so that the various tax authorities could audit tax compliance. Again this would be a voluntary solution, and no one have said what would happen if you do not make these changes (one hardcore rightwing EU politician have said to ban urls/companies at the European ISPs so "normal" surfers can not access them - however this will NEVER happen too many "good forces" will fight this).
3. Banks that process payment data from credit cards, debit cards, wire transfer etc. would retain VAT from the transactions they handle. This could be done with VISA and MC, since they already have marked which merchant accounts do online trade and where the companies operating the merchant account are located. ECash companies like PayPal could also get forced to supply the same information to the EU. Wires would probably fail on the grounds that it is not possible to determine from the payment data the nature of the goods and services purchased (and therefore whether they are subject to VAT), however there is voluntary system inplace today, where the sender informs what kind of product/service he is paying for.
4. Last there is the "old logic of the tax man", where the tax authorities try to determine how much companies have made on online sales to European surfers. Once they have set the ammount they think the companies should pay, then the companies either pay them or try to prove that the companies are innocent (guilty until proven innocent).
If companies do not pay the EU after they have been told to pay VAT, then the EU could do a asset search inside the EU member countries for any assets belonging to the companies - in some cases that could also be privat asset belonging to mangement or others with key postions in the companies... if they do not find any assets, then they have in past send collection agencies to try and collect the money in the home countries of the companies (don´t think they will try that, unless the mangement of the company are EU citizens).
I wouldn´t fear anything from the EU at first, because this will be new law mid 2003, and alot of countries (including the US) have not said positiv things about it, however with politicians worldwide starting to look for ways to tax the internet, then sure something will be worked out eventually.