EU to tax e-commerce with the U.S.

Credit for this post goes to cheekymonkey, our staff writer, who is stuck with something and couldn't post this himself :P

BRUSSELS--EU finance ministers will on Tuesday rubber stamp new rules for taxing products bought on the Internet such as games and software, EU officials said on Monday, a move likely to earn the ire of the United States.

Under the EU bill, the United States and other non-EU firms will be asked for the first time to levy value-added tax (VAT) on e-commerce with private customers in the 15-nation bloc.

At the same time, EU companies will be exempted from VAT for services they provide to non-EU residents.

Both moves are designed to remove what the EU sees as a competitive disadvantage against the United States.

"These new rules are particularly welcome for community suppliers of digital products, like games and software," European Commission Jonathan Todd told a press briefing.

"They would remove the current obligation of applying VAT to sales on countries outside the union," he said.

The United States in February accused the EU of taking unilateral action over the new rules and warned that it might complain to the World Trade Organization (WTO).

News source: ZDNet News - EU to tax e-commerce with the U.S.

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