Brussels, 14/12/2001 (Agence Europe) - The Ecofin Council managed to reach compromise over the implementation on the value added tax on products sold through electronic commerce, which will be reflected in the conclusions of the Laeken Summit and should be definitively adopted in February 2002.
The Council's text stipulates that the working group on fiscal issues should complete, for an agreement in the Ecofin Council in 2002, a interim solution limited to a three year period, which could be extended for practical reasons through a unanimous agreement on the basis of the Commission proposal, based on the Swedish Presidency compromise, when including a mechanism for redistributing revenue and an undertaking to introduce an electronic solution as soon as possible and no later than three years after the entry into force of the Directive.
In other words, this compromise, which includes for the most part the solution put forward during the Swedish Presidency of the Council, foresees that: 1) electronic commerce products sold within the internal market are taxed according to the rules enforced in the selling company's country of residence, 2) the products supplied by companies in third countries to private consumers will be taxed according to the rules enforced within the consumer's country of residence, 3) products exported by European companies will not be taxed.
In order to satisfy the United Kingdom, which favoured the establishment of a single "portal" through which the VAT would be levied, the technical feasibility of such a solution would be reassessed at the end of the three-year transition period.