Shop free world, do we care?

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10 years 1 month

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This year I bought most of my Christmas presents on line. Partly laziness, partly convenience, but mostly such a rich environment. I wanted to buy a bottle of Lovage for a relative. Scoured the shops for a bottle and eventually purchased online. I feel sad that shops are closing but part of me doesn't care. Businesses need to move with the time and the Internet is a powerful force. Just concerned what will happen when the shops are all gone. Merry Christmas to everyone (including a work colleague who sadly died on Christmas Eve, a glass held high for you this Christmas).
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Member for

13 years

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My only real concern with the likes of Amazon, for example, is that despite the buyer being in the UK and the item being despatched from the UK, because the on-line 'transaction' takes place in Luxembourg (where VAT is lower) all the tax goes to the Luxembourg government!

Member for

10 years 1 month

Posts: 2,535

My only real concern with the likes of Amazon, for example, is that despite the buyer being in the UK and the item being despatched from the UK, because the on-line 'transaction' takes place in Luxembourg (where VAT is lower) all the tax goes to the Luxembourg government!
Totally agree but as a consumer that's not my concern. The government needs to sort that loop hole out.

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11 years 4 months

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The other aspect is without shops we simply will not see the products we wish to purchase, how many have been disappointed with a product bought from a picture or written description.

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13 years

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Yes, but now some people like to try something in the shop and then buy it cheaper on-line!
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7 years

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My only real concern with the likes of Amazon, for example, is that despite the buyer being in the UK and the item being despatched from the UK, because the on-line 'transaction' takes place in Luxembourg (where VAT is lower) all the tax goes to the Luxembourg government!
Businesses like individuals will take advantage of the most tax efficient arrangements available. Nothing wrong with that whatsoever.

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13 years

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I agree, nothing illegal about it anyway... ...but why should a transaction between UK consumers and UK suppliers involve paying (admittedly lower) VAT in Luxembourg and no VAT in the United Kingdom? As has been said, it is a tax loophole.....that needs to be closed!

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11 years 4 months

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Yes, but now some people like to try something in the shop and then buy it cheaper on-line!
Sure, but without shops, then what?
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7 years

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I agree, nothing illegal about it anyway... ...but why should a transaction between UK consumers and UK suppliers involve paying (admittedly lower) VAT in Luxembourg and no VAT in the United Kingdom? As has been said, it is a tax loophole.....that needs to be closed!
VAT cannot be paid in more than one country - it can only be paid once. Why is there a loophole to be closed? Why this obsession with big corporations finding ways to pay the least tax legally liable? If governments were less opaque and their tax regimes less convoluted the desire to find "loopholes" would be far less. Man has searched for ways to reduce his tax bill since taxes were first raised to wage medieval wars and that search wil never cease and will be ever greater in direct proportion to the complexity of the tax system. Gordon Brown has much to answer for!

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13 years

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Why this obsession with big corporations finding ways to pay the least tax legally liable?
Because the UK government still needs to raise the revenue that the VAT was supposed to raise! So the UK consumer, in this example, pays VAT in Luxembourg, pays Amazon its profit and then has to pay some other form of tax in the UK to make-up for the lost UK VAT! Or the UK deficit and debt grows once agin. To put it another way.....why does Luxembourg get to tax UK consumers when the shop at Amazon?
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I am not sure I follow the argument so bear with me. VAT is a transferable tax collected by suppliers on behalf of the treasuries of all EU members. Rates vary but each country levies the national rate in the country it sells in, assuming the invoice is raised in the same country and it is not an exported item. So in the UK the rate is 20% and Amazon levies that and then pays the 20% to HMRC. So how does the UK government get less VAT?

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Because if you in the UK buy an e-book, kindle download, Amazon app, software, digital game or music download from Amazon you don't pay the UK VAT rate of 20%, you pay the Luxembourg VAT rate of 15% (3% for e-books)... ...now I'm not sure what proportion of Amazon sales that is but the UK doesn't see a penny in VAT from it!
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19 years 9 months

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Shop free world: do we care? There are some goods which I value actually viewing before I buy, such as furniture, or, to pick a random example, a fish tank, (and all the kit that goes with it as a first time purchaser). Plenty of other stuff I’ll buy online as the products are known to me, such as a brand and size of shirt. The convenience of buying online is fantastic, for example a pair of car tailgate support struts which I purchased yesterday (make, model, good price, all sorted in a few clicks). Shops fulfil an important social function, particularly for retired/older people. When I was young, people chatting in the supermarket aisles used to annoy the heck out of me, but I now appreciate that this may be the only social contact they may have for the day, before they return to the loneliness of their home. Western society places too little value on the respect that older people deserve and the provision that should be made for them (so too for the disabled, but I won’t thread creep). So the daily ritual of shopping (or, going out with the purpose of interacting with the outside world and a person or two) is an important part of their lives. I guess I’m getting older! Online buying has contributed to a retreat for people into their homes. While this suits those like me, with a preference for introversion, the extraverts will always value and enjoy the excitement of shopping, especially in this consumerist age. Are the glittering shopping malls the new churches? We all have our own views on the regular sale-time scrums so beloved by the media (I did have a little chuckle when those 40” TVs fought over on Black Friday were on eBay a few days later due to their poor spec). I understand that shops are part of the structure of capitalism. Their purpose is not to provide for a social need. But they do fulfil a function other than selling goods. I care about their existence, and think there will always be a place for High Street shops, recently bolstered, I hope, by the growth of smaller, in town, convenience stores.
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I remain confused. Books are zero rated in the UK anyway. And if you are a seller from one EU nation to another you cannot levy VAT as an exporter. I must investigate further as it makes no sense at the moment.

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The assumption being made, is that everyone has access to the Internet.

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13 years

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I remain confused. Books are zero rated in the UK anyway. And if you are a seller from one EU nation to another you cannot levy VAT as an exporter.
True, but I think Amazon sell more e-books than books and e-books are 20% VAT rated in the UK... ...it is a grey area since the e-books and the on-line transaction take place in 'cyberspace'!
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7 years

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With total online sales being about 10% of all sales, the lost VAT revenue ( if that is actually the case) from Amazon's ebook sales is less than a drop in the ocean. Hugely greater amounts of revenue are lost in other areas. Storm in a teacup suggests itself.
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I am trying to reconcile this from Amazon with your contention. Can you help? "Help & Customer Service Payment, Pricing & VAT › VAT & Invoices› About VAT on Sales by Amazon VAT is charged on sales by Amazon within the European Union (EU). In accordance with the laws governing members of the EU, Amazon is obliged to charge VAT on all orders delivered to destinations in member countries of the EU. VAT is charged in accordance with the local legislation in each member state. The Recommended Retail Price (RRP) and/or price displayed for goods sold by Amazon are inclusive of UK VAT. However, your final price may differ depending on the actual VAT rate that applies to your order. For orders to other EU countries, the UK VAT amount will be deducted and the applicable VAT rate for the destination country will be added. Your final price during checkout will reflect the correct VAT rate for the destination country of your order. See How to purchase as a VAT registered customer within the EU if you want to use your VAT registration number when purchasing from Amazon. Invoices for items that are subject to the Margin Scheme for second-hand goods will not show a VAT breakdown, and the invoice will state that the item is subject to the Margin Scheme for second-hand goods. For more information on this scheme, please refer to "The VAT Margin Scheme and global accounting HMRC Notice 718 (April 2011)".

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13 years

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It seems this particular loophole has been closed.....well, from 1st January 2015 anyway. http://thebookseller.com/news/e-book-prices-may-rise-vat-law-kicks
The move prevents Amazon, Nook and Kobo from applying a low 3% tax on e-books sold to European countries, because their headquarters are in Luxembourg. Instead, the e-book retailers will have to apply the standard UK VAT rate (20%) to e-books sold into the UK. As a result, Luxembourg stands to lose around €800m a year from the ruling, while the UK and Germany stand to gain around €350m each per annum.
Presumably this not only applies to e-books but all other 'virtual' media?
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7 years

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Fascinating stuff -thanks for posting the link. It only goes to illustrate just how complex and confusing the cross border taxes are levied. And one thing's for sure the increased tax will be taken in to the sales price just as it always is as noted in Amazon's terms as referenced above, by every retailer. It has to be because the supplier is collecting the tax on behalf of the treasury so is bound to charge the end user.