by Andrea Boscaro founder The Vortex
A very important change took place on May 1st when Amazon started charging Italian customers with VAT: they previously were used not to have it included since the supplier leveraged on the “reverse charge” system due to its legal seat in Luxembourg. Now Amazon has an Italian VAT and it’s not possible to deduct the related value in case of a professional purchase.
Of course, this is an important step for Italian e-commerce players, particularly those who target business to business buyers, because a significant competitive factor has been lost for the Seattle-based marketplace. Why is it so?
Amazon decided to change the situation and open a local entity because it was difficult to continue to run such a large business, with warehouses and an enormous share of the market, without complying with Italian rules.
The decision is also part of a continuous process inititated by the European Union to better understand how digital media multinationals use different tax laws and other market regulations among the European countries to generate inappropriate competitive advantages within the single market.
Differently from an initial debate on a possible webtax that could create difficulties in terms of investments and employment opportunities, the European institutions are working more in depth to reduce free riding tactics by member states and to introduce moral suasion in the relationships with larger companies.
Source: The Vortex