The EU got the idea that shops who offer electronic B2C services like book, music and video downloads or domain and web hosting to B2C shall pay VAT in that European Country where the electronic product is used.
So when I download a book for reading at the Italian beach I should pay VAT for Italy, when I want to listen to downloaded music in Finnish sauna I should pay VAT for Finland and when I want to look a downloaded video in my German flat I should pay VAT for Germany.
But of course it is not such easy .... there are regions in Europe with other VAT rules then their country like airport transit regions. Island like Greenland (Denmark), Faroe Islands (Denmark), Helgoland (Germany), Aland Islands (Finland), Guadeloupe, Martinique, Antilles and so on.
The official reason is that they dislike that bigger companies like Amazon and ITunes only pay taxes to Luxemburg. The EU told that they expect Millions of Euro VAT from these companies.
For small companies the new law is a mess. The costs for changing the shop system and setting up VAT system for each European countries are way to high. Lots of small shops and hosters already quit the contracts with their foreign EU B2C customers. That is crazy, some of them still offer services for Switzerland, USA, Japan and other countries but not for EU.
So we now have shops and hosting companies offering national and outside EU international services.
The new law already damaged smaller companies.
But what does this new law means for the big companies?
They are now allowed to collect lots of data from B2C customers that are under privacy law protection. The EU legalised the collection of privacy data like home address, IP address, geographical location via GPS, country code from phone number, credit card and bank location and so on.
When I want to rent a movie for 2.99 Euro I need to hand out lots of privacy data. Is that really what we want?
Anonymity is a human right.
When I go into a usual shop nobody ask me for my name or address.
The law says for figuring out the place of products the company has to figure out the home address or usual domicile.
When I buy something from an internet shop usually they ask for the delivery address.
That is ok, because they need to know this address.
This address not needs to be my home address. Lots of people use their work place as delivery address. The name on the delivery address needs to be the name from the person to whom I want to deliver what I bought.
If I want an invoice or if an invoice is need for guarantee or something else the store ask me for a billing address. This also not mandatory has to be my home address.
Privacy protection laws say that the use of personal data is earmarked.
The is allowed to use the delivery address only for delivery and the billing address only for invoice.
They aren't allowed to use address and name for another purpose.
Additionally privacy protection laws say that personal data have to be ask from the person concerned.
So when I want to download a book or music they have to ask me for the address of my home or usual domicile. Only for the address not for my name.
It is up to the customer to tell the truth here. There are just living 1200 persons on Helgoland Island. Helgoland is tax free. When 10000 customer tell that they are living on Helgoland who will proof it?
It is up to the shops to proof it. But not even the registration of address office can tell which customer lie here because the shop wasn't allowed to ask for the name.
VAT law says that for proofing the shop shall collect IP address, geographical location, phone number country code, data from credit card or bank account and so on.
Let's says I use TOR, or I use free wireless network like Freifunk (the IP Address will point to Sweden).
Privacy laws say that the shop isn't allowed to figure out the IP-Address by automatism here. They have to ask the customer.
What is your IP-Address? Mine is 127.0.0.1
Phone number country code is hard to get by automatism when your PC is in cellar of your home. Also who just has one SIM card? When you travel a lot, of course you have SIM for countries you are travelling more often.
Which SIM should I use for download? UK, Netherland, Switzerland, USA, Germany, Belgium?
As I told before it is not so hard to ask the customer here. So there is reason why the shop should be allowed to figure this out by automatism. Privacy laws only allow to figure out personal data by automatism when it would be to hard to ask the person concerned.
The shop needs to ask the customer here. But just for the country code. Privacy law forbids to ask for full phone number because there isn't a law allowing them to ask for the phone number for this purpose. Without calling the number, the shop can't figure out if the number / the country code is right.
Geographical location also is hard. By automatism when my computer is in the cellar?
I like Helgoland and I use to go there as often as I can. Of course for saving VAT I would buy all my stuff when I am there.
It is in the hands of the customers where the shop will pay VAT.
Anonymity is a human right. There is no law that says that the customer needs to tell the truth here.
Additionally nobody is able to control the shops. Even when the customer told the truth the shop can manipulate the data and tell that they sold less to the single countries.
Nobody knows how much copies of the book, music or video exist. How will the tax offices figure out that the shop sold more then 10000 copies to Germany and just 5000 to Italy?
The shop easily is able to book most incoming to USA or Switzerland or whatever else country.
The new VAT law is nonsense. The only reason for the law is to legalise collecting more personal data. It is up to the courts know to decide if VAT or the human rights of anonymity weighs more.