As indicated above, e-commerce is making steady progress in Spain. The B2C market is estimated to have generated USD 6.4 billion in 2007.
In July 2003, the EU started applying Value Added Tax (VAT) to sales by non-EU based companies of electronically supplied services (ESS) to EU-based non-business customers. U.S. companies covered by the rule change must collect and submit VAT to EU tax authorities. ECl Directive 2002/38/EC changed EU rules for charging Value Added Tax. These rules are currently set to expire at the end of 2008.
U.S. businesses mainly affected by this rule change are those that are U.S.-based and selling ESS to EU-based, non-business customers or those businesses that are EUbased and selling ESS to customers outside the EU who no longer need to charge VAT on these transactions.
There are a number of compliance options for businesses. The Directive created a special scheme that simplifies registering with each member state. The Directive allows companies to register with a single VAT authority of their choice. Companies must charge different rates of VAT according to where their customers are based, but VAT reports and returns are submitted to just one authority. The VAT authority providing the single point of registration service is then responsible for reallocating the collected revenue among the other EU VAT authorities.