Written answers

Tuesday, 16 April 2013

Photo of Arthur SpringArthur Spring (Kerry North-West Limerick, Labour)
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To ask the Minister for Finance the way he intends to protect possible job losses in the retail sector (details supplied) in view of the fact that selling goods on line at prices cheaper than cost price of goods available to Irish retailers in the same industry; his views on the fairness of non-flucuating exchange rates attributed to retail prices of goods to be sold in Ireland by UK distributors are anti-competitive; and if there is a need for European legislation to compensate European Governments for loss of VATrevenue as a result of uncompetitive, unfair advantages gained by on line conpanies established in EU countries with low VATrates and favourable currency exchange rates relative to the Euro. [17696/13]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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While recognising the very challenging conditions in which many firms are operating at the moment, particularly in the retail sector, it is not my intention to intervene to attempt to prohibit or limit in any way the legal sale of goods online. I do not believe that such an intervention would be either effective or sustainable. As regards the practices of UK distributors, this is primarily a matter for my colleague, the Minister for Enterprise, Jobs and Innovation, but I note that the Competition Authority conducted a study on the retail-related import and distribution sector in 2009 and concluded that a number of factors plays a part in the explanation of exchange rate pass-through and that these are dependent on the peculiarities of different sectors and products.

I am advised by the Revenue Commissioners that a publication notification PN 1882 - Ordering Goods for Personal Use over the Internet or from Mail Order Catalogues that is available on their website is informative in this regard. It points out that internet shoppers need to be aware of the potential full price of the goods involved since some websites do not make allowance for charges such as Customs Duty, Excise Duty or VAT. In addition, a carrier handling charge, that is distinct from a Customs charge, is generally applied by the carrier delivering the goods. This means that it is difficult to make direct price comparisons between domestic and other-EU internet sales companies.

European VAT legislation and Irish VAT legislation contain the concept of distance selling. Distance selling means a supplier established in one Member State sells goods to customers who are not registered for VAT in another Member State. Where a company established in one Member State makes distance sales to customers in another Member State the company must register and account for VAT on those sales where the value of the sales exceeds distance sales threshold, currently €35,000 in Ireland. For example, a UK established company that makes distance sales in excess of €35,000 to customers in Ireland who are not registered for VAT must register for VAT in Ireland and charge Irish VAT. The VAT distance sales rules significantly reduce the VAT advantages of internet sales companies establishing in EU countries with VAT rates that are lower than Ireland’s for the purpose of making supplies to Irish customers.

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