eBay move costs Treasury £25m
by Sue Bailey
The Telegraph reports eBay’s move to Luxembourg will cost the UK Treasury £25m a year in lost VAT revenue.
While the cost to the public purse is relatively small in terms of overall tax revenue, eBay’s decision will embarrass Gordon Brown, the Chancellor, because it suggests that Britain is not the most business-friendly country in Europe.
With 15% VAT, the lowest rate in Europe, and multilingual resources readily available, Luxembourg’s attractions seem pretty obvious. The paper reports that the overall effect of eBay’s move will be the equivalent of a £200 bonus for every one of the country’s tiny 465,000 population.
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[...] eBay and PayPal have both recently moved their European head offices to Luxembourg. For PayPal the main advantage was a banking licence which allows it to offer services more attractive to mainstream businesses. For eBay undoubtedly it’s because the Duchy has a low VAT rate which is applicable to all fees charged to eBay users. [...]