The end of cheap games from online retailers?

[bingo83]

Businesses that sell UK product through their Jersey operation have lost their licence to sell tax-free games of under £18 – a practice that costs the Treasury around £90 million per year.

But other web companies look set to follow Tesco Online and set up a non-EU base – where they can continue to benefit from avoiding the usual 17.5 per cent VAT charge.

Amazon has already told MCV that it is investigating new territories for its headquarters, with a spokesperson confirming the company is “evaluating its options�.

Forum For Private Business spokesperson Matt Hardman commented: “Online entertainment businesses based in Jersey will all now look to move to somewhere else like Zurich to escape VAT.

“These areas are outside the EU, but are still cost-effective to import goods from. This supposed Government crackdown on the Jersey loophole just means that companies will have to move their operations.�

The news comes after Tesco Online announced that it was moving its CD, DVD and games operation out of Jersey to a new VAT-free supply centre in Zurich, Switzerland.

Asda Online and Play.com also operate from Jersey, and while question marks still hang over Asda Online’s future, Play insists that it is staying put.

If you buy most of your games online like I do this could seriously impact your wallet :(

I suppose there will be a transitional period but I think we will see game prices slowly rising again to fund these new distribution centres.

[Tobes]

I read it right yeh? It just means that if the loophole is fixed everyone will move to Zurich. But Play say they wont. So I will just buy my games from Tesco online.

[bingo83]

I read it right yeh? It just means that if the loophole is fixed everyone will move to Zurich. But Play say they wont. So I will just buy my games from Tesco online.

Yep, but who is gonna foot the bill for moving the operations to Switzerland? Its not exactly a small operation, and logistically it will be nightmare. There will also be an impact in the local job market if these retailers pull out of Jersey.

[Webb]

Yep, but who is gonna foot the bill for moving the operations to Switzerland? Its not exactly a small operation, and logistically it will be nightmare. There will also be an impact in the local job market if these retailers pull out of Jersey.

It's not as if Tesco's don't have enough money to pay for it though :p They will see it as an means to an end, they need to do it to avoid the costs which they will now incur. I can't see them putting it on top to make their money back as it will just be defeating the object of moving there.

[damien©]

I read it right yeh? It just means that if the loophole is fixed everyone will move to Zurich. But Play say they wont. So I will just buy my games from Tesco online.

I believe the Loop Hole is where it allows UK-based Companies like Tesco's to use Distribution Centres in Jersey to avoid Tax. As Play.com is a Jersey based company (not UK) it is therefore not effected by the changes and will still continue to offer games at the same price and blah de blah.

That was my understanding of this, when the plans was announced a while back.

[Tobes]

I believe the Loop Hole is where it allows UK-based Companies like Tesco's to use Distribution Centres in Jersey to avoid Tax. As Play.com is a Jersey based company (not UK) it is therefore not effected by the changes and will still continue to offer games at the same price and blah de blah.
Tescos are moving to Zurich. The article says:
“Online entertainment businesses based in Jersey will all now look to move to somewhere else like Zurich to escape VAT"
So I guess this loophole is being fixed but only for Jersey?
Yep, but who is gonna foot the bill for moving the operations to Switzerland? Its not exactly a small operation, and logistically it will be nightmare. There will also be an impact in the local job market if these retailers pull out of Jersey.
They have no need to stay in Jersey if they are going to have to charge VAT. This is why they WILL move to Zurich.

[damien©]

So I guess this loophole is being fixed but only for Jersey?

Well the way I understand it is, if you are a Local Jersey Based Company then will continue to be able to sell items to UK Consumers on a VAT Free basis. (eg. Play.com)

However if you are a Company like Tesco's or Amazon that use Jersey simple as a distribution Centre but you are based on UK Mainland then you will not be exempt from VAT Payments to HM Revenue and Customs.

That's why Play.com is staying still, it won't impact them. Again that's how I read it a while back but not sure if the law/plans have changed.

[Tobes]

Ahhhh ok then. I gets it now :)

[Fusion]

I sometimes buy my games from Tesco Jersey, but normally I use Pricerunner to find the best deals or even go out and dig up a bargain.
I'm not really an online shopper, unless its for...say band merchandise that you can't get in shops.
So I'm happy to continue hunting shops for good deals.