Supplemental Question #2 to .org Applicants (With Responses)
Supplemental Question #2 to .org Applicants (With Responses)
Supplemental Question No. 2:
(posed to all applicants on 7 August for response by 10 August 2002)
According to the Criteria for Assessing Proposals: "In view of the noncommercial character of many present and future .org registrants, affordability is important. A significant consideration will be the price at which the proposal commits to provide initial and renewal registrations and other registry services." Some applicants have proposed that, in addition to the price they propose to charge, they intend to collect taxes (such as value-added tax) with respect to services provided to registrars or ultimate consumers (e.g., registrants) in particular jurisdictions.
To clarify the proposals and allow them to be more readily compared, we are asking each applicant to provide details about the taxes (if any) they propose to collect. For each tax you propose to collect and add to the price you charge, please state:
a. The nature of the tax (e.g., value-added tax).
b. The rate or amount of the tax (e.g., 15.0% of the registry price) that you propose to add to the price.
c. The services to which the tax collection will apply (e.g., initial and renewal registrations).
d. If you will collect the tax on charges to only registrars in one or more jurisdictions, please specify the jurisdiction(s).
e. If you will collect the tax on charges to only ultimate customers (such as registrants) in one or more jurisdictions, please specify the jurisdiction(s).
Responses to Supplemental Question No. 2:
The DotOrg Foundation
The Global Name Registry,
Limited
Internet
Multicasting Service, Inc. and Internet Software Consortium, Inc.
The Internet Society (ISOC)
NeuStar, Inc.
The .Org Foundation
Organic Names Ltd.
Register ORGanization, Inc.
SWITCH Swiss
Academic and Research Network
Union of International
Associations
Unity Registry
a. The DotOrg Foundation and its subcontractors, Registry Advantage and Kintera, are based in the United States. Under current legislation, no additional tax will be levied on top of the registry fees charged. In the event that tax legislation changes, we reserve the right to charge any such tax in future periods where the amount of the said tax is material and cannot be absorbed within the operating margins of the business.
b. Not applicable.
c. Not applicable.
d. Not applicable.
e. Not applicable.
The Global Name Registry, Limited
a. It is proposed that The Global Name Registry, Limited ("Global Name Registry") collects one type of tax: Value Added Tax ("VAT").
Global Name Registry is based in the United Kingdom and is thus governed by the laws of that jurisdiction, which include VAT legislation, requiring that a sales tax, in the form of VAT be added to the sales price of most goods and services.
b. Global Name Registry has agreed with UK Customs and Excise (the body responsible for enforcing VAT legislation) that the VAT to add to the sales price only depends on the geographical location of the customer (ie, the registrar), according to the following table:
Location of Registrar Applicable Rate Actual cost to Registrar when VAT Registered Within the UK 17.5% 0% Within the European Union (EU) but outside of the UK, the customer having first supplied evidence that they are registered for VAT locally 0% 0% Within the EU but outside of the UK, the customer unable to provide evidence that they are registered for VAT locally 17.5% 0% Outside of the EU 0% 0% VAT charged to UK-based registrars is re-claimable by those registrars from UK Customs and Excise if they themselves are registered for VAT. If the registrar is not registered for VAT, then the VAT charged will be an additional cost. Where VAT is charged to EU customers (i.e. those who have not supplied evidence of a valid local VAT registration) it is possible to re-claim this VAT from UK Customs and Excise although this process can be complex and take time.
In the first seven months of operating the .name registry, all of the UK-based registrars have been registered for VAT in the UK, and all of EU-based registrars have been validly registered locally. Thus, all VAT that the .name registry has been obliged to charge its customers has been reclaimable by them.
The result is that to the extent additional tax has been added on to the purchase price by Global Name Registry in accordance with relevant tax laws, the registrars subject to those taxes have been in no worse position because of their ability to reclaim such taxes. Registrars outside of the EU have not been, and to our knowledge, will not be, adversely affected by any additional taxes on .name products or .org products.
c. The rates given in the response to (b) above are currently valid for all services that Global Name Registry intends to supply, including initial and renewal registrations.
d. Global Name Registry worked closely with its tax advisors, PricewaterhouseCoopers to ensure that it has complied with all relevant tax legislation. Given the parameters (nature of supply, place of supply etc) the Global Name Registry believes that currently tax will only be collected for the UK. See also the tax discussion in subsection (b) above.
e. Global Name Registry will not be collecting tax on charges to ultimate consumers.
Internet Multicasting Service, Inc. and Internet Software Consortium, Inc.
a. We are proposing no taxes and the prices as listed in proposal section C26 is the final price to registrars. There are no hidden charges or surcharges and our only charge is for the basic service of maintaining a name object for a year. Additional services are all provided to our registrars, registrants, and the Internet community free of charge. We believe a simple pricing model is the best for the marketplace.
We are aware of and track carefully legal decisions related to the establishment of substantial nexus, both associational and direct, for state or international tax jurisdiction purposes, and are also aware of unrelated business income provisions for U.S. Federal and California exempt organizations. We consider those to be business risks and have taken them into account in the financial model underlying our consolidated financial statements before establishing our proposed maximum prices for services.
b. Not applicable.
c. Not applicable.
d. Not applicable.
e. Not applicable.
a. The Internet Society (ISOC) and its’ not-for-profit corporation Public Interest Registry (PIR) are not currently aware of any direct or indirect taxes that we may be obligated to collect. Neither ISOC nor PIR have proposed to collect and add taxes of any nature to the prices shown in C.26 of our proposal.
b. There is no proposed tax rate or any additional amounts of tax that are added to the prices shown in C.26.
c. We are not currently aware of any direct or indirect taxes that we may be obligated to collect for any of the services we foresee PIR providing.
d. : We are not currently aware of any direct or indirect taxes that we may be obligated to collect for any of the services we intend to provide for registrars. Accordingly, there are no jurisdictions where we expect to collect taxes from registrars.
e. We are not currently aware of any direct or indirect taxes that we may be obligated to collect from the "ultimate customer". Accordingly, there are no jurisdictions where we expect to collect taxes on charges from "ultimate customers".
a. NeuStar has not proposed, nor is it aware of any additional taxes that apply to the Registry in the sale and distribution of domain names. In the event that such taxes do apply to NeuStar in the future for the registration of these domain names, NeuStar reserves the right to require that such fees be charged to the registrar at the time of registration or renewal.
Our proposed pricing for a .org registration is a fixed annual fee of $5.00. This pricing represents a significant decrease from current .org pricing ($6.00), and includes service level commitments that exceed those currently provided by Verisign. This pricing would be applicable from the very first .org registration accepted by NeuStar and is not dependent on volume.
b. Not applicable.
c. Not applicable.
d. Not applicable.
e. Not applicable.
a. The .Org Foundation will not be charging any additional tax. There will be no taxes or fees added to the price we proposed.
Please see the supplemental information provided below. The .Org Foundation is a nonprofit entity and will abide by all laws and codes of conduct as set by the State of Washington and the United States of America which pertain to taxation and financial reporting for such entities.
b. Not applicable.
c. Not applicable.
d. Not applicable.
e. Not applicable.
Supplemental Information:
The .Org Foundation has proposed a maximum price of $4.95 per name-year for all of the services listed below which includes all current services provided to the .org community. In addition we will provide several additional improvements for the .org Internet community at no extra cost to registrars.
By analysing prices offered by registrars to the public, we found a slightly lower (than $6) registration price, such as the price offered for .biz or .info names, offered by a registry to registrars is not generally reflected in the cost to registrants. We will encourage registrars to reflect the lower registry fee ($4.95) in the fee they charge .org registrants. Or instead of passing the savings on to the registrants, registrars can choose to use the extra revenue to offer additional services to the .org community. Ultimately, the .org registry can only suggest pricing and policies to the registrars and hope that they will adopt those which benefit and strengthen the .org community.
Enom, Inc., as the registry service provider, will provide the following registry services, and only these services, on behalf of The .Org Foundation with equivalent access to all ICANN registrars, who, as currently, will be the only paying customers to the registry operator.
Services Table Service Fee to Registry Registrations (including adding years to a name, or “renewing” a name) including existing IDN names $4.95/name/year Re-registrations (registration of deleted names using daily mini-sunrises) $4.95/name/year Registrar to registrar transfers None Transition from RRP to EPP with extensions None Real-time zone file updates/DNS None Fat-registry whois database service similar to .info or .biz None Compliance with future IETF RFCs, BCPs, and ICANN policy None Billing, 24x7 customer service, maintenance of the registry database, bulk access to zone files, name server registrations, registry data escrow, and other registry functions that are currently provided None Additional Improvements:
In addition to providing the above listed services currently available for .org registrars, registrants, and the Internet user community, and which are key to stable registry technical service, The Org Foundation in conjunction with eNom, the registry service provider, will also provide the following improvements:
- Transition to EPP from RRP, providing many benefits, the biggest one may well be authorization codes to facilitate transfers, the basis of competition.
- Better handling of deleted names, with the same fairness and cost as re-registering deleted names today.
- Real-time zone file updates for faster domain provisioning and so that zone file errors can be detected and corrected faster.
- Free transfers. To help encourage competition among registrars and freer choice for registrants, after the transition to EPP, transfers will be free, and will not add a year (complies with RFC 2832)
- Self-categorization. The .org registry will be open and unrestricted to any registrant, just as it is today: non-profit, for-profit, organization, individual, etc. Registrants can continue to decide if the .org TLD is appropriate for them and there will continue to be no eligibility requirements, though we propose the following new feature: After the EPP transition is complete, registrants will be given the opportunity to declare whether or not they are a commercial for-profit, or a non-profit organization, an individual, etc. and if they are non-profit, are they a grant making, or grant receiving (or both) organization. This non-required information will be displayed in the whois output, gives an added benefit for non profit organization to select the .org TLD, reinforces the original purpose for the .org TLD, allows grant-making .orgs to connect with grant receiving organizations via a registry (or 3rd party) supplied search, and will allow the registry to disburse excess and matching funds/resources back to non-profit organizations that the registry primarily serves. The information will not be used to settle disputes amongst registrants.
- EPP polling mechanism. To provide a voice for the .org registrants, the EPP interface will be extended to allow each registered domain to cast a vote; in much the same way as whois information is modified today. Since transfers are free, registrants who wish to vote can easily choose which registrar to utilize that provides the voting capability to registrants. Validation of registrant identity by the registrar is the same as for changing name servers for a domain, for example. Votes will be published in the whois output for the domain. The foundation board will get a report, for example, showing how many domains who declare themselves to be a non-profit organization, voted “for” the resolution.
Regarding volume discounts, we project that the current number of names sponsored at the registry will likely continue to decline in the short term. Long term, we intend to implement advertising and marketing measures to increase the number of .org registrants. The price we proposed is the maximum price, and since The .Org Foundation is a non-profit entity, there are no financial incentives to maintain a price above a break-even price, therefore, the price will be lowered at a later date if it is found that a lower price will not detrimentally affect service or stability.
Organic Names is a pure registry and so will deal only with registrars. The answers to your questions are based on this.
However Organic Names notes in the preamble your reference to taxes and affordability to registrants. Registrants, being normally "consumers" in sales tax terms would have to pay whatever taxes are levied in the jurisdiction in which they are based. Taxes to consumers are levied depending on the location of the registrar and the consumer – being a separate transaction, this is separately taxed to the transaction between registry and registrar. Organic Names has no visibility of what sales taxes are currently levied on sales by registrars to end users, however it sees no reason why the sales tax status of these transactions should vary depending on the location of the registry, which is not a party to the transaction between registrar and registrant.
In the European Union, (and, specifically, in Organic Names’ case, the UK), the tax most comparable to sales tax is "Value Added Tax" (VAT). In the case of jurisdictions in which Value Added Tax is levied, either by registrars or (in turn) Internet Service Providers, many .org registrants will be "registered" for Value Added Tax. This status allows them to reclaim this tax from the tax authorities. They would normally do this as a matter of course. This is the current situation with EU based registrars and ISPs, and the movement of the registry will not affect these arrangements. Your evaluation team should not therefore assume that VAT has a significant impact on affordability in these jurisdictions, and in any case, to the extent that it might, the location of the registry itself is not relevant.
Your team should also not assume that because a registry in the US (for example) might not have to levy VAT that an ultimate registrant in a VAT jurisdiction will also not have to pay the tax. The opposite is more likely to be the case. The location of the registrar, and the nature of the service provided, will be the key issues here.
It is also worth noting, in relation to affordability that the impact of VAT in a jurisdiction depends on the registrar's price. VAT is a percentage of this. Because a registrar can reclaim VAT charged by the registry the significant feature to a registrar in determining its retail price for .org is the registry's charge before the application of VAT.
Organic Names’ bid partner CentralNic Ltd has a good relationship with the UK Tax authorities and a clear understanding of the implications of tax law in the registry field and of minimising its impact.
VAT is a complex tax, especially as VAT on telecommunications services is taxed differently. However, in nearly all instances, it is either not payable, or fully reclaimable. Organic Names has thus provided short answers to your questions, with a detailed analysis of the nature of the tax as an appendix. CentralNic (Organic Names' bid partner) has already obtained a ruling from Customs and Excise (the UK taxation authority responsible for VAT) that its registry services should be taxed under the alternate regime for telecommunications service. Questions have thus been answered assuming this ruling applies.
ICANN states that the object of this question is “To clarify the proposals and allow them to be more readily compared”, and Organic Names thus advises evaluators to ignore the effects of this tax. It has little effect on the registry, or on the registrars. As is explained more fully below, in the limited instances where VAT is chargeable (to UK registrars), it will be fully reclaimable by those registrars, under procedures which are already part of their day to day operations.
Further, we would point out that taxation is not normally a voluntary activity over which businesses have much control. Thus whilst we can give our own interpretation of the current tax regime, we would note that the interpretation that will be relevant in practice is that of the taxation authorities, and that the nature and interpretation of the taxation regime may change over time.
a. Value Added Tax, payable under the regime for Telecommunications Services.
b. The rates (as a percentage of registry price) will be as follows:
- 0% to registrars located outside the EU.
- 0% to VAT-registered registrars located inside the EU, but not within the UK.
- 17.5% to VAT-registered registrars located in the UK, which is fully reclaimable by the registrar, giving an effective rate of 0%.
- 17.5% to non-VAT-registered registrars located inside the EU, but not within the UK, which is non-reclaimable by the registrar.
- 17.5% to non-VAT-registered registrars located in the UK, which is non-reclaimable by the registrar.
If the effect of the VAT reclaim is taken into account, the (far simpler) effective tax rates are:
- 0% to registrars located outside the EU
- 0% to VAT registered registrars located inside the EU
- 17.5% to non-VAT registered registrars located inside the EU
As VAT registration is compulsory inside the EU for businesses over a certain (minimal) turnover threshold, Organic Names predicts that all UK and EU ICANN-accredited registrar customers will be VAT registered, and thus no registrar customers will suffer the non-zero effective tax rate.
c. Taxation will apply to all services for which a charge is made by Organic Names.
d. See (b) above. The rates listed apply to charges to Registrars.
e. No such tax will be charged.
Background to Value Added Tax (VAT)
The nature of value-added tax is somewhat complex in that it only applies to sales by parties in the EU to parties in certain jurisdictions. Further, the issue is complicated by the nature of the sale that has been made.
Organic Names’ bid partner (CentralNic) has already obtained from Customs & Excise a ruling to the effect that its registry services are classified (for the purposes of VAT) as telecommunications services. This has a bearing on when Organic Names must charge VAT to its customers. Organic Names notes that not all bidders may have obtained this ruling, and the availability of a ruling may vary depending on the location of the business concerned within the EU, along with its other activities, thus it is possible that some bidders from the EU will (quite legitimately) answer these questions differently.
Under the arrangements for Telecommunications Services, VAT is chargeable by a UK business (such as Organic Names) only to other UK businesses, and to those EU businesses who do not provide Organic Names with their VAT registration number in advance. No VAT is chargeable on sales to countries outside the EU. No VAT is chargeable to EU businesses that do provide their VAT registration number.
However, where VAT is charged, VAT registered businesses can simply reclaim VAT paid from the appropriate taxation authorities. Reclaim of VAT by registered businesses applies even when those businesses have paid more VAT on supplies than they have charged on sales, thus it is perfectly possible (and indeed normal for startup businesses) to be in a net reclaim situation, and to be sent a cheque by the taxation authorities. As VAT is calculated quarterly, the effect of VAT which can be reclaimed is thus minimal, even at a cash flow level.
Under European Union law, all businesses with non-trivial turnover must register for VAT (and thus must, under certain circumstances charge VAT, but can also reclaim it). Consumers are not registered for VAT, and thus cannot reclaim it.
The importance of VAT, from ICANN’s point of view, is those instances where it is charged, but cannot be reclaimed.
In Organic Names’ case, as we supply a telecommunications service, VAT is only charged in an unreclaimable manner to European Union customers which are not registered for VAT. As registrars are in general non-trivial organizations, we do not expect any of these not to be registered for VAT, and thus no customers will fall into this category. The only registrars having to reclaim VAT (as opposed to simply not being charged it) will be UK registrars. As non-trivial businesses, these will already be registered for VAT, and the reclaim operation will be part of their normal business process, as nearly all supplies will already have VAT charged which needs to be reclaimed.
ICANN’s original question appears to also look to the effect on registrants. We have compared the effects of locating the registry in the UK with the effect of locating it outside the EU which, for the purposes of this evaluation, we take to mean that no sales tax of any sort is payable. We believe the situation in other EU countries is similar to that of the UK. We have assumed that all registrars inside the EU are VAT registered, which we expect to be the case.
Registry location Registrar location Registrant location Effective VAT rate on registry/registrar transaction Effective VAT rate on registrar/registrant transaction In UK In UK In UK 0% (reclaimed) 0% / 17.5% (*) Outside EU In UK In UK 0% 0% / 17.5% (*) In UK In UK EU, not UK 0% (reclaimed) 0% / 17.5% (*) Outside EU In UK EU, not UK 0% 0% / 17.5% (*) In UK In UK Outside EU 0% (reclaimed) 0% Outside EU In UK Outside EU 0% 0% In UK EU, not UK In UK 0% 0% / Local rate (*) Outside EU EU, not UK In UK 0% 0% / Local rate (*) In UK EU, not UK EU, not UK 0% 0% / Local rate (*) Outside EU EU, not UK EU, not UK 0% 0% / Local rate (*) In UK EU, not UK Outside EU 0% 0% Outside EU EU, not UK Outside EU 0% 0% In UK Outside EU In UK 0% 0% Outside EU Outside EU In UK 0% 0% In UK Outside EU EU, not UK 0% 0% Outside EU Outside EU EU, not UK 0% 0% In UK Outside EU Outside EU 0% 0% Outside EU Outside EU Outside EU 0% 0% An asterisk in the last column means that the effective tax rate is 0% when the registrant is an EU business and can thus reclaim VAT, but is non-zero when the registrant is not VAT registered.
The table demonstrates that as all the registry’s customers are businesses (and thus, by presumption, VAT registered if within the EU), the location of the registry does not affect the tax charged to the end user. The total effective tax paid depends on three things – the location of the registrant, the VAT registration status of the registrant, and the location of the registrar. The location of the registry is thus not relevant. Of course taxes other than VAT charged by non-EU regimes may have a different effect.
ICANN states that the object of this question is "To clarify the proposals and allow them to be more readily compared", and we would thus advise evaluators to ignore the effects of this tax. It has little effect on the registry, or on the registrars.
a. Register Organization Inc. is based in the United States and under current legislation no additional charge to tax will be levied on top of the registry fees charged. In the event that tax legislation changes we reserve the right to charge any such tax in future periods where the amount of the said tax is material and cannot be absorbed within the operating margins of the business.
b. Not applicable.
c. Not applicable.
d. Not applicable.
e. Not applicable.
SWITCH Swiss Academic and Research Network
a. Value-added tax. Please note that this tax is included in the price we propose (USD 5.00). This our common practice with CH and LI since years and with good results. Our invoices state VAT number and the amount of the tax is explicitely listed on invoices.
Registration of Domain Names is considered in Switzerland as data processing activity (names are being stored in a data base) and not as telecommunication service. This is information we have received in written form from the Swiss Federal Tax Administration.
Registrars located abroad (outside of Switzerland) are therefore entitled to claim this tax back from the Swiss Federal Tax Administration. According the applicable law, the claimant needs to prove that she or he is domiciled out of Switzerland. We have a leaflet describing the methods in detail and ship this to interested parties upon request.
If a registrar is located abroad and reclaims paid VAT it will actually result in a price reduction (USD 5.00 minus 7.6 percent).
b. VAT is not added, it is included in the proposed price.
c. Initial registrations, renewal registrations (so called 'auto-renewals') and transfers to a new registrar, where the gaining registrar will be charged.
d. The procedure described above will apply to all registrars.
e. There will be no difference in jurisdictions introduced by us (SWITCH) but we have to follow Swiss law and will apply any measures and procedures requested by the Swiss Federal Tax Administration.
Union of International Associations
NOTES:
This answer is based on practical and legal advice from local experts and is to the best of our knowledge accurate now.
The legal regime for taxation is subject to change. This is especially notable (1) in the European Union (EU) at this time of enlargement, when the legislative structure in many countries is changing through harmonization of law across the Union, and (2) as commercial and fiscal laws around the world are adjusting to the global delivery of services in electronic form. These e-commerce issues are important for the ICANN community and we encourage the community to keep abreast of them.
Diversitas, as a Belgian company, would be liable to collect and deliver to the State the various taxes required under company law, as an employer and in respect of any other relevant domestic law. As a recipient of goods and services, Diversitas would also be subject to the provisions of value added tax (VAT). We expect that the “not-for profit, social purpose” status Diversitas is seeking under Belgian law will either exempt it from paying VAT or render it a “mixed” taxable entity. Subsequent answers to this set of questions assume that the above taxes are not the issue.
a. Diversitas, as the .org registry, would be an international provider of digital services. The sole tax that would directly affect its customers is VAT.
The customers of Diversitas would be .org registrars and any other third parties to whom Diversitas provides services. From this point on we only consider registrars.
Note that registrants – those who contract with a registrar for provision of an .org domain name – are not registry customers.
VAT is a “pass-on” tax. The intention is that only the “ultimate” customer (the consumer of the goods or services, ie the registrant) pays the final tax. Intermediaries (ie registrars) will pass on the tax to the ultimate consumer as is legally required of them.
Under new EU rules (formally adopted May 2002*), EU suppliers are no longer obliged to levy VAT when selling electronic products on markets outside the EU. (Former EU rules, drawn up before e-commerce existed, obliged EU suppliers to levy VAT when supplying digital products even in countries outside the EU. The new proposals eliminate a competitive distortion by subjecting non-EU suppliers to the same VAT rules as EU suppliers when they are providing electronic services to EU customers.)
Diversitas understands the applicable VAT rules to be as follows (with reference to the Belgian VAT Code):
- Non-EU registrars: VAT is NOT collected (Article 21, § 3, 7º, d).
- EU registrars: VAT is NOT collected, except for Belgian registrars (Article 21, § 3, 7º, d).
- Belgian registrars (and any individuals in the EU without VAT registration): VAT would be added to their invoices (Article 21, § 2, 7º, d).
(*) COUNCIL REGULATION (EC) No 792/2002 of 7 May 2002, http://europa.eu.int/eur-lex/en/dat/2002/l_128/l_12820020515en00010003.pdf
b. The VAT rate for electronic services in Belgium is 21%.
This rate will be applied to invoices for registrars based in Belgium. There are currently no Belgian .org registrars.
c. VAT would be collected on all services, as required according to the residence of the registrar (see a.).
In practice, this means VAT would be collected from Belgian registrars only. There are currently no Belgian .org registrars.
We reiterate that the VAT provisions that apply to the Diversitas registry business should not change the VAT being paid by .org registrants. Please see additional points made under d. below
d. Diversitas would be required to collect VAT from Belgian registrars only. (There are currently no Belgian registrars.)
We recognise that the primary concern of this supplemental question is the financial implications for the ultimate user of .org services – the registrant.
These additional points summarise the consequences for .org registrars in different jurisdictions (and, therefore, for their registrants) of a transition of registry from USA to Belgium from a VAT perspective (again, to the best of our knowledge of the current e-commerce law and tax regimes).
1. US-based registrars:
VAT would not be invoiced by Diversitas. Therefore, from a tax viewpoint, US registrars and their registrants should in no way be adversely affected.
The current .org registry is based in, and invoices from, the USA. In the event of change to any non-US based registry operator of .org, US registrars should be aware that provisions of US Federal and State tax laws may apply in terms of their own declaration and collection of taxes.
2. EU-based registrars:
Registrars in all EU countries must conform to the EU VAT system. The applicable VAT is the same whether the service is provided from inside or outside their country.
VAT rates may vary from one country to another. This is of no importance from the competitive point of view within the EU Single Market since, for example, a service delivered from Germany and sold in Germany will pay VAT at the German rate, while the same service delivered from Belgium and sold in Germany will not have paid VAT in Belgium but will pay the tax in Germany at the German rate. This equally applies if the service is delivered from the USA, or anywhere else outside the EU, ie the German registrar always pays the German VAT.
- Registrars in Belgium: 21% VAT would be added to invoices from the Diversitas registry; this is a “pass-on” tax, ie it is legally recoverable by a Belgian registrar in the VAT invoiced to EU registrants. We assume that a Belgian registrar must absorb this cost or pass this as a higher price on to non-EU registrants. This is a moot point, because there are currently there no .org registrars based in Belgium.
- EU registrars not based in Belgium: VAT would not be invoiced by Diversitas. The registrar is liable to charge VAT to its customers at the local applicable rate. This implies no change from the existing situation for both registrar and its registrants.
3. Registrars in other parts of the world: VAT would not be invoiced by Diversitas. Non-EU registrars would already be declaring any sales tax payable according to their local regime in the tax invoices they submit to their local tax authority. This implies no change from the existing situation for both registrar and its registrants.
e. See (a) above.
a. Unity Registry is based in Switzerland, sub-contracting services to Poptel and AusRegistry. Our Swiss based professional advisors have indicated that Swiss VAT would be chargeable, but only to Swiss registrars. (e.g. zero rated for EC and United States registrars).
b. Swiss VAT is currently approx 7.5%.
c. All chargeable services.
d. Only chargeable to Swiss registrars.
e. There is no direct tax liability to the registrants.
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09-Sep-2002
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