A point that’s been made time and again in general terms, is how vastly different the digital world now is, compared to the situation in 2006 when the new EU VAT on digital sales regime was first being discussed.
Adam Dobay has gone further and looked at the specifics, writing an eye-opening post for the EU VAT Action Campaign Group on Facebook.
With his full permission, I’m posting his research here – and both he and I would be very interested indeed in further information and analysis by those with more detailed technical knowledge.
Similarly I’d very much like to know any informed – albeit informal – legal opinions on whether or not these regulations can be challenged as not fit for purpose or something similar.
As Adam writes –
“”A 2006 EU document is not suitable to regulate digital businesses in 2015” — research [UPDATED 01.26]
I’ve made some very basic research concerning just how vastly different the internet was in 2006 when the EU regulation resulting in today’s rules was on the table — and how surreal it is that us entrepreneurs and all the member states have to draw definitions from something this outdated.
The research was prompted by Les Howard’s article where he states “the definitions of telecommunication, broadcasting, and electronic services are found in the Implementing Regulation 2006/112/EC, arts 6-7. Rather than fret about the definitions applying in different member states, read the relevant article”.
The following is meant as a resource for the EU VAT Campaign Group as well as websites and bloggers who want to highlight differences in a variety of fields. The list is unfinished and the process of adding citations is ongoing — I am continually updating this post as I find new data from 2006 and today to compare (harder than it sounds). If anyone has knowledge of better or more relevant data, please notify me in the comments below.
Feel free to copy, quote, and use in blog posts and other publications, citing Adam Dobay, digital entrepreneur, http://www.cabbitsupreme.com as the source. Thank you!
INTRODUCTION
Concerning the digital marketplace, referring to a 2006 piece of writing in 2015 is highly erroneous. One huge part of the problem with definitions of digital products and services is exactly the significant number of ways in which the internet and digital entrepreneurship have changed in a mere 9 years.
THE INTERNET AND ENTREPRENEURSHIP IN 2006 VS TODAY
Basing regulations on how the Internet looked in 2006 is actuallyreferring to a time when:
– the number of internet users was 35% lower than today [1]
– mobile broadband penetration was 50% lower than today in the EU [2]
– the EU e-commerce market was was 66% smaller than today [11] [12]
– the very concept of “web 2.0” and social networks was in its infancy [3]
– blogging still dominantly meant people keeping personal journals online [4]
– only 5% of blogs concerned business at all[4] (compared to 8% corporate and 13% entrepreneurial blogs in 2014[5])
– 8% bloggers made any money through their blog[4] (compare today’s 17% of bloggers who earn full-time income[6])
– making money from a website almost exclusively meant displaying banner ads; blog content marketing, affiliate marketing, video ads, subscription services, membership sites, and digital products did not exist as they do today
– Youtube was less than a year old and was just being bought by Google [7]
– the concept of vlogging was in its infancy, and enterpreneurs using online video as a platform did not exist
– digital music distribution was only 3 years old and was restricted to Apple [8]
– one year before the Kindle’s debut, the e-book market was non-existent [9]
– e-learning solutions, and online courses did not exist in the sense they do today
– the concept of crowdfunding would not kick off for another 2 years [10]
– one-click digital shopping cart solutions did not exist
– digital sales solutions easily accessible and widely available for entrepreneurs did not exist
– it was not commonplace for users to buy digital products directly from entrepreneurs and small businesses
– the concept of apps for phones would not exist for another 2 years (the iPhone itself would not debut for another year)
– purchasing on mobile devices was limited to polyphonic ringtones
BOTTOM LINE
In 2006, the digital products and services that entrepreneurs sell today did not exist.
The concept of entrepreneurs selling digital products directly to their consumers without third parties did not exist.
The concept of digital microbusinesses did not exist.
The above list could go on for a long time.
A 2006 regulation is not suitable for the 2015 internet landscape.
A 2006 regulation is not suitable for digital microbusinesses.
REFERENCES
[1] International Telecommunications Union statistics, http://bit.ly/1tcwY1P
[2] ITU statistics, http://bit.ly/1CpMd9p
[3] One of many papers defining web 2.0 by Catherine Styles, http://bit.ly/1JoHzdW
[4] Pew Internet & American Life Project, http://pewrsr.ch/1C0C30n
[5] Blogconomy Stats 2014, http://bit.ly/1iTeC0H
[6] Lifehacker, 2014 http://bit.ly/1iebTdk
[7] http://nbcnews.to/1CpMoBF
[8] Natalie Klym, MIT, 2005, http://bit.ly/1BpUGYU
[9] T.D. Wilson, Information Research, 2014, http://bit.ly/15BL4it
[10] Freedman and Nutting, 2015, http://bit.ly/1pM6JqI
[11] European Commission, 2009, http://bit.ly/1LajYzw
[12] European B2C Consumer Report, 2014, http://bit.ly/1r5H3rV
Digital Microbusiness Action Group 
But the 2006 regulations are what exist and unless/until the Commission are persuaded that they get *more* out of the market (which means *less* for everyone in the market) they won’t change them.
As for a legal challenge — if you haven’t noticed, you would be launching a challenge against the EU which will be adjudicated on by the EU (not national courts), and you will *pay* (in the ‘000s of Euros) for the privilege of being told Where To Stick It.
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It is much the same with the cookie law, which came into effect in 2011 and 2012, based on a plan drawn up in 2002, which was based on information about cookies collected in 1997.
You couldn’t make it up.
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