Under a new EU Directive, AOL will have to charge its UK customers VAT at 17.5%. The Directive requires non-EU businesses to register for VAT in the EU and charge VAT at the standard rate in force in the member state where their customers reside. However, the Directive is unlikely to be implemented in the UK before mid-2003. Freeserve recently complained about the refusal of Customs & Excise to make an announcement in relation to the current VAT treatment of AOL.
John Pluthero, CEO of Freeserve, which is owned by Wanadoo of France, told Reuters, “Frankly, this makes my blood boil that this should go on this long.” AOL argues that it is complying with Customs & Excise policy.