The Tax Man keeping an eye on eBay sellers
December 18th, 2008
Should you have to pay tax on things you sell on eBay?
The Revenue Commissioners think you should,but before you get alarmed they are targeting the “Power Sellers.”
Revenue estimate there are at least 10,000 such sellers in Ireland, and as is the case in Canada,they may force eBay to hand over personal information on them. In Canada they focused on those sellers who earned in excess of $1,000 a month for three consecutive months.
eBay has remained silent thus far,concerning Irish sellers. It charges a commission on every sale. Ireland has proven luctative.
One international “Power Seller” recently surpassed a million positive feedbacks. Should those people pay tax?
The issue remains that, because information on ebay is hosted outside of Irish Juristiction, the Revenue Commissioners will have some trouble obtaining personal information related to power sellers on eBay. The most that the Irish Government is able to do is to withdraw grants which were previously given to them - or through extreme means - lodge court appeal to have their .ie domain taken off them. Cases like this are extremely rare however and it is unlikely the govt. will pursue this action. They are essentially relying on goodwill.
However, the French Tax Commission didn’t allow this issue to get to them. Instead, they tricked Power Sellers into handing over personal information, and then went after them.
What is expected to happen is that the Irish Government will begin monitoring records stored on the CRO (Companies Registration Office), and will visit premises. Or, in the case that the person is not VAT registered and does not own a company, will do as the French Authorities did, and will order items from the stores, receive them, then report them as faulty. And will use the return address they have been given to pursue the PowerSellers.
If the powersellers’ sales figures are above €50,000 and they aren’t VAT registered, you can be sure that there will be heavy penalties imposed.
The Revenue have a big job on their hands, but it will be fruitful because if you do the basic math:
If there’s 10,000 powersellers, and they earn at least $1,000 per month (We’ll use $1500 as the average), thats 10k multiplied by $1500 - thats $15m sales per month.
Now convert that to euro, and thats €10.83m, then multiply that by twelve, you get in the region of €130million, add on another €10m for Christmas and you’ll get €140million. Now if you have collected 21.5% VAT off that (which of course you won’t, but we’ll pretend anyway), it will mean €30million every year will go into the government’s pockets.
That is a very general calculation.
Also, now is a prime time to target these people, because online ecommerce is beginning to mature within Ireland, and it is estimated that by 2012, online sales will double. Everyone is jumping on the ship, and the Revenue is trying to get in on the act also.
Online sales within Ireland have also suffered the brunt of the recession, but to a lesser extent than high street retailers. Figures from the NB Consumer Index shows that Flights are down 5%, hotel bookings down 7%, and DVD rentals down by 5%. But it is expected, that online DVD rentals will begin to improve again towards September.