Jersey cracks down on DVD and CD VAT loophole

Jersey is set to limit the number of UK firms funnelling sales of CDs and DVDs through the island to take advantage of its tax exemption.

Many large UK retailers have channelled their orders through Jersey-based distribution companies in recent months under European legislation which exempts VAT from goods imported into the EU worth less than €22 (£14.60).

The move allows businesses to cut shipping prices on music and movies purchased through their web sites. The island distribution firms ship the orders free of VAT, driving consumer costs down to as little as £8.99 per CD.

But following complaints from small independent retailers, the Jersey government is looking to tighten the loophole when it is used by firms which do not benefit the local economy.

More details: startups.co.uk