Monthly Archives: October 2014

How changes to UK Consumer Law affects ecommerce businesses?

Effective earlier this year, the UK Consumer Contract Regulations came into force replacing the prior law on distance selling. Ecommerce businesses selling to UK customers will now need to review and update their sales process, terms and conditions of sales and refund policies to comply with the new regulations.

The Regulations were designed to implement the specific provisions of the EU Consumer Rights Directive (Directive 2011./83/EU). The directive applies to all consumer contracts for goods and services, including most particularly, online sales. The new regulations set out the information that must be provided to customers before the goods or services are purchased:

1. A specific description of the goods or services and the length of time any commitment on the part of the customer will last.

2. The total price of the goods or services, or manner in which the price will be calculated.

3. The cost of delivery and if the customer returns items, who will be responsible for the price of any return shipment.

4. Order cancellation details. Pursuant to the new rules the customer has no less than 14 days following receipt of the goods in which to cancel, this is an increase from prior law which mandated only 7 days.. There are exceptions to the 14 day right to cancel, including CDs, DVDs, or software if the wrapping seal is broken, the goods are perishable, tailor-made or personalized.

5. Information about the seller of the goods or services must be provided, including geographical location address and telephone number.

6. If the product is digital content, then the seller must provide information on the compatibility of the content with hardware and other software.

Sellers will no longer be able to charge a customer for an item that is selected for the customer as a pre-ticked box, rather the customer must actively tick the box. Finally, premium rate telephone numbers for help lines or other customer contact during the sales and return periods are no longer permitted.

Bottom line is that ecommerce companies selling to UK customers should review and revise, if necessary the terms and conditions of sale to ensure compliance with the new regulations. Failure to comply may result in contracts being unenforceable and criminal penalties may be imposed. Please let us know if you need any assistance or would like to discuss these new regulations to ensure your compliance.

Double Irish Take Break to End in 2020.

Bowing to pressure from the OECD and the European Commission, Ireland has agreed to close a loop hole that exploited the differences between U.S. and Irish tax law. France, too, has been particularly outspoken in its attempt to bring attention to unfair tax competition. The Double Irish loophole is used by large companies with significant royalties arising from intellectual property holdings. Ireland recognizes a company’s tax residence as the place where the company is operated from, while the U.S. focuses on where a company is registered. Thus, an Irish registered company being controlled from a tax haven like Bermuda, is considered, by Ireland, to be tax-resident in Bermuda. However, the U.S. considers that same company to be a tax resident of Ireland. Leaving royalty payments made to the Irish company untaxed or minimally taxed.

Starting in 2015, newly registered Irish companies will be regarded as Irish tax resident. The tax rate for an Irish tax resident company is either a 12.5% rate on trading income or otherwise 25%. This is still one of the lowest tax rates in the EU. Pre-existing companies using the double Irish structure can maintain that structure and its advantages until 2020, after which all Irish registered companies will be deemed Irish tax resident.

Because of its already low corporate tax rates, you may not see a rush to move from Ireland. Ireland’s Minister of Finance has also hinted at additional potential tax breaks or credits that might ease the loss of this loophole.