1 - 15 August, 2003

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eBay Adds VAT

Settling the conflict with the new EU e-Commerce regulations, eBay decided to add VAT to its prices thus leadin to a general price increase for its services.

The Internet auction site confirmed that it will begin charging VAT (value added tax) on all its sellers fees starting July 1st. VAT in the UK is 17.5 percent. Rather than increase all its prices by this amount, though, eBay has implemented a range of changes to the fee structure of eBay.co.uk.

"At the same time as the implementation of VAT, we will restructure eBay's insertion, feature and final value fees. We will raise some fees, reduce others, while keeping some the same. In addition, we have changed many of our reserve fees," explained the company in a statement.
All eBay sellers are charged two fees - an insertion fee, which is based on the starting price, and a final value fee, based on the value of the successful bid. Sellers can also pay to set a reserve price, to have their entry featured prominently on the side, or to include one or more photos. This means there are over 30 different fees imposed by eBay, although a seller wouldn't be required to pay any more than two.

A total of 26 fees will go up from 1 July. Some of these have increased by around 17.5 percent - such as the starting prices, which have been raised by between 16.5 percent and 33 percent, and the photo hosting fees, up by 20 percent to 12p from 10p per photo. Others have been raised by more. For example, having an item featured on the main eBay.co.uk page will cost £49.99 from 1 July, up from £19.95. EBay.co.uk has also brought in three new charges, including a cheaper insertion fee for goods with a starting price under £1.

One fee -- the cost of having a lot displayed in bold -- has fallen from £1 to 75p. Four more fees have remained the same, which actually means a reduction for businesses selling on eBay.co.uk as they will now be able to reclaim the VAT.

Some analysts believe that these increased charges could hit European demand for eBay, one of the success stories of the dot-com boom.

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