Laws cannot extend beyond physical territory. All sites hosted on European servers have to comply; EU laws do not extend to any sites hosted on foreign servers.
This is not true. Example: you have to collect and transfer to EU tax authorities VAT for downloadable goods sold to customers located in the EU if you're not located in EU. If you don't, you can't sell to EU customers. This is ridiculous, but I guess, they can "force" you to block EU users from accessing your website.
I'm not sure how this is actually enforceable, but I think you'll have problems with EU (for example, if you decide to go to Europe for holidays) for not complying with their rules. Which is sad.
Do you have any citation for that ? It is completely contrary with what I know of EU tax law.
An EU citizen buying abroad is responsible for paying the VAT (usually to customs), not the merchant, and if it is 'downloadable' then VAT only applies if the merchant is european.
The law is active since July 2003. There were a lot of buzz among e-commerce companies and shareware developers about it.
The changes eliminate an existing competitive distortion by obliging non-EU suppliers to charge VAT as EU suppliers when they are providing electronic services to EU non taxable persons, something which EU businesses had been actively seeking for some time.
Depends. AFAIR there are at least some german laws that are active because the provider of the service is sitting in germany, independent of where the servers are.
Which would be really bad for business, because there's a surprising amount of stuff hosted in the EU.
Broadly speaking, if your primary markets are not America or Asia and you are the type of company that buys racks of space in datacenters without blinking, western EU is where you'll probably be.
The main factors are servicing, bandwidth and reliability.
For example, many trans-national African projects are hosted in the EU because it's simply cheaper to set up infrastructure there, because you're piggybacking on the infrastructure that's already there (long-term shared costs). Once in place, it's easier to service because you outsource service contracts on things like hardware to the vendor, who can give you a decent quote because ... they have a servicing system in place.
Power comes from the power grids that are in place, and that's very reliable. Bandwidth comes from the bandwidth structure that's .. you got it .. already in place and being upgraded all the time.
Now try and set up a load of servicable hardware in a reliable datacenter (bandwidth and power-wise) in Africa. Or Eastern Europe. Or the Middle-East. It's doable, but the price tag goes up, up, up. To service your account your vendor will have to invest in local infrastructure, hire competent servicing personnel near site, find a way to deliver hardware components in a timely manner without access to a general depot, etc. And because you're the only one requesting this you'll have to pay for it all.
You could try and move into the Russian Federation, but the operational costs there are, ah, unpredictable. Also, the Russian networks do not extend well beyond the metropolitan areas (trans-national traffic is also a work in progress).
I could go on, but my point is that the western EU hosts and accounts for a lot of traffic.
I sincerely doubt this Directive will have much impact. There are just too many interests involved.
