France restricts web auctions

Internet Business News, May 5, 2000

INTERNET BUSINESS NEWS-(C)1995-2000 M2 COMMUNICATIONS LTD

A Paris court has ruled that French Internet users cannot take part in online auctions except by using a state-approved auctioneer and paying French value added tax.

According to FT.com the ruling centres on sales last year by Nart.com, which held web auctions of expensive works of art. The site was sued by the association of Paris auctioneers. Nart claimed that its sales were exempt from French VAT because the auctions are handled by a subsidiary company which is incorporated in New York and the computers handling the bids are also located in the United States. Furthermore, the company said, payment is made in dollars to a US bank.

However, lawyers representing the Paris auctioneers successfully argued that French law should apply to the case because the company had an office in Paris, the sale was advertised in the French media, and the artworks were displayed in France and could be bought by French residents.

The court agreed and ruled that the sales were illegal under French law. Nart's French and New York subsidiaries were fined a symbolic FRF1 each.

A spokesman for Nart.com compared the ruling to preventing French people from walking in to a New York auction house and placing a bid.

((Comments on this story may be sent to info@m2.com))