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Dear Dr. Ecommerce,

We are two guys based in Italy who intend to open a retail international store on the yahoo! Server. we are a small organisation and want to put together some Italian stores that specialise in European products. Our organisation will manage the retail sales on the web. We will be able to take the orders from the customers and pass those orders to the shop, who will deliver the order. We will also collect the payment for each purchase and forward it to the right shop.

The first question is: do we have to pay any taxes in Italy? In this case our shop is on an American server and the money will be collected from an American bank. The shops who work with us already pay taxes in Italy, so we think that in our case we won't have topay taxes for our work. But please give us the right answer and your opinion about our work. If we decided to charge a fee to the shops that work with us, do we have to open an individual business? Where?

Ivan

Dear Ivan:

If you are based in Italy and are earning an income from your activities, then you will need to declare that income and very likely you will need to pay taxes on that income (depending upon the size of your income and tax law in Italy). Incidentally, the location of your server is irrelevant as far as tax collectors are concerned. It is the location of your business or yourselves (if you are doing business as individuals).

What you are doing is already a 'business'. However, whether you formally register a company in Italy or elsewhere depends on many issues including income, activities and much more. You should talk with an accountant in Italy for more information and recommendations in this area. She could also advise you about the tax issue.

Your business idea is interesting. But I would be worried about the long term prospects. Opening a shop on Yahoo is simple and most businesses do not need a middleman to help them to do it. I assume the shops you are serving are not yet on the Internet and so need someone like yourselves to take the order. However, once they are on the Internet they may ask themselves why they need you to take the orders (and take a cut, I assume) when they could have their own staff doing this.

So, perhaps you should start looking at the possibility of establishing your own business. Perhaps you could set up your own shop on Yahoo. But if you are feeling ambitious, why not go one step further and establish your own Italian shopping mall (along the lines of Yahoo's shops). By the way, I know the Italian government is keen to promote e-commerce, so if you do try something, check with your local chamber of commerce about support, funding, and that kind of thing.

Good luck,

Dr. Ecommerce