Some of the companies planning to store data at Verne Holding’s new Icelandic data centre, including the computer giant IBM, have cancelled their investments outright. At issue is (it is claimed) how badly the Icelandic finance ministry is dealing with technical difficulties surrounding VAT.
This was the assessment of Independence Party MP Ragnheidur Elin Arnadottir in the Althingi parliament yesterday. she went on to say she fears developments at the expensive new data centre could grind to a halt completely over the issue of Value Added Tax.
Skuli Helgason, chair of the parliamentary industry committee, said that Arnadottir’s concerns are entirely reasonable, Frettabladid reports.
Apparently Verne Holding representatives were taken off guard to find out that they do not enjoy a level playing field with European Union data centres when it comes to the application of VAT to net servers imported by the companies intending to use them. That issue needs resolving quickly, they say.
Iceland procrastinate… Never!… Look at the excellent progress in reaching agreement to pay the Icelandic IceSave debt
>At issue is (it is claimed) how badly the Icelandic finance ministry is dealing with
>technical difficulties surrounding VAT.
Just the same way they screwed up the interst in the oil and gas licenses in 2009 by not having the tax structure simple enough for investors.
http://www.icenews.is/index.php/2009/01/23/oil-exploration-licences-on-sale-in-iceland/
http://www.icenews.is/index.php/2009/09/23/no-iceland-oil-exploration-after-all/
” The main reason for Sagex and Lindir backing out of the [ oil gas exploration ] project is the complex tax system in Iceland, as the CEO of Sagex, Terje Hagevang, told RÚV. ”
http://icelandreview.com/icelandreview/daily_news/?cat_id=16539&ew_0_a_id=343647
When will this morons in the ministry involved come to realize that 100% of nothing is … nothing.
Exceptions need to be made for people bringing in the equipements for the Data Centers — if we were a member of EU then EU commission would enforce it.
As we are member of EFTA we can easily pass this exceptions. Just as we did pass execption giving rebate for film investment VAT of funds spent in film production.
A specific excemption can easily be made.
To Terry.
Repeating this Icesave views of yours more often does not make them more true:-)
Even within the EU this is by now widely recognized. If the UK and the Netherlands were so sure about there case, they would bring it to the courts. But they know as well what was going on there. why are people like you always go back to this Iceland bashing? It was not Iceland or the Icelandic population which screwed up, it was a bunch of greedy Bankers, private business men, who did so. They also hurt us, there fellow country-men. We lost also a lot and some even everything. Mr.Gordon Brown himself as Chancellor in Blair’s government even urged the UK communities to invest in these schemes… I surely hope for the UK and the Netherlands that if they get into this kind of disaster (as the UK my go very well according to EU and IMF predictions), I hope they find better friends that Iceland did when it needed them most. Your governments seem only to be friendly when things are going good. Well, friends like this we should well be ale to love without.
Hmmm, ditto Bjartur. If Iceland was so sure, it would have brought it to court by now.
>It was not Iceland or the Icelandic population which screwed up, it was a bunch of greedy Bankers, private business men, who did so.
This is plainly untrue. The Icelandic population is directly responsible for every action of the Icelandic government. The Icelandic government privatised and regulated the banks. That the whole process was corrupt and inept is the responsibility of the Icelandic people. Now, it may be that that’s unfair, but that’s how sovereign states work.
“Repeating this Icesave views of yours more often does not make them more true:-)
Neither does it make them untrue.
“Even within the EU this is by now widely recognized.”
I would challenge “widely recognised”. Sure, there is opinion – either rented, or given to promote self interest, but to my knowledge neither EFTA or EU have backed Iceland. To repeat one my favourite Fisy quotes – “Opinion like behind, everyone have one.” : )
http://www.icenews.is/index.php/2009/01/24/british-pensioners-receive-warmth-from-iceland/#comment-62211
“If the UK and the Netherlands were so sure about there case, they would bring it to the courts.
That may well happen. The most recent talks, indicate that a negotiated settlement may not be possible.
http://www.bloomberg.com/news/2010-09-08/iceland-won-t-settle-icesave-feud-at-any-price-arnason-warns.html
Indeed, I, as others outside Iceland would agree with Fisy ….’To Court.’
“It was not Iceland or the Icelandic population which screwed up, it was a bunch of greedy Bankers, private business men, who did so.”
Yes – but unfortunately – so did your government, and Icelanders bear responsibility for their actions. This situation is well explained by Bromley86
http://www.icenews.is/index.php/2010/08/26/icelandic-state-not-responsible-for-icesave/#comment-266661
Terry :
>Look at the excellent progress in reaching agreement to pay the Icelandic IceSave debt
As you well know Terry, the current Red-Green coalition sitting in the government seats did try they hardest to sell out our current and future generations, and even then completely messed up the negotiations ( Svavar Gestsson chief negotiator ), signing horrible deal for ” IceSave ” ( our parliament did they job and passing amended one of that with state guarantee for ” IceSave ” funds in August 2009 ).
Our parliment passed it once even then how horrible it was for Icelandic tax payer and future people — 5.5% interst and Ragnar Hall issue still, but still the UK and Holland government seat sitters at the time did say no to it.
Then our oh so competent Red-green government did try again with something even more favouble to UK and Holland and narrowly managed to pass a second bill in December 2009.
But our president refused to sign the bill and so it had to go to referndum. Not surprisingly given how horrible this bill was ( this issue never have been within smelling distance of impartial court process ) the people of Iceland did say no thank you.
93% voted against. Why idiots in government seats did not pull back bill before it got that far I do not know.
The number voting FOR it ( 2,599 ) was barely more than the number of MPs in the government and their families together. Thats on turn out of 88.6%.
Since then the UK and Holland have continued to pressure including EU commission pressure on EFTA surevillance authority as much as can be to stop it going to court — any court. But particuarly a court where there is jurists and judges that know EU directives and legal framework under Lisbon Constiton and Maastricht Treaty before.
That is exactly where it needs to go now. To court ! It needs desparately to go to court since November 2008 when Icelandic people realised they did stand alone.
( Note here that there is never any criticism of IMF helping Icelanders from me other than critizing the nonsense when IMF board pretends that they do treat every country equally large or small. Which obviously they dont. It’s the big nations that rule the IMF. Dont try and insult our intelligence by telling us other wise Mr Strauss-Kahn and fellow board members. )
+what is the Ragnar Hall issue ?
http://www.slideshare.net/hjalli/the-icesave-dispute-priorities-and-division-of-claims
http://blogs.ft.com/economistsforum/2010/01/how-the-icelandic-saga-should-end/#comment-969108
So Terry what advice do you have for our Ministry of Finance about this VAT on goods coming from EU for our data centers ?
Many seem to want to give advice to us Icelander with they ross tint glasses about what our ministers and government should have done in days gone by.
So now is your chance. You know that Red-Green ministers to love to hear what whole world has to say as they do not like to have to make they judgements them selves.
My question not just to you Terry but to others here. What should the ministry do ?
Fisy – Perhaps your comment was before my last was posted?
You say:
“Since then the UK and Holland have continued to pressure including EU commission pressure on EFTA surevillance authority as much as can be to stop it going to court.”
Please provide evidence.
You will see from my post – I agree…… ‘To Court ! ’.
“So Terry what advice do you have for our Ministry of Finance about this VAT on goods coming from EU for our data centers ?”
No advice at all – other than I would prefer the use of English ‘centre’ rather than its US derivation. : )
@Fisy
My question not just to you Terry but to others here. What should the ministry do ?
The easiest way to atract investors is to give everything away for free, but I would not recommend it.
>”Fisy – Perhaps your comment was before my last was posted? ”
Yes I think there is not the realtime moderation here or we would just see the spam.
I am not sure my post was about if you agreed or diagree but more to recap again. As you know it is our use less government seat sitters that are bumbling they way.
Friendly or not current UK colaition I expect to be fairer because anyone than Brown and Darling. The new Dutch coalition ( when it comes finally ) expect will do its own independent ideas as well.
As to your other question,
http://www.icenews.is/index.php/2010/07/24/efta-extends-iceland-icesave-deadline/
http://www.icenews.is/index.php/2010/07/30/eu-commissioner-gives-icesave-new-face/
I do not understand the IceSave issue. If I use a Swedish bank in Norway, my deposits are secured by SEK 250.000. If I use a Norwegian bank in Norway, my deposits are secured by NOK 1.000.000.
If the Swedish bank goes belly-up, I’ll get up to SEK 250.000 right.
So in the IceSave case, the deposits would be secured by the Iceland krona, not EUR or GBP. So if the iceland krona goes belly up with the banks, there will be no protection.
What’s the issue?
Sure it must be a cause of some reassurance to some of you that the main rascal behind the Icesave scam is a 40% owner in the Verne Holdings and that he is investing his ill gotten gains in such a worthy venture. Damn the Icelandic Government for not supporting him wholeheartedly and letting some technical issues around a flexible concept such as taxation, get in the way.
@Petter Smart (Stupid?) – You don´t understand the issue.
If I use a Swedish bank in Norway, my deposits are secured by SEK 250.000. If I use a Norwegian bank in Norway, my deposits are secured by NOK 1.000.000.
No.
If you use a Swedish bank that is operating in Norway, your deposits are secured under the Norwegian system, which insures to NOK 2m.
If that Swedish bank used a branch structure (i.e. it didn’t incorporate a subsidiary in Norway to handle the business), then it may have used the EU/EEA “passporting” rules, as Icesave/Landsbanki did. That would mean that you would recover the first 20k euros (i.e. not SEK) from the Swedish deposit guarantee fund, and the remainder up to NOK 2m from the Norwegian fund.
Anything over NOK 2m in both cases would be claimed from the liquidation of the bank, which would likely be less than 100% and take a while.
If you use a Swedish bank in Sweden but actually live in Norway, then that’s a different matter. You’d claim up to SEK 500k from the Swedish system and nothing from the Norwegian one.
The fact of the euro nature of the guarantee is in no way disputed. The Icelandic law states it in ISK, but it fixes an exchange rate to give 20k euros (actually 20,887 IIRC). The current dispute arises from the Icelandic interpretation that the fund is the limit of the liability and the UK/NL/EU interpretation that the guarantee requires state backing in the event that the fund cannot pay.
@Fisy. Where was the evidence that Terry asked for? Neither link contained anything to back your assertion about Commission pressure on the EFTA SA.
Polite moderator note to Oysten-Norway:
Please don’t forget the commenting guidelines. It is important to treat other commenters with respect and not call them stupid!
Alex, editor
Knowless this is a very cut of nose to spite face attitude. You will notice he did accept ramp down hes investment because it was being used as idiot excuse to try and block this project.
Novator ( i.e. he did accept watering down from 40% to 20% unless you do know something I dont ) :
http://icelandreview.com/icelandreview/daily_news/?cat_id=28304&ew_0_a_id=355708
“ When this matter landed on my desk last summer I asked myself the same questions which people are asking themselves now,” Júlíusdóttir said. “Should we let the entire investment go to waste because Björgólfur Thor submitted the initial capitalization or should we continue working on it so that it can deliver 200 jobs?”
“My conclusion was that I’d rather get the funding and water down Novator than to say to those who hold a 60 percent share against Novator and are planning to provide new funding that we don’t want them because in 2007 they worked with one of the alleged antagonists of the collapse,” the minister explained.
..
So now we have this flag wavering nonsense from the Finance Minisry ..
“> Apparently Verne Holding representatives were taken off guard to find out that they do not enjoy a level playing field with European Union data centres when it comes to the application of VAT to net servers imported by the companies intending to use them. ”
The ones effected by this is all of the members of Association of Icelandic Data Center :
Thor Data Centers, Nýherja Group ( IBM ), Verne Global, Síminn, Titan Global, Greenstone, Glacier Guards, Nordata .
I hope the ministry gets off its sitting muscle in no more than matter of days about this issue.
>” I hope the ministry gets off its sitting muscle in no more than matter of days about this issue. ”
http://www.zdnet.com/blog/datacenter/how-to-kill-the-datacenter-business/438
http://www.datacenterknowledge.com/archives/2010/09/09/will-tax-issues-stall-icelands-data-center-push/
Steingrímur!
“The current dispute arises from the Icelandic interpretation that the fund is the limit of the liability and the UK/NL/EU interpretation that the guarantee requires state backing in the event that the fund cannot pay.”
There is also the, Icelandic, claim that the depositors protection fund is liable for repaying Icesave. If that’s the case its should be collecting funds from the Icelandic financial system in the form of a levy.
@Alex – “Petter Smart” is the Norwegian name of Disneys Gyro Gearloose – so I thought this was just on of “his” smart solutions. I doubt he offended, just smiling <;-)
I’m wondering, what would have been the result if they didn’t do what they did and let the whole shebang run it’s course.
Saving the system was not an option as we all know.
A. Things would have gone pretty much the same.
B. People would have been too shocked for a long time, and things would just withle away…
C. Total collapse of the financial system, a revolution, and with all the middle class joining in.
P.S. I pick c.
UK/Netherlands has to negotiate to the people of Iceland, as it is they who have to pay, not politicians.
Funny stuff, they don’t even send an half wit committie not even knowing the issues.
I hope this will go to court…
>If that’s the case its should be collecting funds from the Icelandic financial system in the form of a levy.
Although, I believe (but haven’t checked), the EU directive specifically prevents the levy from being so high as to threaten the viability of the banking sector. So If the UK is willing to wait 1,000 years, then it might recover the money in this manner :) .
Bromley86, you are correct. How they can claim to have a depositor protection scheme if it can *never* hold any where near sufficent funds to cover any of the banks individual failure is beyond me.
It was just a scam, although the government went on record that they and the other nordic nations would finance the fund if nessessary.
>” I hope the ministry gets off its sitting muscle in no more than matter of days about this issue. ”
Thank fully Minister of Trade Katrín Júlíusdóttir is paying attention to whats going on :
http://www.icenews.is/index.php/2010/09/12/iceland-data-centre-laws-to-be-changed/
Bromley86 did write :
September 10, 2010 at 2:21 pm
http://www.icenews.is/index.php/2010/09/08/ibm-cancels-iceland-investment-due-to-procrastination/#comment-270114
” >@Fisy. Where was the evidence that Terry asked for? Neither link contained >anything to back your assertion about Commission pressure on the EFTA SA. ”
As it was getting this story and comments off topic from Data Centers I have made a reply in more appropraite place :
http://www.icenews.is/index.php/2010/11/09/eu-progress-report-on-iceland/#comment-508198