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They've survived the bursting of the tech bubble, a global economic downturn and the occasional virus, but now overseas Internet retailers may see their European profit push derailed by one of the oldest drags on business: tax.

On July 1, a new EU (European Union) directive goes into effect requiring all Internet firms to account for value-added tax, or VAT, on "digital sales".

The law adds a 15 to 25 percent levy on select Internet transactions such as software and music downloads, monthly subscriptions to an Internet service provider and on any product purchased through an online auction anywhere in the 15-member bloc of nations.

The VAT tax is nothing new for some Net firms. European dot-coms have been charging customers VAT since their inception. Their overseas rivals though have been exempt, making foreign firms an obvious choice for the bargainhunting consumer.

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