There's a parallel here with the US for tangibles. The difference is that in Europe, intangibles definitely come under the same rule. Most software, for example, is subject to VAT, and that VAT is applied whether it's bought on disk from a brick and mortar shop or downloaded from the Internet. Because the amounts involved are so large, Internet VAT avoidance on both tangibles and intangibles is a big deal for European consumers and their governments. FedEx then ships the discs into the country, acting as an unwitting smuggler, and because transatlantic transport is so efficient, there's barely any delay and just a small shipping charge and all in all it's a better deal than buying from a UK Internet retailer.
Business is brisk and everybody's happy.
Recently the UK authorities started to wake up to this little scheme. Music-lovers are now finding that FedEx and the other carriers turn up at their door with not just the CDs but also a VAT bill imposed as the goods passed through customs. A key element here is that the carrier actually pays the VAT at the border to get the goods inside, and then the customer reimburses the carrier. This is a clever method of collecting cross-border taxation. It doesn't take much imagination to see that the UK authorities will soon recognise that anything sent from address X in New York and transported by carrier Y is almost certainly a batch of CDs and should have a VAT bill slapped on it.