"VAT and the EU" Topic

If a buyer is outside the EU they are not liable to pay the VAT, which is often about 20%. VAT is unlike American-style sales tax in that it's already included in the price of items, not added upon purchase. Thus it's easy for someone outside the EU to be unaware of it. Since a seller is not obligated to pay VAT on sales outside the EU, a seller can effectively mark-up the price by a large amount without the buyer being awake.

Some companies, such as Ground Zero Games, don't charge VAT. Others do.

Do you expect vendors to charge VAT to Americans, Canadians, and others outside the EU? Do you feel strongly on this?

I'd buy from an online shop that explained their VAT policy rather than from one that didn't. For things like PayPal, it would be difficult to sort out the correct VAT refund stuff, but it should be possible to simply reduce the Post & packaging by the appropriate ammount.

That said, I suspect that a lot of the smaller shops/dealers/manufacturers don't actually charge VAT at all in the first place, as their annual turnover is too small – GZG used to be in this catergory for instance, but then we fools started buying too much stuff from them, so they have to charge VAT to UK customers, but they deduct the VAT equivalent from the P&P.

Others, like Foundry, do not, adding even more padding to their prices by inflating their retail for 'foreign' orders, and/or increasing P&P excessively or using dodgy exchange rates (GW).

Vexillia has a perfect guide

link

others take note, this is the way to do it properly.

You have missed a catergory, VAT is only charged by companies above a certain turnover threshold.

As a small company we do not charge VAT, but by the same token we are not eligable to reclaim the VAT from our suppliers either.

This is how it works in the UK, not sure about other countries rules.

Vexillia has a perfect guide

Thanks.

Please note that all UK web sites must display:

[1] A street address (PO Boxes not allowed),
[2] Their VAT number if registered.

These requirements are part of the EU Distance Selling & VAT regulations respectively. In addition limited companies must display:

[3] Their registered address,
[4] Their company registration number,
[5] The country of registration.

All of the above must be easily locatable by anyone visiting the web site.

For example, the Amazon entries are in item 27 at amzn.to/M34g7h and you can reach this page from any page at amazon.co.uk

I have to say I always check these things when buying hobby items.

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Martin Stephenson
Vexillia Limited: Wargames Miniatures & Accessories
vexillia.ltd.uk
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pikeandplunder.vexillia.ltd.uk

Indeed – in the UK, the majority of wargames firms are too small to be VAT-registered in the first place, so can't "deduct" a tax that isn't there in the first place….

This must be a popular topic!

I'm getting more web site hits from this topic than the news item that I've started stock Plastic Soldier Company 15 mm vehicles.

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Martin Stephenson
Vexillia Limited: Wargames Miniatures & Accessories
vexillia.ltd.uk
facebook.vexillia.ltd.uk
twitter.com/vexltd

Just noticed this:

a seller can effectively mark-up the price [outside the EU] by a large amount without the buyer being awake

They can but if the Revenue find out and they haven't paid the VAT to the Revenue they will be in serious trouble.

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Martin Stephenson
Vexillia Limited: Wargames Miniatures & Accessories
vexillia.ltd.uk
facebook.vexillia.ltd.uk
twitter.com/vexltd

As others have said… Not all EU companies need to charge VAT.

With those that do it is a misconception that there needs to be a policy. They have to give the prices including VAT on their websites (and their VAT number) and they need to deduct it from your order if you live outside the EU.

Marking something up is virtually impossible, because that way you would charge EU customers VAT twice and that is illegal. The only way this would technically be possible is if buyers were shown different prices depending on where they are. The only webiste I know that is doing this would be Foundry.

Cheers,

Burkhard

Burkhard,
If I understand what you're saying, a UK company should not charge the UK price in £ to a customer in the US. They should charge the usual UK price minus the VAT. Is that correct?

A VAT registered company should charge non EU customers the price of the item, less VAT yes.

A none VAT registered company charges the same to both.

Remembering that the VAT registered company should pass on the VAT to the relevant tax collection service.

A VAT registered company should charge non EU customers the price of the item, less VAT.

That should be "may charge" not "should charge".

Remembering that the VAT registered company should pass on the VAT to the relevant tax collection service.

That should be "must pass on" not "should pass on" and this applies irrespective of where the customer is.

It's simple really. ;-)

--
Martin Stephenson
Vexillia Limited: Wargames Miniatures & Accessories
vexillia.ltd.uk
facebook.vexillia.ltd.uk
twitter.com/vexltd

vexilla,
So if I understand you a company that charges, for example £12.00 GBP for a item is effectively charging £10.00 GBP for the item and with £2.00 GBP going to government as VAT. Is that correct?

The same company could charge a US customer £10.00 GBP because the US customer is not required to pay VAT. Alternatively the same company could charge the US customer £12.00 GBP with the extra £2.00 GBP being profit. Is that correct?

If I understand what you're saying, a UK company should not charge the UK price in £ to a customer in the US. They should charge the usual UK price minus the VAT. Is that correct?

Essentially that is correct. If the order ships to a non-EU adress and the company is VAT-registered… yes. With smaller companies that do not have some fancy shopping software that does this on its own, you might have to eMail them to make it clear, but that should be it.

[…] Alternatively the same company could charge the US customer £12.00 GBP GBP with the extra £2.00 GBP GBP being profit. Is that correct?

No, the 2 GBP would still be gong to the government as VAT. They would have to "class" that money as VAT on the bill and consequently in their books. anything else would be tax fraud and we all know how keep our governments are to punish that!
So a clever VAT-registered company would charge the customer the price minus VAT, since they are not allowed to keep it anyway, so why not give the customer the incentive to buy more!

So if I understand you a company that charges, for example £12.00 GBP GBP for a item is effectively charging £10.00 GBP GBP for the item and with £2.00 GBP GBP going to government as VAT. Is that correct?

Yes.

The same company could charge a US customer £10.00 GBP GBP because the US customer is not required to pay VAT.

Yes, but only if the company chooses to zero rate (0% VAT) the order for export. See bit.ly/NyJhz6 for the principles.

I know of at least one company that charges everyone VAT, and pays it to the government, because they don't want the hassle of proving they have exported the goods.

Alternatively the same company could charge the US customer £12.00 GBP GBP with the extra £2.00 GBP GBP being profit. Is that correct?

No. The "extra" £2.00 GBP would be deemed as VAT and must be paid to government as VAT.

--
Martin Stephenson
Vexillia Limited: Wargames Miniatures & Accessories
vexillia.ltd.uk
facebook.vexillia.ltd.uk
twitter.com/vexltd

Add in that none VAT registered companies charge you £12.00 GBP full stop.

If you charge a customer VAT, irrespective of where they are, the VAT goes to the govt. If you are VAT registered you do not make an extra £2.00 GBP profit, it goes to the VAT man, and you don't mess with the VAT man.

I'd like to clarify a couple of things re VAT.

Companies who are registered for VAT collect it on behalf of HMRC.

From the collected VAT from sales they subtract the VAT they have been charge by their suppliers and the balance is sent to HMRC. The company does not make a "profit" from VAT, it is supposed to be a neutral transaction.

Companies who are not registered for VAT do not collect anything for HMRC. Neither are they capable of claiming back VAT from their suppliers. Again the effect is neutral.

(HMRC = Her Majesty's Revenue and Customs)

So a plea to all non EC customers – if the company you are buying from isn't registered for VAT, PLEASE don't accuse them of overcharging or defrauding you, for them VAT effectively doesn't exist.

No, and I appreciate the companies that publicly state they offer a VAT discount to their non-EU customers.

Pendraken site had a great explanation as to how their VAT policy and international postage rates meant that the results were neutral to the end user.

Taxes are a pain in the caboose. My hats off to you folks who understand em.