How to deal with import/export duties?

[analog_sa]

Hey, where is the end of this story? Did Customs agents censor it?

 

[jan.didden]

Guys, my question is not how much VAT is in every country.

My question was how to avoid paying it twice. I understand that this is difficult to achieve as an individual / small scale operation. Damn.

It is not difficult, you only pay it once. And your customer also pays it only once.
That's where the name 'Value added tax' comes from, it is assumed that every transaction adds a value to the product which is then taxed.

For companies, they can recuperate the VAT they pay on stock they purchase, because that stock generates VAT when the company sells it to end customers. All logical and transparent.

What does not work: I as a company purchasing stuff, recuperate the VAT I pay, then sell to 'a friend' without charging VAT.

Why not? I have two choices:

1. Not charging VAT from 'a friend' which means the sale is out of my books, which means I have unsold stock representing a value and at some point, in the limit when dissolving the company, is taxed, or

2. I sell to 'a friend' and charge him/her VAT which I then have to send to the Government.

It's a well thought out system.

Jan

 

[jan.didden]

Yes sir, In India its cheaper to get the PCBs manufactured locally, but only in large qty (say50+). then it becomes cheap. Because they charge a rate based on per cm2 area+ some fixed charges like (gerber processing charges+ film making charges (silk+copper+stop)+taxes.
So for large GBs, I get the PCBs manufactured locally.

For proto PCBs (~10 nos ), I am now searching for a cheaper solution other than China.

Earlier customs used to let small packets through, but now they are charging customs on everything and that too on invoice value.

I have been using SEEED Fusion for PCBs. Example: 5 boards up to 100 x 100mm, $ 4.90 total, with shipping to Europe between $ 12 and $ 18 depending how fast you want it.

The nice thing is that with the low total you also stay below the VAT/Import duties radar.
If you can accept some 2 weeks delivery.

Jan

 

[simon7000]

I am confused. VAT stands for Value Added Tax. If you are redistributing a product at cost there is no added value, so there should be no added tax.

Import duties are a different tax. They are based on value, but under some conditions they are refunded when the item leaves.

 

[jan.didden]

I am confused. VAT stands for Value Added Tax. If you are redistributing a product at cost there is no added value,

Irrelevant. The value is supposed to be added by the process of selling. You wouldn't think the IRS could be circumvented so easy, did you?

In some countries like in my own, there's a special rule for for instance 2nd hand car dealers, called marginal VAT. In those specific clearly specified cases, the trader only has to pay VAT on the (positive) delta between buying and selling price.

Jan

 

[mbrennwa]

It is not difficult, you only pay it once. And your customer also pays it only once.

So it does get payed twice, which I think is as wrong as it gets!

Example 1: parts get manufactured in the UK. Then they are sent to me, so I get charged Swiss VAT. Then I send the parts to the USA or China or XYZ, without changing the parts in any way. Since the parts don't stay in Switzerland I don't see why Switzerland would be allowed to keep the VAT they charged. The recipient in the USA, China or XYZ will of course be charged the VAT of their countries.

Example (2): the factory sends the parts directly to the guys in the USA, China or XYZ. Switzerland is not involved, and I am not charged any VAT at all. Still, the guys in the USA, China or XYZ get the same parts, and they do pay the VAT of their country. The result is the same as in example (1), except that I didn't pay any VAT to Switzerland.

There must be a way to get to avoid (or reimburse) the Swiss VAT in Example (1). It would be very wrong to restrict this to large companies and exclude individuals or small organisations from this. The point is that I don't know where to ask... Since I get the invoice for the VAT from the Swiss Post (or DHL or FedEx or UPS or whatever), I asked them about it. They said that I need to talk to the guys at the customs office, who of course referred me back to the post office. Damn.

 

[wealas]

I would ask an accountant.
While the post office/couriers provide an option to do the clearance and import, the VAT is part of the tax system and as such is handled by the tax authorities. I would imagine that if you had any chance of getting the VAT back it would be through a tax form.

 

[jan.didden]

So it does get payed twice, which I think is as wrong as it gets!

Think about the underlying principle: every transaction adds value. And that value gets taxed. I build an amp and sell to a distributor, he pays VAT. He sells it to a retailer, the retailer pays VAT. He sells it to a customer, the customer pays VAT.

If you are a company (the distributor, the retailer) the VAT is considered an advance on income tax, so he can recover it and then he is charged on his income/gain.

There is logic to the madness ;-)

And don't mix up VAT and import duties, completely different. Import duties are levied because your government wants you to buy national products instead of foreign, so when you nevertheless buy foreign, you get punished. Has nothing to do with VAT which is a strictly national thing.

Jan

 

[jan.didden]

More logic.

If I sell stuff to an American, I can't charge him VAT, because why would an American pay national Belgian taxes??

But the US government may charge him import duties on the stuff he bought from me because he had the nerve to buy from a foreigner (me) instead of Buy American.

As I said, logic to the madness.

Jan

 

[jan.didden]

The logic to its limit:

VAT is charged on a transaction, not only on a product but also on a service.

So if I buy something from say China, and it is above the import-free limit, I pay import duties. The importation paperwork is done by the postal carrier, which is an in-country service provided for me. So I pay VAT on the cost of the import paperwork. Simple ;-)

Jan

 

[Zvu]

If parts are manufactured in UK, let someone from UK pick them up when they are done. He will then send it to you as a gift and he will write the value of shipment say 25 euros. Prior to sending, he will strip the package of any stickers that could indicate what is it and how much it could cost. Since there are no price tags and it is just two friends sending some random stuff to each other, there can not be any customs fees or VAT and if there is, the declared value of shipment is low, so let them take few euros.

Few years ago i've bought Rega RB250 from Audio origami in UK for 100 euros (when converted from GBP). A friend of mine picked it up, shipping to Belgrade was about 20 euros. It was on my doorstep few days later with 0,5 euros more - packet handling fee. No stickers, no price tag and a natural person sending, not a legal person.

 

[Zvu]

double post