VAT on American orders

[jaydor 345]

I was in the proccess of paying and downloading FlyTampa Dubai. I noticed that they were including a VAT charge. The proccessing company for the download is also an American company based in the USA.

I am hesitant to buy as I am not sure if this is a legal VAT charge of fraudulent, as purchases from the USA do not carry ECC Vat charges I believe?

Any help?

[stu7708 244]

Don't know if the rules are the same as in Sweden, but they should be much the same since both Sweden and the UK are in the EU.

According to Swedish tax law you need to pay VAT if you import something from outside the EU (as well as from another EU-country), and it should be charged by the selling company.

[jaydor 345]

Thank you stu7708

I will download from simvation at least I know that to be correct.

[rob16584 42]

Not sure if the US should be charging VAT - it's a dark art fully understanding all the rules and regs of VAT.

Basically in the EU if goods cross a border than VAT is not charged, but the value of these goods needs to be entered onto the VAT return. If a service is provided (by a foreign company) VAT can be charged and then reclaimed under the reverse charge method. Although some companies choose not to show the VAT on the invoice.

To be safe I'd try and buy it from somewhere in the EU.

[jaydor 345]

Thank you Rob

I will get it at SimMarket.de not simvation as I said above.

[Tim_A 997]

If you're in the EU, you pay VAT, regardless of where the goods come from. Most big Internet traders are now set up to pay the VAT from source, so they charge it at the point of sale. Thus you will pay VAT when purchasing from the U.S. on the Internet.

If you buy goods from another EU country, you STILL pay VAT, and it is charged at the rate of the country of origin. Most EU countries pay more VAT than the UK (although some pay less), so SimMarket, for example must charge 21% VAT because they are based in Germany, compared to the UK's 20%

(I think Rob has his business-accountant hat on, since sales to private individuals across borders *definitely* include VAT)

[stu7708 244]

(I think Rob has his business-accountant hat on, since sales to private individuals across borders *definitely* include VAT)

I'd say so too yes... VAT in business to business transactions are a totaly different set of rules that can be an outright nightmare at times...Here in sweden the reverse charge method are even used in some domestic transactions

[jaydor 345]

Yet I do not appear to pay VAT on ORBX purchases from the FSS store in Australia?

They do not show such on my download orders.

Questionable? Is this a scam being played out in the US? as the download sites do not show a EEC VAT registration number..

In my other hobby, American model railroads I import a lot from the US. I do not pay VAT on the purchase for them, but I do have to pay Import duty when they arrive in the UK.

So my belief was no VAT on goods purchased outside of the EEC with a import tax on puchases bought from non EEC countries. VAT is only paid on all goods bought within the EEC.

[Tim_A 997]

I think they have to provide a VAT receipt if you explicitly ask for one, but maybe not otherwise?

It isn't a scam though -- HM Crooks & Robbers will not be banging on your door for a second dose of VAT (they might well still ask for Duty though)

FSS may simply not be registered for VAT in the EU. (in which case, technically you are still liable)

[stu7708 244]

In australia it's called GST, and the terms and conditions on FSS states that all prices include GST.

I'd guess that the website determines your location and adds VAT accordingly..

[britfrog 180]

no american company has the right to charge vat , it is a europe wide tax only if they want to try to charge vat they are either ripping you off or perhaps they are an american company registered in europe to avoid american taxes there are many ways of avoiding vat however if you are living in europe and you want to buy a servicefrom abroad when it comes to the border you must pay vat on its decalred value

[Quickmarch 488]

I'm in the position as having been a Canadian (7% GST, at the time) supplier of product to the USA and abroad. Canadian GST is not hidden in the advertised purchase price. It is added after the fact. Canadian law requires sellers to prove (under audit) that either: GST has been paid and submitted on all sales or a shipping receipt is retained on record in lieu of the GST submission.

I totally agree with those who are of the opinion that foreign countries should not require their nationals to submit GST on sales outside the country. Unfortunately, Internet sales are one of the grey areas. As a supplier, you (sort of) have a record of an out-of-country sale. But, wait a minute! Was that sale made to someone in country who is using a VPN or some other method of hiding their real location. One thing you never have with an Internet sale is a bona-fide delivery address. All you have is a destination IP ddress that could be anywhere.

It's tough to beat the tax department. I suppose that the only real option we have is to notify the seller of a lost opportunity when we don't buy their product because they charge GST to foreigners. Really, all that does I'd deprive us of the product.

Taxes are here to stay and as countries get more and more cash strapped they come up with newer and better, to their way of thinking, ways to tax us.

I'm a big fan of the Australian way - bury the tax in the advertised sale price. If it's possible to retract it for a foreign sale the buyer feels good about it. If not, the buyer doesn't feel that anything has been lost. Don't buy anything from Canada, the price does not include the Gouge and Screw Tax and, in most cases, an equal or greater PST (Provincial Sales Tax).

Don't get me started.

Cheers,

March

[jaydor 345]

OK March, will not get you started as you may become as mad as a March Hare.. :)

Thanks for your input..