Businesses and VAT

[PeterSt]

Hi Chris,

 

I didn't really look hard for it, but I don't think that there's the option for VAT in there at this moment / engaged. And if not, businesses from most European countries won't be able to use the Stores.

Assumed the option *is* in there, you won't be able to set the parameters right and possibly one entity (like you or me) can't even do it because it depends on the selling country. I expect it to be a LOT of work.

 

Depending on the amount of work, I could set it up for you ... And when each Seller has to do it himself, it requires a guide.

 

And, here you have another reason (also see  Superdad's post) to separate businesses from private persons, because VAT works differently for either entity. For example, the speaker I listed is private and does not Charge VAT. But a Lush cable would be business and does charge VAT of 21% for the Netherlands. So I would need two Stores (allowed ?) or two accounts.

There is 10 times more involved with this and it must be regarded to be impossible to comply to all rules. Unless a real ERP system is controlling it ...

 

Sorry for the bad news, but at least I waited with it a few days. 

Peter

 

[The Computer Audiophile]

8 hours ago, PeterSt said:

Hi Chris,

 

I didn't really look hard for it, but I don't think that there's the option for VAT in there at this moment / engaged. And if not, businesses from most European countries won't be able to use the Stores.

Assumed the option *is* in there, you won't be able to set the parameters right and possibly one entity (like you or me) can't even do it because it depends on the selling country. I expect it to be a LOT of work.

 

Depending on the amount of work, I could set it up for you ... And when each Seller has to do it himself, it requires a guide.

 

And, here you have another reason (also see  Superdad's post) to separate businesses from private persons, because VAT works differently for either entity. For example, the speaker I listed is private and does not Charge VAT. But a Lush cable would be business and does charge VAT of 21% for the Netherlands. So I would need two Stores (allowed ?) or two accounts.

There is 10 times more involved with this and it must be regarded to be impossible to comply to all rules. Unless a real ERP system is controlling it ...

 

Sorry for the bad news, but at least I waited with it a few days. 

Peter

 

 

Hi Peter - Thanks for the feedback as always. 

 

Question: As a commercial seller, how does this work if you sell something on eBay? What if the buyer is in the US and the seller is in the Netherlands?

[PeterSt]

8 minutes ago, The Computer Audiophile said:

What if the buyer is in the US and the seller is in the Netherlands?

 

Then no VAT applies. VAT is applicable only within EU countries between each other (or in the country itself like Germany selling to Germany) and only when the country is part of this VAT "community". Examples of countries which are not part of it : Norway and Zwitserland. They behave the same as the US (but import duties will differ).

 

11 minutes ago, The Computer Audiophile said:

how does this work if you sell something on eBay?

 

Personally I never use eBay, so I don't know. But I can ask others in my company, tomorrow (we're all heading for some beers right now).

Formally the same should happen as described above, but we may wonder whether this is commercial usage (businesses selling there). Coincidentally I Google quite a lot on eBay (run into that) but I hardly run into businesses selling stuff from VAT to VAT country. And otherwise there is always the option to deal with that outside of the formal selling (say by email).

 

Point also is that one must be able to tell clearly what's in order. So if I tell in here that a cable costs 200 euros, then I should add to it "excluding VAT for those liable to VAT". This is very confusing because those who don't know about VAT may be scared off ("oops, does it cost me 21% more then ?"). Also the other way around : I can't tell that something costs 242 and say "for some it is cheaper because".

It is just a formal system that must be the most clear to buyers. And what remains : you out there know hardly anything about it, so what to do (our ERP system, now 30 years operational, still changes 1 - 2 times per year on some VAT issues and not because of the law changing - just incompleteness because it is so complex).

 

Last thing for this post : You don't want to know how many OFFLINE emails are necessary to get stuff to some places, some times. And how DACs turn into flight simulator devices in order to bring it along, instead of ... So tbh you can't even do without the invisible emails ...

[The Computer Audiophile]

Hi Peter - I believe I've solved the tax issue on Superphonica. We can now charge tax based on the combination of the seller's and buyer's location. It has to be setup for each business manually, but we can now do it.

 

Several dealers asked for this capability, so I figured I better solve the issue :~)

[PeterSt]

Hi Chris - Would it be correct that we can not see anything of this (yet) ?

 

On 27-2-2018 at 1:34 AM, The Computer Audiophile said:

It has to be setup for each business manually, but we can now do it.

 

I understand. But it isn't really something you'd want, right ? I mean, it doesn't look like an inviting thing if I, as a potential, say UK business seller, don't even see the field "Business Yes/No ?". I wouldn't be able to use Superphonica if I didn't see the differentiation.

But besides that, is it your prospectus to set this up for each individual organization who wants to join, from some European country ?

 

Anyway, I wanted to look how it is organized because I can't imagine how a third party (you, as not related to the selling and VAT liable organization) are ever able to set this up in the first place; If you'd do it like I envision the only possibility in such an environment of this software, it is a matrix per country and 30 or so countries. So example, a Polish business will charge 23% VAT to me as a person in Holland. I as a business in Holland, will charge 21% to a Poland consumer. Now you have one line of the matrix and it is without any rules yet. One of them is that I as a business will not Charge VAT to an other Business. This with the notice that in the end I personally (as a manager) don't care much about the charging of VAT to my business because it can be obtained back from the government, weren't it that I have all automated anyway and it is part of some procedure which goes quite unnoticed. BUT :

When my business customer in Poland demands me (my business) NOT to Charge VAT on the prerequisite that he provides me his legal and verifiable Business VAT number, I am not allowed to charge VAT because it is just the law.

 

An additional problem you kind of "will" have is that most of your Superphonica new business customers will not be able to tell you how this whole VAT system works. And heck, one must be graduated to understand all of it.  So what happens instead ? people use ERP systems. They cope for everything. No need to look after it. And that I myself am coincidentally one of rare global ERP manufacturers, just makes me "know".

 

Lastly for now, if I am a consumer and see an amp listed of 20K, I *have* to know the possible VAT amount, because when that is 30% for some sending country, the listed 20K becomes 26K. ... I 

a. need to see the sending country always;

b. need to be able to super easily test ride the payment because at stage I will see the additionally charged VAT.

Always keep in touch with this : VAT can never ever be listed in the globally visible list price, because no-one from a non-VAT liable country would understand (hence the amp can not be listed as 26K while for e.g. the USA it is 20K in practice).

 

Anyway I was curious how it looks like. And not do de-motivate by any means. I just seem to know how "undoable" it is.

 

Peter

[rando]

@PeterSt That was as informative as it was enjoyable to see sorted out so neatly.  The division of tariffs on goods imported into the US is almost simplistic in comparison.  

 

I'm off to look since my interest has been piqued whether there is any documentation on Superphonica detailing the monetary amount above which duties need to be paid in the US.  As well as how many categories purchases could conceivably fall under.

 

Edit:  It appear not, but iit s good to see tax information delineating gross and number of sales accrued before filing a 1099-K and notifying the seller of this requirement.

[PeterSt]

14 hours ago, rando said:

The division of tariffs on goods imported into the US is almost simplistic in comparison. 

 

Hi Rando - The import taxes live in any country (except for one that I know of) and always are subject to categories. Thus, one may pay higher taxes for TV's than for frozen chicken, to just make up something. Or steel may charge a 25% extra. 

 

It may seem to be off topic, but the whole matter of import duties is a big danger to some formal vehicle as Superphonica is or intends to be. This is so much so that I personally would not know how to engage such a formal system for a trading situation like this, and the proof is me myself because indeed I did not (while I am even owner of the software to such (ERP) system). Instead I use something else (third party tool), BUT use the ERP system to form sales prices (in or ex VAT automatically) and spit out the invoice for the customer, and if not for the customer then for our internal administration which is as formal and legal as can be. Now start to be confused : for the customer this too is as legal as can be. Thus, if I charge VAT, the customer pays it. If I don't charge VAT this is because legally it should not be charged and now the customer also does not pay it (mind you that this can be set up in illegal fashion again, the customer paying the VAT which I, the receiver, don't pass this on to the government. So, ... all legal. Where it goes off is this and I'll take the most easy example which still leads to a legal situation for all parties, BUT can not be dealt with reasonably by software :

 

Limits on Australian Dollar is 1000 for imports. Above that, means paying taxes.

First thing to think of is that the customer decides whether this 1000 (think of ~790 USD at this moment) is including the shipping costs or not. Hear me well : de customer decides this. Why ? well, because it is he who is afraid and it is NOT ME who knows for real. I don't live there. I only sell to Australia and once in a while watch a Mad Max movie (which is crazy enough).

In practice envision that your AUD 1000 gear costs just that or costs 1200 because if import duties (spread over two types of it). Or, that you can import for a value of 700 only because the shipping is regarded to be 310 and is to be calculated-in.

Still laying out the example ... : Now the customer buys a pair of speakers. Costs 1500 the pair and shipping is 310 (mind you, AUD - not your currency at all so you don't even know what is happening for real, especially when things start to be about South Korean Dollars and you have no clue). So say that this is now 1810 + import duties of 380 = 2190.

What does the customer order you to do (sit tight) ?

 

Please send me the speakers one by one. Now they are 750 plus 245 shipping each and my cost will be 1990 (2x 995). I save 200 !

 

And you know, this is perfectly legal. The law is the limit of 1000 per shipment and this is not trespassed.

Of course far more wild examples of this can be thought of and they easily include the not-so-legal ones, but if we stick to the legal real life happenings : have fun with your automated system. I say it can't exist (and for 20 more reasons than this easy to explain example).

 

There is much much more involved that seen at first glance, and in the Australian example it is about the Australian law as the first cause. So, introduce this 1000 limit and there you go (in Holland the limit is 20 euros I think and there too things get "abused" but the gain is relatively zilch). So, Aussies had Mad Max movies for a reason, because they have one goal for (psychological) life : avoid that stupid tax. Is that impossible ? then no sell for you. Is it about the money ? sure, but it is far more about the idea.

So one country, and it is full with required exceptions on your side. Emails about arrangements can be countless. Money transfers go special routes just the same (like really paying 2x 995).

 

14 hours ago, rando said:

my interest has been piqued whether there is any documentation on Superphonica detailing the monetary amount above which duties need to be paid in the US.

 

Haha, that would be difficult because few know. This is also related to the informal matters or just no interest from the government. Maybe billions are lost here. Btw, this is not really different from we over here importing from China something which costs 1 euro including shipping, while domestic shipping by local mail costs 6,80 euro alone, that same domestic shipping involved for that 1 euro package to arrive at your doorstep. All s*cks and it is so all over the world. Only in the real difficult countries (I name India) the government tries really hard to get in those taxes which is again a reason to not even sell something to such country. The US is the other way around : I have no proof that anyone anywhere had to pay import duties (so not for a cable, but also not for a DAC or a PC) except for when it is really obvious : a pair of loudspeakers that requires about an airplane on its own. So what happens here is that formalities occur because of the unloading, storing (before e.g. UPS collects it to bring it to your door) and now suddenly paper work is in order which triggers your tax payment (but which still is a few % only).

In all countries similar things happen, but always different from the other. Example again : when I'd send something to canada for CAD 1, brokers are to be appointed and everything and tax has to be paid in advance. Must cost a 200 to arrange for such things. Anyway, no such thing in the US and it is best to think that no import duties are in order (for audio that is).

 

A last extreme (example) is this :

First off, when I order from Aliexpress (China) no Chinese understands that if I buy a USD 10 piece of whatever BUT pay 25 more so DHL can ship 20 days quicker, that if I buy 100 of these items, that it really can go with the same shipment and that because of volume or weight the 25 rises to 100. But no, to the China trader I pay plainly 100x 25 for DHL.

While this is one part of the example, the other is that when this is split into 100 shipments, my import brokerage fees will be 100 x 14,50 euros just the same. Import duties are zero (the item per shipment is too cheap and under mentioned 20 euros) and I pay 1450 euros for brokerage which could be 14,50 only, BUT now with 4%% (promile) of 100x10 = 4 euro for import duties.

The difference is only 1450 - (14,50 + 4) = 1431,50 on the gross price of 1000. Thus because of the Superphonica now called Aliexpress (it is quite similar) I pay 2431,50 instead of 1019,50 (I do this without calculator but you get the idea).

The result ?

 

Aliexpress does not work for me and I buy cheap one-thing-trial cheap consumer stuff only. Grossly the Chinese think that it works. But it could be 100x bigger if real trades could be arranged for from a distance. Special treatments.

But that can't work. It is too large - too massive ...

 

Peter

 

 

 

 

 

 

 

 

 

[rando]

Impropriety was not in my definition.  Let's re-simplify the act of buying a single new item from manufacturer in the world's most powerful nation.  Forget byzantine European business practices, that tend towards strangling commerce, and VAT.  I asked about the USA.  Where the acceptable import value without paying customs has risen in a number of categories.  Where exactly that limit lies between a $200 cable and $20,000 box of some sort is worthy of establishing upfront.  UPS comes to the door, you hand them a check, sign for the package, and all is right with the world.  

 

Where you seem to have waylayed the experience is a lack of experience with the inestimable record keeping ability and powers of observation every package that gets delivered internally faces.  An exponentially greater power of attention is exerted upon anything attempting to make shore.  The numerous examples of rinky-dinking around customs by shipping one piece here and another next week, et al, just plain would not work.  Also, since this seemed to form the basis of one level on each your designs, shipping price has no effect on valuation.  Thus no impact on import duty.  If 200 boxes a year show up for delivery the only thing you are going to receive is a summons.  Oh, at first the packages will arrive showing signs of extraction and inspection.  Not for long.

 

Where things do get sticky is private sales of used high value goods.  Keeping in mind all I've put down so far, this serves as an intelligence test.  

 

I appreciate your reply though, Peter.  As such it far exceeded the request I was forwarding by some distance.  International shipping to island nations, Australia, or many other places does incur a great amount of human resourcefulness.  

[PeterSt]

One more time this one :

 

On 11-3-2018 at 7:16 PM, rando said:

I'm off to look since my interest has been piqued whether there is any documentation on Superphonica detailing the monetary amount above which duties need to be paid in the US.

 

I think I understood this question, but my response was in the realm of the world (wide) approach. So, first off - would you think more goods are going to be imported to the US than what's exported hence "we" buy from you in the US ? Secondly, this is not about the US as a center of trade, unless I am mistaken. I mean, I could just as well sell something to the man in the street next door in my Dutch village with Superphonica as the vehicle.

 

On 12-3-2018 at 3:25 PM, rando said:

Keeping in mind all I've put down so far, this serves as an intelligence test.  

 

What I have said in between all lines is that, in my view, for businesses this (one vehicle) can not work because the target is too large scaled. I mean this in the context of "nations". Thus, when this would be in-USA only, I wouldn't dare to say it is not large scaled, but for problematics it suddenly would be peanuts. This, while when it would be in-Holland only (or any of the EU-community countries) the problem would be 10 fold to begin with. And this with the context of VAT only. Limit the trade to private persons and suddenly there would be no issue other than a trading vehicle like how Superphonica is projected. Just sales with paying fees and of course the set up and maintenance of the (software) site. Now cross borders with those private trades and coincidentally for EU-EU there is no problem (but EU community only hence countries liable to VAT). There is no problem unless it involves cars because again each country has different rules for cars and it is just not even allowed to "just" trade them between countries. This is all tax related and how a car may cost 100,000 in Germany while it costs 160,000 in Holland. The difference is tax and really nothing else. But it imposes the problem because it is tax hence as formal with laws as can be.

But we are not dealing with cars here, so all good.

 

Again back to your question, but allow me to still put it in the global perspective, when I register a world wide sales, some times I am asked what duties etc. I charge. This is not related to being a private person or a business, but just the person who never dealt with that before and so he/she asks. The answer when the customer is liable to VAT : 21% and that is definitely all, or when not liable to VAT : me nothing, but what is charged in your country I don't know.

To answer your question in your own context : again I don't know, but I made an attempt in my previous post. What was in between the lines there, though, was : ask your fellow country men and observe that you don't get an answer because to my experience nobody can tell no matter how often I asked myself. But ... there is a Superphonica site owner and he should know. Or not, because why would it be his problem. I mean, it is you who presses the button for an implied import of 100K goods, and it is you who will receive a bill for taxes of 20K or not. You should know that yourself.

Aha ... that was what your question was about ?

 

Sort of, I guess.

So an automated system is implied and nobody knows what is going to happen. And while you seem to map this onto imports to the US, the guy from Turkey wonders the same when he buys something of which no emphasis at all is visible whether this comes from Norway, Netherlands or US of A. This, while each makes a vast difference for the buyer, ... which he may not even know about. He just receives the unexpected bill which he may even need to fulfill before the goods will pass customs. No money for it ? huge problem.

Additionally and once more unsolicitedly, Turkey is coincidentally so complicated that its inhabitants usually know and don't buy anything from abroad. Or, I could again mention India where no automated system would ever work for dead sure because the buyer needs to be in 100% control which includes his own shipping arrangement and brokerage or else he loses his precious purchase in customs forever or pays a 100% tax. Add Serbia for being a very similar country. And I mention these because there could be 10 times more audiophiles out there per square mile than in e.g. Germany and the problem emphasizes because there's fewer internal audio production (in Serbia still quite OK but in India far less).

 

On 12-3-2018 at 3:25 PM, rando said:

International shipping to island nations, Australia, or many other places does incur a great amount of human resourcefulness.

 

Try one of the beloved places for the US (I love to be vague); might I coincidentally describe the goods in a too vague fashion, then there too a 100% import duties is implied. With this example close to you, all over the world people depict how goods must be described "or else".

Mind you, this would be doable, but it should be all part of the trade in advance. I mentioned Aliexpress for a reason. 100% of communication with a "trader" over there which you will never get to know for real, goes via a central communication system. No back door emails. It is not allowed - not much different than Superphonica adheres or actually should adhere.

So much for human resourcefulness, I'd say. It just won't happen; it can't happen.

Now wonder about the system as a mechanism itself. That now too largely can't happen.

 

Failed the intelligence test for sure but these are my ideas about it. 

Possibly also failed to respond adequately but your English is too good for my Dutch hence not so easy to interpret.

[rando]

You are unlikely to have failed any intelligence test.  Furthermore, this is taking up more of your time than necessary. 

 

The small print concerning my inability to use concise English stung.