Home Forums General General Practical question to American vendors about customs declarations

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  • #51982
    Avatar photoRhoderic
    Member

    When I order hobby products from the US or Canada, they’re always shipped with a customs declaration stating the value of the order on top of the parcel. This in itself is entirely understandable, I’m not calling it into question and I know vendors have no way of getting around it regardless of how disadvantageous it may be to me (due to my having to pay local VAT and a customs handling fee, which incidentally also prolongs the time the parcel takes to reach me).

    However, I’ve noticed that the value stated on the customs declaration usually includes the cost of shipping and handling as well as the value of the figures themselves, and these two values are not in any way separated. For instance, if I pay a vendor $100, of which $80 is the value of the products and $20 is the shipping and handling that the vendor charges, that vendor will state the value as $100 on the customs declaration. This seems wrong to me, and it frustrates me. I don’t know the actual law on this matter in my country, so I may be the one in the wrong, but it doesn’t strike me as correct that my customs authority is charging me VAT for shipping and handling on top of the justified VAT for the product value. There’s also the fact that orders below a certain value (somewhere around $60-75, at an estimate) tend to be ignored as “small fry” by my customs authority so they slip through untaxed, which when it happens is a great solace to me, not so much because I’m spared VAT, but rather more because I’m spared the customs handling fee and the delay. When ordering figures from North America I often try to keep the value of the order fairly low for that reason.

    So my question is, are vendors in the US and Canada legally obliged to include the money that they charge for shipping and handling as part of the value of the product? Or are they in fact making an error when they do that? I can’t claim to know that it’s an error (that’s what I’m trying to find out), but if it is one, then it can be a very costly one to me.

    #51984
    Avatar photoAngel Barracks
    Moderator

    Looking at a UK form it quite clealry states to describe the contents and provide the value for the contents.
    So a UK customs form should not include shipping, as shipping is not inside the box.

    A google image search of US forms for the USPS seems to have a very similar form, that asks for value of contents.

    I have certainly asked US companies not to include the value of shipping and they have obliged.

    Be interesting to see what a US/Canadian member can tell us.

    #51986
    Avatar photoMr. Average
    Participant

    When I worked for a bookseller we assessed shipping for customs because, at least at the time, CBP considered the value of shipping as part of total packaged value in case of collecting or applying tariffs. Or so my employer told me. I just filled in the forms! I think trade between the US and UK is basically tariff free at this point but maybe old habits die hard? A person with more recent retail experience could correct me I’m sure.

    #51987
    Avatar photoRhoderic
    Member

    Looking at a UK form it quite clealry states to describe the contents and provide the value for the contents. So a UK customs form should not include shipping, as shipping is not inside the box. A google image search of US forms for the USPS seems to have a very similar form, that asks for value of contents. I have certainly asked US companies not to include the value of shipping and they have obliged. Be interesting to see what a US/Canadian member can tell us.

    Coming to think of it, I should perhaps have aimed my question at UK vendors as well as North American ones, because if a hard Brexit happens I’ll be in the same situation with you guys. This is not a political commentary, just a statement of the fact that I may need to become better informed about my rights (if I as a foreign customer of a UK vendor can be seen as having rights in the UK?) and UK vendors’ obligations in regard to customs declarations, in the event of a hard Brexit.

    #51988
    Avatar photoRhoderic
    Member

    I think trade between the US and UK is basically tariff free at this point but maybe old habits die hard?

    I’m not in the UK 

    #51989
    Avatar photoMr. Average
    Participant

    Aha! Don’t know why I assumed?

    Still the US has low or no tariffs with a lot of countries, except those we’re embargoing. Which are more than you might think! And federalism being what it is, trade law can get pretty complex over here so maybe people are just planning for the worst case scenario.

    #51991
    Avatar photoAngel Barracks
    Moderator

    Here is a UK form:

    #51998
    Avatar photoRhoderic
    Member

    Aha! Don’t know why I assumed? Still the US has low or no tariffs with a lot of countries, except those we’re embargoing. Which are more than you might think! And federalism being what it is, trade law can get pretty complex over here so maybe people are just planning for the worst case scenario.

    Hmm. I’m not really sure what “tariffs” are defined as, technically, but here in Sweden, when ordering from outside the EU there’s customs duties and then there’s Value Added Tax (and customs handling fees on top of those). I don’t have to pay customs duties for orders below 1500 kronor (or “crowns” to use the common unofficial translation of our currency) which presently is approximately $165, £130 or €150. But I’m still supposed to pay VAT (via customs) for all orders. I say “supposed” because, as mentioned earlier, they tend to simply not bother with parcels of a relatively low value.

    VAT for all items excepting comestibles and printed materials is 25% (to put that into perspective, I believe it’s 20% in the UK although the nature of the exceptions may be different). Customs duties for “toys”, in the case of goods valued at 1500 crowns or more, is 4.7%. As for customs handling fees, IIRC the last few times I was hit with them they were somewhere around 100 crowns.

    So if for instance I was to order $200 worth of Heavy Gear Blitz miniatures (a useful example because I do play/collect HGB, the figures come with hefty price tags, and Dream Pod 9 have always had immense difficulty establishing a UK/Europe market presence so I tend to have to order my HGB stuff from America), I’d really end up paying something like $275 for them, not counting shipping and the potential extra VAT and customs duties for that. Counting shipping with the concomitant extra charges it should come to around $300-325.

    I must admit to being shamefully ignorant as to what effect, if any, TTIP and CETA might have on all this if they come to fruition.

    #52008
    Avatar photoPatG
    Participant

    Looking quickly at the Canadian side, it appears that the declaration should only be for the contents and not the postage.
    However, it rapidly gets very complicated. For example, looking at send toys (among a great many more things) to Norway, shippers are advised to consult with Norwegian customs officials before sending anything to ensure they are not restricted or prohibited.

    I can see a small vendor wanting to go through all the hassle of working through the maze of regulations. I would just ask them to ensure that the customs declaration is for the contents only and not the shipping and explain why. I suspect they simply don’t know or haven’t thought of it before.

    From personal experience, I received a package of used miniatures from the US – with whom we have a Free Trade Agreement and one wold think much reduced tariffs. UPS (the pirates in brown) decided to act as my customs agent and charge me $40 for the privilege – the minis were worth $75. And – I had to drive to their office during office hours on a weekday to pick them up.

    As it turns out I took the time to dig through the regulations and used toys carry an import duty of 0%. So I said no thanks UPS I will not accept the package. UPS went back to the shipper and demanded $75 to ship them back + US customs broker fees on top of the original shipping charge. Note that at this time, the package is still technically in a bonded warehouse, so hasn’t entered Canada and so there is no need to re-import it back to the states. Canada Post only charges $10, understands the tariff rates and generally ignores anything under a couple of hundred bucks – it’s not cost effective to collect.

    I fought UPS and got the charges waived but never will I use them again or buy from anyone who only ships UPS.

    #52057
    Avatar photoBandit
    Participant

    We (The Wargaming Company, LLC) routinely ships internationally from the United States to:

    • Italy
    • England
    • Australia
    • Canada
    • France

    We are shipping almost exclusively books.

    We declare for purpose of customs only the value of the book (MSRP) and the type of item (book). Our understanding is that we are not under any obligation to declaring shipping costs as part of the product’s value.

    I was recently speaking with a friend who said he regularly bought from book sellers in England and was being charged VAT by them which confused him since his understanding was that they are not obligated to collect VAT on outgoing exports.

    TL;DR: International trade is really a mess.

    Cheers,

    The Bandit

    #52061
    Avatar photoGuy Farrish
    Participant

    Books are zero rated for VAT in the UK, so no-one should be charged VAT on them.

    #52065
    Avatar photoRhoderic
    Member

    We (The Wargaming Company, LLC) routinely ships internationally from the United States to: • Italy • England • Australia • Canada • France We are shipping almost exclusively books. We declare for purpose of customs only the value of the book (MSRP) and the type of item (book). Our understanding is that we are not under any obligation to declaring shipping costs as part of the product’s value. I was recently speaking with a friend who said he regularly bought from book sellers in England and was being charged VAT by them which confused him since his understanding was that they are not obligated to collect VAT on outgoing exports. TL;DR: International trade is really a mess. Cheers, The Bandit

    I’ve seen the issue of VAT when non-EU customers order from the UK come up from time to time on wargaming forums. (Also, I presume the same thing applies when non-EU customers order from other parts of the EU, but it’s not terribly relevant as the vast majority of wargames vendors in the EU are in the UK, or failing that, at least have a UK stockist). Ground Zero Games and Brigade Models have become known for deducting VAT, and a few other UK vendors might do it as well, but AFAIK most don’t bother, even though they’re “supposed” to. There don’t seem to be very many non-EU customers raising a fuss about it to be honest, which is a bit odd as it would entail savings of almost 17% (for purchases of miniatures, not books, see below).

    I’m actually curious to know whether UK vendors are in fact breaking the law when they charge non-EU customers VAT, and if not, whether at the very least they become obligated to deduct VAT when a non-EU customer explicitly requests it (although I suppose they can always choose to refuse service to the customer in question if they think it’s too much bother or not lucrative enough). This will become relevant to me as well in the event of a hard Brexit – EU customers will join all other non-UK customers as being exempt UK VAT. (Technically we’re already exempt it, but only if we arrange to pay VAT in our own countries instead, which entails extra paperwork for both parties and – at least here in Sweden – is of little to no advantage to the buyer, so for these kinds of private hobby purchases it doesn’t really happen).

    But as for the specific case of ordering books from the UK, like Guy said all printed materials are zero-rated in the UK VAT system. So there should be no such thing as being charged VAT when you buy books in or from the UK.

    Vendors shipping books internationally ought to (IMO) always clearly state in the customs declaration form that the items in the parcel are indeed books, as opposed to “hobby products” or something such. Most countries (as far as I can tell) have either zero-rate or reduced-rate VAT for printed books (it’s 6% here in Sweden, which obviously is very mild compared to the usual 25%). That said there are exceptions, ie. countries that charge the standard rate for printed books, such as Australia and Russia.

    When a vendor is shipping a mixed order of books and miniatures (and/or other hobby products such as paints and tools) internationally, they might want to think about itemising the different product categories with their respective values on the customs declaration form, so as to potentially save the customer from some undue VAT charges. However, on a US customs declaration form this seems to require mucking about with Harmonised System Tariff Numbers. Probably not worth it for smaller-value orders, but I’m out of my depth here.

    #52068
    Avatar photoMike
    Keymaster

    I’m actually curious to know whether UK vendors are in fact breaking the law when they charge non-EU customers VAT,

    I dont believe so.
    However they must include this on their TAX returns to HMRC.

    So if they charge VAT to a US customer they are only breaking the law if they dont pay HMRC that same VAT amount back.

    #52070
    Avatar photoBandit
    Participant

    I dont believe so.
    However they must include this on their TAX returns to HMRC.

    So if they charge VAT to a US customer they are only breaking the law if they dont pay HMRC that same VAT amount back.

    I’m not sure.

    In the US my understanding is that it is not legal to collect a tax that isn’t owed as well as illegal to collect a tax and not turn it over.

    Cheers,

    The Bandit

    #52071
    Avatar photoMr. Average
    Participant

    As a consumer I’ve never been liable for VAT in non-US purchases – I admit I don’t totally know how that works, though. In the US we typically have sales tax which is paid by the consumer as a percentage markup to goods and services and collected by the seller at the time of delivery.

    However, though I don’t think I pay VAT as an American buying from overseas, I am liable for sales tax to my state (not the Feds) for the value of goods I buy from other countries or other states, over a set amount ($600 I think). Each state in the Union has its own tax laws on that so it varies from state to state.

    Here’s to “free” trade!

    #52072
    Avatar photoBlackhat
    Participant

    It is not illegal to charge VAT to a non-EU customer. You are permitted to deduct the VAT and not charge it provide you have proof of postage to a non-EU country and keep that proof of postage for 6 years…

    It is illegal to charge it and not include it in your VAT return and fail to remit it to the VAT man.

    This doesn’t affect me because, like most wargames companies in the UK, I am not VAT registered as I keep my turnover under £83k and thus don’t charge VAT on top of my prices.

     

    Mike

     

    #52073
    Avatar photoRhoderic
    Member

    This doesn’t affect me because, like most wargames companies in the UK, I am not VAT registered as I keep my turnover under £83k and thus don’t charge VAT on top of my prices.

    Oh, I see. That’s a critical detail I wasn’t aware of at all 

    So, some UK vendors’ prices include VAT, but most don’t. Of those vendors that do charge VAT, some deduct it for non-EU customers and some don’t. Those that deduct it do so for market competitiveness or goodwill, not because they have to.

    I presume that vendors who do charge VAT are obligated to state that fact? So if a webstore has no mention of VAT, one can assume that it isn’t being charged and it would be futile to contact the vendor to ask if they would please deduct it?

    Anyway, returning to the original matter of this thread, I would still appreciate further input from non-EU vendors (especially US and Canadian ones) on whether the value of products stated on a customs declaration form should include shipping and handling. I just don’t want to inadvertently encourage or incite vendors to break the law if/when I ask them to exclude shipping and handling from the stated product value.

    #52074
    Avatar photoMr. Average
    Participant

    Whoops. Kinda drifted there didn’t we?

    #52076
    Avatar photoRhoderic
    Member

    Whoops. Kinda drifted there didn’t we?

    Fine by me. I was interested in the UK VAT issue anyway as my trading relationship with the UK might be changing circa 2019.

    #52080
    Avatar photoMike
    Keymaster

    I presume that vendors who do charge VAT are obligated to state that fact? So if a webstore has no mention of VAT,

    Yup, they have to have their VAT number on their website.

    Brigade Models are a good example:

     

    #52095
    Avatar photoIan Marsh
    Participant

    Although a customs declaration (CN22 or CN23) should just be for the value of the goods, if that value is greater than the import threshold for your country you will also get taxed on the shipping costs.

    The risk of a vendor including the shipping cost in the customs declaration is that you may in effect get charged VAT on shipping twice.

    Ian
    Fighting 15s
    www.fighting15s.com

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