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Talking about interesting tax tactics: the other day I got an email from an Indiegogo project saying 'we ship directly from the EU, so EU customers don't pay VA
by roel_v 11y ago
Talking about interesting tax tactics: the other day I got an email from an Indiegogo project saying 'we ship directly from the EU, so EU customers don't pay VAT.' At first I was like 'huh?', but after a while it turned out to be true: they are supposed to charge VAT only if they are selling from within the EU. They're not, they're a US company, collecting money through Indiegogo (not sure if Indiegogo is a reseller or not, but doesn't matter for this case). So they don't have to charge VAT to their customers. But VAT for foreign purchases is charged only by customs; if they ship from within the EU, no VAT. Meanwhile, if their EU production facility is a subsidiary of the US one (or of an umbrella concern), they can still both reclaim VAT they paid, plus they can shift profit offshore. No VAT paid anywhere (by anyone - not even the customers, so a 20% competitive advantage!), low corporate taxes if they choose so, it's awesome.
So I wonder: why don't more companies do this? I can see that for mass produced cheap trinkets the 20% would not be profitable vs how much cheaper it is to produce in China; but say for high-end furniture, manufactured in the EU. Why don't they just 'sell' from their online (US, or Hong Kong for all I care) shop which would give them a legal 20% advantage?
- tiatia 11y agoShipping time? Billing cost? Custom clearing? Don't forget, many customs have quite low thresholds before they tax the hell out of imports. In Germany I think you can have an item shipped up to 20 Euro. Also, many products could be confiscated (dietary supplements, "medicine", food, electronics (certifications)). Try to ship ANYTHING to Brazil. Good luck with that. And hope you don't have to return anything. Furniture? Good idea. I don't know what "high end" means but the shipping costs are likely going to kill you. On the other handL I shipped once a pallet from LA to Germany via Airfreight. If you use a small provider, costs are quite low. The provider buys a kg air freight US<>Europe around 1 US$ and resells it to you with a mark up. Still, you have to clear customs and have to get it to the airport and then again from the airport. Funny thing: The company who delivered it for me to the airport included a bill for their services. It was only for finalizing the product that I shipped to them. The EU customs charged him import taxes based on that bill, not mine. Hence my customer saved a shit load of money.
- roel_v 11y agoNo, you'd ship from within the EU, so no customs clearing, low shipping time, etc. My point was, it seems that as long as you sell via a company outside the EU, but produce and ship from within the EU, you don't have to charge your EU customers VAT.
- tiatia 11y agoWhy does this get down-voted? Within the EU? True. But who has left money in this hyperfragemented market? Many different languages, regulations, power supplies. It is easier for Germans and Italians to sell to Americans than to each other (at least B2C).
- roel_v 11y agoIt's not like 500 million ppl just sit around and buy nothing...
- kspaans 11y agoDoesn't Indiegogo charge 10% of funds collected?
- roel_v 11y agoI guess but you wouldn't sell your furniture via Indiegogo, just from your own overseas office.