Question about VAT for US residents

[Robert]

What company was it that charged you VAT although you live outside the EU?

Conid

As it turns out, you were wise to use a credit card. I would have done a wire transfer to save on the surcharge Conid assesses - - - - and been out of luck on the VAT. Do let us know when the credit card company renders its final verdict on the VAT refund.

[Neo]

What company was it that charged you VAT although you live outside the EU?

Conid

As it turns out, you were wise to use a credit card. I would have done a wire transfer to save on the surcharge Conid assesses - - - - and been out of luck on the VAT. Do let us know when the credit card company renders its final verdict on the VAT refund.

Ok, thank you all for your input.

[Laura N]

You know, actually, I didn't really understand all the nuances here. Once Neo mentioned Conid, I went to the Conid website. It looks like Conid charges a flat fee in euros for each pen. So it seems that they quote everyone a price that includes VAT and they do not remove the VAT portion for non-EU buyers. On the one hand, you're not paying more than you agreed. But on the other, if you are an American arguably you are paying what you normally wouldn't.

It occurs that nowhere do I see VAT mentioned on the ordering form. So I and many of my fellow Americans (who don't pay VAT) probably wouldn't even suspect that some of that price incorporates VAT applicable only to members of the EU. Maybe EU customers would ask first, because VAT is second nature to them, but for us it isn't.

And in my experience, every other EU seller I've used does remove VAT for non-EU buyers.

It's a really interesting situation. I hope Neo fills us in on what happens.

[Chrissy]

It occurs that nowhere do I see VAT mentioned on the ordering form. So I and many of my fellow Americans (who don't pay VAT) probably wouldn't even suspect that some of that price incorporates VAT applicable only to members of the EU. Maybe EU customers would ask first, because VAT is second nature to them, but for us it isn't.

It occurred to me that Conid is fully aware of this, and it looks like they may actually be taking advantage of it.

And in my experience, every other EU seller I've used does remove VAT for non-EU buyers.

Yes I don't know of any who don't either.

It's a really interesting situation. I hope Neo fills us in on what happens.

I also hope Neo fills us in on what happens too

[Neo]

You will be the second to know.

[mrcharlie]

I don't see how you are in the right here. Conid never claimed to be charging you VAT. They just charge one price, all taxes inclusive, for everywhere. If you are from the EU VAT zone your price includes the VAT they will need to pay; if you aren't your price all goes to Conid.

Effectively they have one price for the EU + VAT and different price (and no VAT) for everywhere else. That is still "legal" isn't it? They just use different wording to describe it (ie one price everywhere, VAT inclusive if relevant).

FWIW, I have no affiliation with Conid, not even as a customer or online friend with anyone from there.

[Chrissy]

I don't see how you are in the right here. Conid never claimed to be charging you VAT. They just charge one price, all taxes inclusive, for everywhere. If you are from the EU VAT zone your price includes the VAT they will need to pay; if you aren't your price all goes to Conid.

Effectively they have one price for the EU + VAT and different price (and no VAT) for everywhere else. That is still "legal" isn't it? They just use different wording to describe it (ie one price everywhere, VAT inclusive if relevant).

FWIW, I have no affiliation with Conid, not even as a customer or online friend with anyone from there.

No, it isn't legal to charge non-EU customers VAT and other EU sellers seem to be able to manage to operate the correct method. They need to have a VAT free price and a VAT included price. It's not that difficult

[Neo]

I don't see how you are in the right here. Conid never claimed to be charging you VAT. They just charge one price, all taxes inclusive, for everywhere. If you are from the EU VAT zone your price includes the VAT they will need to pay; if you aren't your price all goes to Conid.

Effectively they have one price for the EU + VAT and different price (and no VAT) for everywhere else. That is still "legal" isn't it? They just use different wording to describe it (ie one price everywhere, VAT inclusive if relevant).

FWIW, I have no affiliation with Conid, not even as a customer or online friend with anyone from there.

Using that logic, would it be acceptable to you if the grocery store charged you sales tax on your entire purchase, and they then pocket the tax collected on the food items?

Granted the per transaction amounts would be different in this case than one I raised, but the principle is the same.

[mrcharlie]

No, it isn't legal to charge non-EU customers VAT and other EU sellers seem to be able to manage to operate the correct method. They need to have a VAT free price and a VAT included price. It's not that difficult

I don't know what the VAT rate is, but for sake of argument and easy math posit it at 10%. So Conid could say "Bulk Filler Model A costs 100 Euro plus VAT to any EC customers, and costs 110 Euro plus no VAT for the rest of the world". You agree that would be "legal" right? It isn't illegal in the EC to have different prices for EC and non-EC customers is it? Many web stores have different prices for international/non-international orders.

Posting the price as "110 Euro, VAT inclusive when applicable" is exactly the same thing.

Using that logic, would it be acceptable to you if the grocery store charged you sales tax on your entire purchase, and they then pocket the tax collected on the food items?

No, it isn't the same. The grocery store marks prices as X, and then adds tax to the total when you check out. Conid, from what I'm being told in this item, prices the pen at X and adds no VAT when you check out, regardless of if you are from the EU or not. Then they pay the applicable VAT from that price if the customer is an EU customer.

If Conid is adding vat to the advertised prices at check out, then they are clearly in the wrong. If they are advertising a price that is fixed and VAT inclusive regardless of whether the customer is in the euro/VAT zone or not, I don't see how they are in the wrong. They are effectively charging more for non-EU customers, but again I doubt that is illegal.

[kbrede]

Does the bill actually have a charge for VAT on it? If not, Conid can probably get away with it. That's my uneducated guess.

Having said that, if there's one price for all and the company is deducting 21% of the pen price for VAT sold in the EU and at the same time *not* deducting 21% for pens outside the EU, I've got a problem with that. Essentially they would be charging non EU customers 21% more than EU customers.

EDIT: Maybe better stated, Conid would be making 21% more on pens sold outside the EU, while charging all customers the same. Since they already charge more for shipping to the U.S. I see no reason I should pay more.

Legal or not, I certainly won't be buying a pen from them until they clear this up.
Kent

[Chrissy]

I don't know what the VAT rate is, but for sake of argument and easy math posit it at 10%. So Conid could say "Bulk Filler Model A costs 100 Euro plus VAT to any EC customers, and costs 110 Euro plus no VAT for the rest of the world". You agree that would be "legal" right? It isn't illegal in the EC to have different prices for EC and non-EC customers is it? Many web stores have different prices for international/non-international orders.

Posting the price as "110 Euro, VAT inclusive when applicable" is exactly the same thing.

Using that logic, would it be acceptable to you if the grocery store charged you sales tax on your entire purchase, and they then pocket the tax collected on the food items?

No, it isn't the same. The grocery store marks prices as X, and then adds tax to the total when you check out. Conid, from what I'm being told in this item, prices the pen at X and adds no VAT when you check out, regardless of if you are from the EU or not. Then they pay the applicable VAT from that price if the customer is an EU customer.

If Conid is adding vat to the advertised prices at check out, then they are clearly in the wrong. If they are advertising a price that is fixed and VAT inclusive regardless of whether the customer is in the euro/VAT zone or not, I don't see how they are in the wrong. They are effectively charging more for non-EU customers, but again I doubt that is illegal.

Firstly, VAT in Belgium is chargeable at 21% for everyone in the EU member Countries. That's how it's levied. Many EU Companies sell to Countries within the EU and outside of the EU. By law, they have to keep their accounts and books in order so that the VAT inspector collects the VAT that every Company has collected from all EU sales. Even if they have an all inclusive price, they don't have to pay any VAT on all sales that they have made to buyers in Countries outside the EU, so they can't collect any.

If the VAT inspector finds that a Company has not collected sufficient VAT, then huge fines can be levied. Also, surprisingly, if a VAT inspector finds that a Company has overcharged on VAT then huge fines can be levied that way as well. It can be really complicated to get all accounts correct for VAT collectors. It is most definitely illegal to charge VAT and keep it for yourself.

So, if you're saying that you're happy to pay an additional 21% extra on your purchases, that you know will go to the Company, rather than the Country's coffers, then that's fine. Please don't listen to us, just carry on and do that. In doing that please be aware that you are aiding and abetting an illegal activity.

What we're saying is that since all VAT collected, has to be collected accurately, and legally has to be paid into the member Country coffers, buyers who don't need or want to pay it because they don't live in an EU member Country, prefer to have it in their pockets, rather than donating it as a free 21% *gift* to a Company who can't or won't work out how to give a discount of 21% to non EU buyers. When they know almost all other Companies don't have a problem working it out, because their VAT accountant not only tells them to do it, but tells them how to do it.

If I didn't live in an EU Country and I was charged VAT on a purchase, I would write to the Customs Department of that Country and give them all of the details about which Company had charged me VAT. That Company would be in serious trouble.

[Laura N]

I don't know what the VAT rate is, but for sake of argument and easy math posit it at 10%. So Conid could say "Bulk Filler Model A costs 100 Euro plus VAT to any EC customers, and costs 110 Euro plus no VAT for the rest of the world". You agree that would be "legal" right? It isn't illegal in the EC to have different prices for EC and non-EC customers is it? Many web stores have different prices for international/non-international orders.

Posting the price as "110 Euro, VAT inclusive when applicable" is exactly the same thing.

The reason you see different prices is that prices for non-EU denizens exclude VAT, so those are lower.

What seems to be missed is that VAT is a tax imposed by EU governments on EU denizens. It is collected by the vendor but only on behalf of the government, and it is remitted to the government. The vendor is an agent of the government. The government does not impose that tax on non-EU residents (the rules are more complicated than that, but just go with that simplified explanation). But somehow you think the government allows the vendor to either (i) decide unilaterally to impose the tax on exempt non-EU residents by collecting the VAT from them anyway and remitting it, or (ii) keep the tax amount for itself?

[Chrissy]

Laura is spot on as usual and said it much more eloquently than I did.

[Neo]

Laura is spot on as usual and said it much more eloquently than I did.

Both of you are very eloquent. Thank you.

[mrcharlie]

Does the bill actually have a charge for VAT on it?

No, it doesn't. Since my last post I've looked at the Conid Pens website and order form and verified this. The fact that they are just charging, for instance, Euro 470 for a "Regular" model plus Euro 5 for the cheapest nib, and there is no line item for VAT. Which seems to be something several people here have a hard time understanding. If you aren't from the EU, they are charging you minimally 475 euro for the pen, period. If you are from the EU they are charging you 475 euro for the pen and then doing an accounting where the "real" price is something like Eu 392.56 and the rest is VAT, which they pay to the appropriate authorities.

This doesn't seem to be hard to understand to me. I'm not saying I like that I would effectively be paying 82.50 euro more than someone from the EU, but then in real terms the EU person isn't paying less since they have to pay the VAT ...

EDIT: Maybe better stated, Conid would be making 21% more on pens sold outside the EU, while charging all customers the same. Since they already charge more for shipping to the U.S. I see no reason I should pay more.

They would not be making 21% more; in fact they are probably making a much higher percentage more. The amount they "make" is not the gross price of the pen, but the net price after deducting costs.

But they do not already charge more for shipping to the US. I quote from their order page: "Shipping Cost [Euro symbol] 35 (For Europe, Americas and most of Azia. Other countries on request)". If you care about them charging the same price for the pen despite not having to pay VAT on non EU orders, you probably will be angry at this too since their actual shipping costs are not uniform but they have a single price shipping charge.

Even if they have an all inclusive price, they don't have to pay any VAT on all sales that they have made to buyers in Countries outside the EU, so they can't collect any.

They aren't. There is no line item on the invoice for VAT. They aren't collecting VAT. If the customer is not required to pay VAT, they are merely collecting a price for a pen.

So, if you're saying that you're happy to pay an additional 21% extra on your purchases, that you know will go to the Company, rather than the Country's coffers, then that's fine. Please don't listen to us, just carry on and do that. In doing that please be aware that you are aiding and abetting an illegal activity.

I am too poor to buy a Conid pen, so I don't care if my price is 475 euro or 396.50 euro. Despite being too poor to buy a Conid pen, I would bet 20 USD that what they are doing is legal and that an EU tax accountant would verify this.

What we're saying is that since all VAT collected, has to be collected accurately, and legally has to be paid into the member Country coffers, buyers who don't need or want to pay it because they don't live in an EU member Country, prefer to have it in their pockets, rather than donating it as a free 21% *gift* to a Company who can't or won't work out how to give a discount of 21% to non EU buyers.

That is nonsense. It isn't a gift. They claim the price is 475 euro, if you want the pen you pay 475 euro. Your apparent anger would be justified if they asked for Euro 396.50 and then charged 475 even though I'm not from a VAT nation-state, but they don't do that.

The reason you see different prices is that prices for non-EU denizens exclude VAT, so those are lower.

No. I explicitly mean that websites charge different base prices before any taxes or lack thereof are added in to different customers.

I used to work for amazon.com; I know this to be true. Different US customers would be shown somewhat different prices for the same item (I don't know that they still do this, but they definitely did when I worked there). These are not total prices including taxes; they are the base prices before taxes, and the base prices were not being adjusted to make the totals come out the same (which is basically what conid is doing by quoting only the total tax inclusive prices). It wasn't secret either; online news sites reported that amazon and other web stores did this and even wrote articles on why it was done.

What seems to be missed is that VAT is a tax imposed by EU governments on EU denizens. It is collected by the vendor but only on behalf of the government, and it is remitted to the government. The vendor is an agent of the government. The government does not impose that tax on non-EU residents (the rules are more complicated than that, but just go with that simplified explanation). But somehow you think the government allows the vendor to either (i) decide unilaterally to impose the tax on exempt non-EU residents by collecting the VAT from them anyway and remitting it, or (ii) keep the tax amount for itself?

There is nothing in this paragraph prior to "But somehow you think" that is news to me or contradicts anything I've written. The "agent" aspect is exactly how sales tax works in the US.

What I somehow think is that the government allows the vendor to collect whatever price they want and it doesn't have to be the same for all customers. What I somehow think is that legally as long as they don't advertise the price as including a VAT payment and don't add VAT to my invoice then I'd not be paying VAT; I'd just be paying the asking price for the pen.

[kbrede]

No, it doesn't. Since my last post I've looked at the Conid Pens website and order form and verified this. The fact that they are just charging, for instance, Euro 470 for a "Regular" model plus Euro 5 for the cheapest nib, and there is no line item for VAT. Which seems to be something several people here have a hard time understanding. If you aren't from the EU, they are charging you minimally 475 euro for the pen, period. If you are from the EU they are charging you 475 euro for the pen and then doing an accounting where the "real" price is something like Eu 392.56 and the rest is VAT, which they pay to the appropriate authorities.

This doesn't seem to be hard to understand to me. I'm not saying I like that I would effectively be paying 82.50 euro more than someone from the EU, but then in real terms the EU person isn't paying less since they have to pay the VAT ...

My question, "Does the bill actually have a charge for VAT on it?" that you're responding to above, was to the OP. I should have said "receipt, instead of "bill." Just because the order form doesn't have a VAT listing, doesn't mean the receipt doesn't. The order form doesn't mean squat, it just sends a message to Conid and then Conid makes arrangements for transferring money with the person buying the pen. Nothing is purchased when clicking "send your order" like we're used to with most web purchases.

I asked the OP if the receipt he received with the pen included a charge for VAT. I also go on to say, "If not, Conid can probably get away with it." which pretty much supports your argument. LOL

EDIT: Maybe better stated, Conid would be making 21% more on pens sold outside the EU, while charging all customers the same. Since they already charge more for shipping to the U.S. I see no reason I should pay more.

They would not be making 21% more; in fact they are probably making a much higher percentage more. The amount they "make" is not the gross price of the pen, but the net price after deducting costs.

So if the base price of the pen is $100.00 for those outside the EU and $79.00 + $21.00 VAT for those inside the EU, what happens to the $21.00 sold to pens outside the EU? I'm pretty sure it doesn't go to the tax collector. So ya, Conid would be pocketing an *extra* 21% compared to pens sold within the EU. That's the part I'm not OK with and it would prevent me from purchasing a pen from them. Why is that so hard to understand? You're essentially arguing that people outside the EU give Conid a 21% tip. For what?

But they do not already charge more for shipping to the US. I quote from their order page: "Shipping Cost [Euro symbol] 35 (For Europe, Americas and most of Azia. Other countries on request)". If you care about them charging the same price for the pen despite not having to pay VAT on non EU orders, you probably will be angry at this too since their actual shipping costs are not uniform but they have a single price shipping charge.

You're right about shipping. I thought it was free shipping to those in the EU and 35 euro for those outside. I have no problem with that. There are different shipping costs to different places in the world and I have no problem with variable charges regarding shipping. If you reread what I wrote, you'll see my comment about shipping only pertained to the perceived extra cost for customers outside the EU.

[Neo]

Kbrede , the VAT was a line on the hard copy receipt that stated the price included this tax at a rate of 21%.

[mrcharlie]

The order form has a break down of various costs, and none of it mentions VAT. Sorry for answering the question you asked of the OP; it would be good for the sake of this discussion to see some sort of final invoice or receipt for both and EU and non EU order.

So if the base price of the pen is $100.00 for those outside the EU and $79.00 + $21.00 VAT for those inside the EU, what happens to the $21.00 sold to pens outside the EU? I'm pretty sure it doesn't go to the tax collector. So ya, Conid would be pocketing an *extra* 21% compared to pens sold within the EU. That's the part I'm not OK with and it would prevent me from purchasing a pen from them. Why is that so hard to understand? You're essentially arguing that people outside the EU give Conid a 21% tip. For what?

Yes, Conid makes more money from non-EU customers. That is not in dispute. But they aren't pocketing anything extra from a non EU customer. They are pocketing the full price they are asking and advertising as "the price"; they are pocketing less from the EU customer. This is the important distinction. If the base price is a pre-tax price, then taxes are "extra" and explicitly paid for by the constomer (via the seller who is acting as a tax collecting agent for VAT in this case), and the EU customer will pay a larger final price for the same product. If the base price is inclusive of any applicable taxes, then taxes are removed from the base price (only when applicable) and paid out of the net profit from the seller, and the EU customer and any other customer pay the same price.

The Conid way seems to make some people feel they are getting screwed, and perhaps Conid should take that into consideration. But in fact the Conid way is more egalitarian and more fair, as all customers pay the same final price.

You, the customer, are not paying more than an EU customer. You both pay the same price. Conid just makes less money from the EU transaction.

If you are not OK with the Conid having a higher net profit from you as a non-EU customer than they have from EU customers, don't buy from them. That is fine with me; I don't feel the same way, but I don't demand you agree. That is different from claiming they are illegally charging you VAT, which I don't think they are doing.

[mrcharlie]

If Conid is adding vat to the advertised prices at check out, then they are clearly in the wrong.

Kbrede , the VAT was a line on the hard copy receipt that stated the price included this tax at a rate of 21%.

I thought I'd stated somewhere that if they mentioned VAT on the invoice they were not in the right, but this is the only statement close to that I could find. So I'll admit right here, if they mention that the price includes VAT (without some sort of "any applicable" type weasel words) on a non-EU receipt, then everything I argued is irrelevant, and I'm sorry for wasting your time.

[kbrede]

The order form has a break down of various costs, and none of it mentions VAT. Sorry for answering the question you asked of the OP; it would be good for the sake of this discussion to see some sort of final invoice or receipt for both and EU and non EU order.

So if the base price of the pen is $100.00 for those outside the EU and $79.00 + $21.00 VAT for those inside the EU, what happens to the $21.00 sold to pens outside the EU? I'm pretty sure it doesn't go to the tax collector. So ya, Conid would be pocketing an *extra* 21% compared to pens sold within the EU. That's the part I'm not OK with and it would prevent me from purchasing a pen from them. Why is that so hard to understand? You're essentially arguing that people outside the EU give Conid a 21% tip. For what?

Yes, Conid makes more money from non-EU customers. That is not in dispute. But they aren't pocketing anything extra from a non EU customer. They are pocketing the full price they are asking and advertising as "the price"; they are pocketing less from the EU customer. This is the important distinction. If the base price is a pre-tax price, then taxes are "extra" and explicitly paid for by the constomer (via the seller who is acting as a tax collecting agent for VAT in this case), and the EU customer will pay a larger final price for the same product. If the base price is inclusive of any applicable taxes, then taxes are removed from the base price (only when applicable) and paid out of the net profit from the seller, and the EU customer and any other customer pay the same price.

The Conid way seems to make some people feel they are getting screwed, and perhaps Conid should take that into consideration. But in fact the Conid way is more egalitarian and more fair, as all customers pay the same final price.

You, the customer, are not paying more than an EU customer. You both pay the same price. Conid just makes less money from the EU transaction.

If you are not OK with the Conid having a higher net profit from you as a non-EU customer than they have from EU customers, don't buy from them. That is fine with me; I don't feel the same way, but I don't demand you agree. That is different from claiming they are illegally charging you VAT, which I don't think they are doing.

I understand all that. My purchases from the EU have always been less than what a person in the EU would pay, due to them having to pay VAT. Sometimes the increased shipping cost to the U.S. will even out the final price for sure. But remember the VAT paid, in theory, benefits the person paying the tax. They get some of that money back, though services, infrastructure, etc. You're looking at it as if Conid is treating all their customers equal. I'm looking at it from the viewpoint that Conid is using my 21% to subsidize the EU price.

EDIT: I shouldn't have said "My purchases from the EU have *always* been less" because the exchange rate hasn't always made that possible. I would be all for Conid shifting their base price to compensate for the stronger Euro. Especially in the future when 1 usd equals 1.5 euro again.

At any rate, if you're fine with the way Conid seems to be doing business. I'm fine with you being fine with it. I'll just vote with my dollars.
Kent