I would like to share some knowledge with you after a recent experience.
I purchased some hi-fi gear from a North-American country and I was very surprised to see that this company was completely wrong with the way it calculated the total price.
Since I don't want to harm this company in any way, I won't reveal it's name. The customer support was outstanding and so were the purchased items. I would nevertheless warn you because these errors are not marginal considering the price of hi-fi gear (you know what I mean
)
When you purchase items outside the EU, you have to pay an import tax + your country's VAT. The import tax and the VAT are both applied on the market value. Then you sum everything up to find out the total price.
The error that the company made was that it applied the the VAT ot the item value increased by the import tax. In other words, they wanted to make me pay a tax on a tax
!
Here's how to calculate the price of something imported into a EU Member State from a country outside the EU.
Consider this:
- Market Value = item value + shipping cost
- Import tax as defined by the TARIC code
- VAT of your country
This is the price of the item as announced on the company's web site + the shipping costs. It is important to know that the import tax and the VAT apply on the final market value, including the shipping costs, not only the item's price.
Import tax
In the EU, it is based on the item's TARIC code and on the country of origin.
One exemple: for speakers, the TARIC code is 8518229000 and the EU-wide import tax for speakers coming from the USA or from Canada is 4,5% of the market value.
Here's where you can find the import tax for other products or the import tax for another country of origin:
http://europa.eu.int/comm/taxation_customs/dds/cgi-bin/tarchap?Lang=EN
Just a little hint if you want to browse the tree structure: go to Chapter XVI, section 85 and start at code 8518.
VAT
I suppose that most of you knwow how much VAT is applicable in your country. But you can also find this info here:
http://europa.eu.int/comm/taxation_customs/resources/documents/taxation/vat/how_vat_works/rates/vat_rates_2005_en.pdf
Exemple
You buy speakers from a Canadian company and you want to import them to Belgium.
- Market value (including shipping costs): 500,00 EUR
- Import tax (4,5% of market price, TARIC code for speakers is 8518229000): 22,50 EUR
- VAT (21% of market price in Belgium): 105,00 EUR
Total price that you would have to pay for your speakers (in EUR):
500,00 (items + shipping)
22,50 (import tax)
105,00 (VAT)
====================
627,50 (total price)
With the company's calculation method, I would have paid 500,00 EUR + 21% of (500,00+22,50) = 632,23 EUR... OK, 4,73 EUR, that's not a big difference, but on 2000 EUR, this error would have cost me an extra 18,90 EUR...
I hope this may help some of you when purchasing abroad and please let me knwow if anything is not correct.
Kinne
