VAT and Import Duty.

[Geoff Wooff]

Now that  the United Kingdom  has  left  the  European  Union  there  are stories  of   import  duties and  local  sales tax  being demanded  by    on goods    coming  from  the UK.  As    several  UK  concertina  dealers  and  makers    supply  instruments  to  players  abroad   how  might this  situation  affect  the  cost of a purchase ?

[Peter Laban]

Here's an outlinem scarce on detail, from rte.ie:

 

Quote

 

Since Brexit took effect on 1 January, new rules have been implemented that will see VAT and Excise Duty being applied to many transactions.

Purchases under €22 will not face additional charges, but anything over €22 will see the addition of an Irish VAT charge.

Goods valued at more than €150 will also be subject to customs duty. The amount to be charged will vary depending on the nature of the item.

Consumers are also being warned that only goods bought from the UK that are of UK origin will avoid tariffs under the Free Trade Agreement in place.

So, if goods sourced outside the EU are being sold by a British seller to an Irish consumer, tariffs and other charges can be applied.

 

 

 

And some (Irish) government  info regarding online purchases: https://www.gov.ie/en/publication/2b41b2-daily-life/#online-retail

Edited January 9, 2021 by Peter Laban

[Don Taylor]

What I say here may not be relevant, but I have imported concertinas from the UK to Canada and this is what I have learned.

 

Canada has a similar tax to VAT called HST, in addition Canada impose duties on most imports of any significant value - they do not bother with small purchases although they could do so.

 

There is no way to dodge paying HST (=VAT) on imports but I did find a way to avoid duties on top of that.  For each country there is (or should be) a massive online tome that details the customs duties payable for every item that they can think of.  Each item is coded and the coding is an internationally agreed standard - the 'Harmonized System Code'.  The duty corresponding to each item varies by country, but the code is (mostly) constant.  There is no code specifically for concertinas, but there is a code for wind Instruments, small accordion.  This is the 'Harmonized System Code' 9205.90.10.90.  In Canada, at least, that classification is duty free.  Most other musical instruments are subject to duty.

 

My first import did not specify the code and the accordion description for the concertina and it was held up in customs for a couple of weeks and eventually subjected to duty as well as HST.  

 

For my last import I researched the customs code and got the seller to state it on the shipping label.  This import went through quite quickly and was not subject to duty.  I did have to pay the HST tax on the declared value.

 

Note that I said 'mostly' about the code.  Countries can vary the least significant numbers in the code a bit to cover what they might think of as special cases, so you should not just use the code that I stated here.  You need to check your own country's code book for the final detailed coding.  Also, I believe that some countries (USA?) exempt antiques from both tax and duties so that would be worth investigating.

 

Don.

 

 

Edited January 10, 2021 by Don Taylor

[alex_holden]

I don't know anything for sure yet, but it seems my EU customers will now have to pay VAT at their local rate when they import an instrument from me, which they didn't do previously (and my UK customers still won't), because I'm a small trader who isn't VAT registered. I initially thought the free trade deal meant there wouldn't be any customs duty, but I've since heard a number of conflicting things about that.

[Geoff Wooff]

15 minutes ago, alex_holden said:

I don't know anything for sure yet, but it seems my EU customers will now have to pay VAT at their local rate when they import an instrument from me, which they didn't do previously (and my UK customers still won't), because I'm a small trader who isn't VAT registered. I initially thought the free trade deal meant there wouldn't be any customs duty, but I've since heard a number of conflicting things about that.

Yes, this is  exactly  the  root  of my  question  Alex, at least  from  our  perspective.

Like  yourself  my  business is  small  and  I  don't  have to  be  registered  for  VAT .     Will my  UK  customers  have to  pay  VAT  on a  product  that     is  not  subject  to  such  a tax  in any other  EU  country ?

 

There are  stories  going around  of  people  buying  an  item  from the UK  and  being  charged   16.9% import  duty +  20% TVA  ( the  French  equivalent  of  VAT)  and  that  would  add  a substantial  amount  to  the  cost of  any  musical instrument. 

 

Edited January 9, 2021 by Geoff Wooff

[Don Taylor]

1 hour ago, Geoff Wooff said:

There are  stories  going around  of  people  buying  an  item  from the UK  and  being  charged   16.9% import  duty +  20% TVA  ( the  French  equivalent  of  VAT)  and  that  would  add  a substantial  amount  to  the  cost of  any  musical instrument.

That is what would happen in Canada if I imported one of your instruments, although the duty rate might be 0% because what you make is a wind instrument.  You need to fugure out the Harmonized System Code for your instruments.

[Geoff Wooff]

 Don ,

I  understand  and  have  used  the  Harmonized  codes  relating to  the instruments  I  have  exported  to  the USA  but  what  bothers  me  about the  current  changes  to  the  UK  situation  is  the possibility   of  double  taxation.   Say  a  supplier  in the UK quotes prices on their  website  which include  VAT (sales  tax)  but  does  not  remove  that  portion  of  the   amount  prior  to  exporting  the  goods  and    the  buyer  then    has to  pay  an import duty and local  sales tax  in their  country.  

How  do  we  know  if  the  prices  shown  on the  websites  of  businesses   like   Barleycorn  or Hobgoblin  etc.  include  VAT ?     I  encourage  any  potential  purchasers  to  enquire  about  this  first.

[adrian brown]

I'm also completely baffled Geoff, even having read a few articles on the difference between customs duty and tariffs - I'd assumed they were the same thing but it seems that customs duty is still applied even if there is a zero tariff regime?

 

Unlike you, I am registered for VAT, as are all businesses in the Netherlands, so I thought I'd be fine to continue with my UK suppliers, since any VAT paid, I can claim back in the next quarterly VAT declaration. However, I can't claim customs duty back, which at a stroke has made my UK suppliers very uncompetitive vis à vis their EU counterparts. To be fair, I haven't imported anything so far this year, but just the insecurity of not knowing how much goods ordered will cost in the future has led me to look for alternatives, so if this goes on for much longer, it will inevitably affect businesses on both sides of the English Chasm...

 

BTW Did you become French as a result of Brexit? It ended up costing me almost €2,000 to change nationalities and make sure I kept the same privileges I had pre-2016...

 

Cheers,

 

Adrian

[Geoff Wooff]

I  have  not  changed  nationality  yet Adrian,  but  I  applied for  permanent  residency (  Carte de  Séjour  )

  as a first  step.  The French department  that  deals  with  nationality  issues  currently  has   quite a  backlog.

 

I  was  thinking  of  those  concertina  players  in Ireland  who  have  saved up  and  are  waiting for  their  new   instrument  from  the Dippers   etc.,  will they  be  faced  with  a large  bill for  import  duty ?  Perhaps  there is  a   free tarriff  situation for 'Traditional Music'  items  in  Eire.

 

I  buy  very little  in the way  of  materials and tools  from the  UK  and  hardly  have  a client there  either  but  it  looks as  if  anything  we  do   will  be  costing us  a  good  bit  extra.

[Theo]

I'm not an expert on this but my understanding is that import VAT is now charged on everything that enters the UK unless it is zero rated here.  I assume the same will apply to goods from UK sent to any EU country.  The exporter, if VAT registered, in either case can sell without charging VAT so the customer pays the same as before plus the cost of extra paperwork.  If the exporter is not VAT registered the customer now must pay VAT.

 

Customs duty only applies to things like booze and tobacco, and to goods that are imported from elsewhere (for example China) into UK and the sold on to an EU country.

 

VAT is the killer for any business, like mine, that is not VAT registered.  For example if Geoff sent me a concertina to repair it would be potentially charged import VAT twice on the full value of the instrument, once when it enters the UK and again when it goes back to France.   There is a paperwork system for re-claiming the VAT on repairs, but I'm reluctant to wade in to that.  I have one friend who has just tried to do so on a repair which involves get an instrument back from the USA.  He started the process in early December, and the parcel has spent most of that time stuck in "processing" in the USA and has now been returned to the customer because of incorrect paperwork!  It's a minefield.

[alex_holden]

14 minutes ago, Theo said:

Customs duty only applies to things like booze and tobacco, and to goods that are imported from elsewhere (for example China) into UK and the sold on to an EU country.

 

Does it? This is one of my major points of confusion.

 

15 minutes ago, Theo said:

VAT is the killer for any business, like mine, that is not VAT registered.  For example if Geoff sent me a concertina to repair it would be potentially charged import VAT twice on the full value of the instrument, once when it enters the UK and again when it goes back to France.   There is a paperwork system for re-claiming the VAT on repairs, but I'm reluctant to wade in to that.  I have one friend who has just tried to do so on a repair which involves get an instrument back from the USA.  He started the process in early December, and the parcel has spent most of that time stuck in "processing" in the USA and has now been returned to the customer because of incorrect paperwork!  It's a minefield.

 

I wonder if, once COVID is more under control, a way around it in some cases would be for an EU based concertina player to travel to the UK with their instrument for a short holiday, playing music (not for profit) and doing touristy things. While they are here they take it in to a local repairer to have some work done on it, then they carry it back home with them when they return. Would that break any regulations?

[alex_holden]

1 hour ago, Geoff Wooff said:

I  was  thinking  of  those  concertina  players  in Ireland  who  have  saved up  and  are  waiting for  their  new   instrument  from  the Dippers   etc.,  will they  be  faced  with  a large  bill for  import  duty ?  Perhaps  there is  a   free tarriff  situation for 'Traditional Music'  items  in  Eire.

 

I've not heard anything about a tax exemption for musical instruments. And yes, I have several EU clients on my waiting list who are now facing a significant extra cost.

[Geoff Wooff]

5 minutes ago, alex_holden said:

 

Does it? This is one of my major points of confusion.

 

 

I wonder if, once COVID is more under control, a way around it in some cases would be for an EU based concertina player to travel to the UK with their instrument for a short holiday, playing music (not for profit) and doing touristy things. While they are here they take it in to a local repairer to have some work done on it, then they carry it back home with them when they return. Would that break any regulations?

This  is  what  usually  happens  with  my  customers  although  one  American  sent  his  Pipes  back  for  adjustments  and, being a cautious  fellow ,  he  insured  them  and declared the  full value.  His instrument was stuck  in customs  for  a considerable  time  before he  had  to  pay  for  their  return  as well as  a fee that amounted to  the  value of  the  duty. During this  process  I  was not  contacted  and  was,  by  a third party,  advised not to  try  to  'pull'  the  package  through  as this  would only  result  in more  problems.  

 

Later, he  organised  a  family  holiday, dropped the  instrument in  and  everything worked out  satisfactorily .  

[hjcjones]

4 hours ago, Geoff Wooff said:

How  do  we  know  if  the  prices  shown  on the  websites  of  businesses   like   Barleycorn  or Hobgoblin  etc.  include  VAT ?     I  encourage  any  potential  purchasers  to  enquire  about  this  first.

In the UK it is the case that the quoted price includes VAT unless it is expressly stated that VAT is payable in addition. 

 

[David Barnert]

51 minutes ago, alex_holden said:

I wonder if, once COVID is more under control, a way around it in some cases would be for an EU based concertina player to travel to the UK with their instrument for a short holiday, playing music (not for profit) and doing touristy things. While they are here they take it in to a local repairer to have some work done on it, then they carry it back home with them when they return. Would that break any regulations?

 

I was wondering a related question that this suggests an answer to, but let me ask it to see what shakes loose: If (when travel is a thing again) I travel from New York to London on vacation and bring my concertina (no paid gigs), am I subject to any trouble or expense at the customs & immigration desk?

[adrian brown]

David, I think the answer is in "paid gigs" - in that if you are a professional musician or an instrument maker travelling on business (for paid gigs or let's say a trade show in the case of an instrument maker) you have to arrange a carnet in advance. This involves leaving a deposit with the people who issue the carnet (usually the Chamber of Commerce in European countries) to insure that you will bring the instrument back with you and not sell it during your travels.

 

Of course if you are travelling for work, you will also need a working visa and this is going to catch a lot of Musicians from both sides wanting to play gigs on the other side. As far as I know, there has been no talk of a visa waiver for creative artists yet, but it might well emerge in the years to come. I certainly hope so...

 

Adrian

[alex_holden]

1 hour ago, hjcjones said:

In the UK it is the case that the quoted price includes VAT unless it is expressly stated that VAT is payable in addition. 

 

Usually true, but there are exceptions. Perhaps @Ciaran Algar would care to comment?

[Stephen Chambers]

I'm awaiting delivery of a new bellows, ordered last year off Mark Adey - I'll let you know what the additional import charges are...