Tax on sales to the EU

[keeptheroof]

I don't sell many items and few of those are overseas but I recently sold an item to Portugal and noticed eBay had add tax. Now, I'm not really bothered and I don't care to find out if this is correct or not as the buyer paid it. But I have a question;

When printing the customs form if I select "GIFT" is this tax refunded to the buyer? or is it not that tax or does eBay just absorb it into the earnings or what? as I say not an issue but just interested, this tax topic is getting very complicated isn't it 🙂 

PS - I live with a management account but she charges too much for advice 🙂

[plpmr]

When printing the customs form if I select "GIFT" is this tax refunded to the buyer? ""

If you do that you are committing a criminal offence as the item is not a gift.

[4_bathrooms]

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@keeptheroof wrote:

When printing the customs form if I select "GIFT" is this tax refunded to the buyer? 

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Don't do it; you'll be breaking eBay's rules and will potentially end up causing your buyer being charged their domestic VAT twice.

[keeptheroof]

Folks, the question is not - should I use the GIFT option on the custom form?

[4_bathrooms]

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@keeptheroof wrote:

Folks, the question is not - should I use the GIFT option on the custom form?

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No, you select "SALE OF GOODS". You sold the goods to the buyer...it matters not whether you are a business or a private seller.

When you sell to the EU eBay are deemed to be the seller of the goods for purchases up to €150 in value. You should be provided an address label with an IOSS logo on it and - if you didn't buy the postage/shipping via eBay - asked which marketplace you sold the item through. eBay charges the applicable VAT during purchase; if you choose the "GIFT" option not only are you trying to deceive the customs authorities but you're voiding the declaration in it's entirety. Customs data is sent electronically - as what is on the form won't tally with what eBay declared through IOSS your buyer may well be asked to cough up VAT again along with an additional handling charge from their domestic carrier.

If you sell something on eBay and it requires a customs declaration you tick the "SALE OF GOODS" box; that's all there is to it.  

[4_bathrooms · Accepted solution]

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@keeptheroof wrote:

Folks, the question is not - should I use the GIFT option on the custom form?

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Oh, I see now:

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@keeptheroof wrote:

When printing the customs form if I select "GIFT" is this tax refunded to the buyer?

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No.

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@keeptheroof wrote:

or is it not that tax or does eBay just absorb it into the earnings or what?

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eBay declares the sale through the EU's IOSS - this is a reporting mechanism for sales of items into the EU where the seller and/or the item was located outside the EU at the point of sale. eBay charges the buyer the applicable VAT then remits it to the relevant tax authority. 

By the way, the reason the UK, EU and other countries have these tax arrangements is to prevent the once rampant abuse of the "GIFT" box in order to avoid import charges that were due. If you start engaging in such practices not only might you get yourself or your buyer into trouble you might find eBay aren't joking when they call it a permanent selling restriction. 

[keeptheroof]

Thanks for the reply, I'm still confused however because what happens if I don't use online postage and take the item to a PO? 

Also, what happens if it is a gift? perhaps it's a replacement or a gift is included in the parcel, I often send extra items to buyers - mainly to get rid of them or to save them from the bin.

I said tax is now confusing but no I'm not trying to avoid the tax just want to know where the money is going in reality. 

[the-nutwood-collection]

I said tax is now confusing but no I'm not trying to avoid the tax just want to know where the money is going in reality

The sales tax is going into the coffers of the desination country to squander as they see fit.  Likewise, any duty payable.

Including a gift in the parcel doesn't make the shipment a gift.  A free shirt button with every Rolex watch does not avoid sales tax and duty.

If you include a packing slip, and the parcel is opened at customs, it's obvious from the packing slip that it's a sale of goods and not a gift - it will either be destroyed at customs or the recipient will get a bill.  If you include a 'Happy Birthday' card instead of a packing slip, that's fraud.

Sales tax and duty are the recipient's problem, not yours.  I seldom ship internationally but, before I do, I have to be satisfied that the buyer fully understands that they are liable for taxes, duty and carrier fees.

[4_bathrooms]

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@keeptheroof wrote:

Thanks for the reply, I'm still confused however because what happens if I don't use online postage and take the item to a PO? 
 

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The PO counter will ask you what you are sending. As soon as you provide a non-UK address they will ask you if you sold the item online and ask which marketplace you used. They will use the information you provide to generate an IOSS address label and populate the CN22.

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@keeptheroof wrote:

Also, what happens if it is a gift? perhaps it's a replacement or a gift is included in the parcel, I often send extra items to buyers - mainly to get rid of them or to save them from the bin.

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Ticking the "gift" and "sale of goods" boxes where an eBay sale is concerned is a bad idea (you can tick more than one box). As mentioned, eBay will be electronically declaring the consignment so including anything else might cause the consignment to be rejected by the outgoing or destination customs or might cause the buyer to be charged additional import charges. 

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@keeptheroof wrote:

I said tax is now confusing but no I'm not trying to avoid the tax just want to know where the money is going in reality. 

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It's not really that confusing. When a buyer purchases something from another country they are importing that item; imported goods are generally subject to import tax regardless who the importer is. Historically, far-eastern sellers would gain an unfair advantage by ticking the "gift" option so the buyer wouldn't be charged the import tax/import VAT that was due on their purchase thus allowing the seller to undercut domestic business sellers. To counter this the EU and other countries decided the best way to stop such rampant tax evasion would be to charge the tax/VAT at the point of sale and make the marketplace involved liable for charging the buyer and remitting the tax to the relevant tax authority.

Any import charges such as VAT, duty, handling charges etc. are the buyer's burden, not yours. If a buyer requests you tick the "gift" box explain you're not willing to do so and point them to eBay's policy. If the buyer persists and/or threatens negative feedback if you don't tick the "gift" box report the message to eBay.