Yes
Are you questioning why the system is created this way, or the mechanics of how the shipment is detected and the fee is charged?
Well, if you send a $5000 watch to Europe, you'll have to declare that value with the shipment. There will be a receipt inside that says $5000.
Then the recipient has to pay VAT based on that price.
If you declare less, obviously that would be fraud, but I assume you would also have insurance on that shipment, so if wouldn't be in your best interest to "lie" about the value.
Not accusing you of anything, just pointing things out.
Now if you ship something a lot less valuable, you might get away with declaring a lower value, but then again it wouldn't be worth it, because VAT would be a lot lower as well.
That's the bad part about VAT. Now the good is, that you don't have to add sales tax to anything you buy like in the US, because prices in Europe already include that cost.
So a new Speedmaster that costs 4800 Euro in Europe, would be ~$5280 with current exchange rate.
Compare that to $5350 but then you're still adding sales tax to that depending on what State you live in.
Since I like what if questions.
So if I am sending my long lost Uncle Anthony in Italy a watch from his brother here in the states and insure it for $5000, Uncle Anthony may have to pay VAT taxes on the watch?
That is a good question.
I was assuming you were selling someone a watch over there.
Now if there is no money exchange, I'm not quite sure how that works. Maybe someone else could chime in.
I think in that case, they would stop the shipment, send a note to your uncle and he would have to show up at the customs office where they would determine a value and he'd still have to pay the import VAT accordingly.
Again, that's me assuming, since I've never been through that exact scenario.
But I've ordered car parts from the US before and then got a bill to pay VAT upon delivery.
I think in your "what if" scenario above you'd be better off to fly to Italy and hand off the watch in person.
Even though technically you'd still have to declare it at the airport...
Isn't it a great world we live in???
I know it sounds ignorant or like some of us are trying to dodge taxes but tHe logistics of VAT is foreign to most Americans- like myself.
The sending something of value as a gift and getting taxed is something I don’t understand. The uncle scenario above is something plausible as my brother had given me our father’s Breitling to have serviced while he was in the states, then was spending 6 months in Germany. I was tempted to send it to him, and insure the package of course- but was hesitant because of not knowing the rules so just told him to wait until he got back. What would have happened if I sent him HIS watch and it got hung up in customs?
