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Education Needed - Selling to German Watch Dealer

  1. leetse2 Feb 25, 2019

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    Apologize if this has already been discussed, I conducted a search and couldn't find much info. I am looking to sell a watch to a German dealer and they indicated that unless I had an EU bank account, they would need to assess 19%, for what I assume to be VAT. I am based in the US and just don't know how the tax laws apply in the EU / Germany. I believe I found some information that indicated the tax laws changed on January 1st of this year.

    https://taxinsights.ey.com/archive/...es-forward-with-implementing-third-party.aspx

    Any help or guidance is greatly appreciated.

    Thanks,
    LT
     
  2. valkyrie_rider Feb 25, 2019

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    Why not sell in USA?
    ;-)
    murica01.jpg
     
  3. MRC Feb 25, 2019

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    I would flip them the bird. Paying the VAT is the responsibility of the purchaser, and they are trying it on IMV. A dealer should have sufficient turnover to be registered for VAT and would recover it when the watch is sold.

    Disclaimer: I'm an engineer not an accountant (but am in the EU [for the next 5 weeks ::facepalm1:: ])
     
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  4. sxl2004 Feb 25, 2019

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    The seller has to account for VAT in his country/ state.
    The buyer pays import duty.
    The buyer in your case does not incur VAT.
    They are trying to rip you off.
    Who’s is the shady watch dealer?
     
  5. Dan S Feb 25, 2019

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    I think that your sales price is at your discretion, and you shouldn't reduce it below your comfort level because of fees that the buyer is responsible for. It's just a negotiating tactic. Sometimes taxes, shipping, duties etc. will torpedo a deal, and you need to accept that, take a step back and find a domestic buyer. The bottom line is that if a dealer is willing to pay $XXX dollars for a watch, the right private seller will be willing to pay substantially more, so the price he is paying is probably already bottom dollar. You shouldn't reduce it even more.
     
  6. watchknut New watch + Instagram + wife = dumbass Feb 25, 2019

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    Fcuk that...

    USA, USA, USA
     
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  7. Folgono Feb 25, 2019

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    Well the VAT he has to pay is not your problem, they have to cope with that. If he's a dealer he should be aware of that obviously, and as a registered business they have a VAT account which is balanced at the end of each accounting year so they're not really paying it.
    I guess he is trying to use that as leverage to negotiate...
     
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  8. Motik Feb 26, 2019

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    VAT is a tax on added value, which means that the dealer will pay it on the difference between the price he buys the watch from you and the price he later sells it for.

    The way it is done is:
    - The dealer imports the watch (from you) and must pay VAT (19 % in Germany) to the German State;
    - The dealer then declares the VAT he paid and gets it back from the State the following month;
    - When the dealer sells the watch he collects VAT from the buyer and gives it to the German State.

    So he's not even really paying VAT when buying from you, as it will eventually be returned to him. He's only trying to take advantage of you to convince you to lower your price.
     
  9. albertob Feb 26, 2019

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    Name name name name
     
  10. leetse2 Feb 27, 2019

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    Thank you everyone for the feedback and guidance, this is extremely helpful.

    Motik - This is exactly what I was looking for, thank you!

    I believe I have figured out a solution but will keep everyone posted.

    Thanks again!
    LT
     
  11. cicindela Steve @ ΩF Staff Member Feb 27, 2019

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    Sell it here

    upload_2019-2-27_11-4-0.jpeg
     
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  12. gatorcpa ΩF InvestiGator Staff Member Feb 27, 2019

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    Remember that we still have sales and use tax in Florida.

    I read all the posts on this thread, and it looks to me that a couple points were missed.

    1. Most of the EU countries wouldn’t have VAT on a purchase from outside the EU, but the customs duties are generally equivalent to what would have been paid in VAT. One difference would be that they are not reclaimed by a business, as they really are customs for bringing an item in-country.

    2. I agree that the German buyer is trying to use this more as a negotiating tactic, since both VAT and Customs are expenses of the buyer, not the seller, similar to sales taxes here in the US. The buyer in this case understands that the cost of this purchase is greater than what a similar watch would cost if it came from an EU country and is trying to get the seller to eat some of that difference.

    Since this is a negotiation, I would not point fingers at either side. Whatever they decide is between them and not us.
    gatorcpa
     
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  13. ChrisN Feb 27, 2019

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    It does appear to be a negotiating tactic.

    If you are in UK (or Germany, which should be the same) and you buy a watch from USA, then you pay duties on the declared value. Customs will collect this and it's about 22% on that value - my understanding is slightly different to @gatorcpa and that's because it's shown as 20% VAT plus some little extras.

    There is no legal way around this. If someone knows of one that doesn't involve lying on the customs declaration, I will be interested to hear it.

    How it works if you're VAT registered and then sell on is not something I have experience with.

    Cheers, Chris
     
  14. Larry S Color Commentator for the Hyperbole. Feb 27, 2019

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    Good thread ..
     
  15. gatorcpa ΩF InvestiGator Staff Member Feb 27, 2019

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    Thank you for that @ChrisN . I stand corrected.

    I took a quick look at the HMRC website and found this.
    Therefore the difference between the 22% and 20% rates is most likely Domestic VAT on the Import VAT.

    So it seems the German buyer isn’t really a dealer and can’t reclaim the VAT, or is trying to take advantage of the US seller.
    gatorcpa
     
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  16. ChrisN Feb 27, 2019

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    This does seem the most likely explanation... perhaps an amateur dealer.

    Chris