Happy 2019 dear OF folks!

By now I've purchased a number of watches through OF, and am about to sell my first watch on another forum. As a buyer, I've been confronted with varying customs/import charges from the same country of origin, both unexpectedly high and unexpectedly low. This makes me presume there is an optimal way of doing this. Therefore, how could I minimise import charges as a seller for my prospective buyers? Of course I would want to insure my shipments to full value. I'm based in Europe myself.

Thanks!

 

There is no way to do this. If you undervalue shipments you're at risk. Even if buyer asks you to do this you can be criminally liable so it doesn't help to say "I know it's against the law but he asked me to do it" . Of course it happens all the time but shipments also get seized all the time too

 

The import charges are just a function of the declared value.

As the seller, it makes little sense to declare a lower value as you are not the one liable for the charges. Furthermore, it has already been said that it is illegal to do so.

 

Thanks! So, say, my undervalued shipment will get seized and opened. How would a customs officer be able to assess the real value of a vintage watch? It's just that the customs process seems totally random to me. It's not that I'm out to game the system, only looking for a way to navigate the apparent randomness.

 

It is very hard to assess the real value of a watch, as you said. I know that they use just some "price ranges" for various type of goods.
For example, it would be hard to declare that the value of a Daytona Zenith is 5.000€, when is that easy to detect that it is at least about 3/4 times more.
The risk to declare a really low value on these objects is all on the seller.

 

It would be good to hear some real world examples.
Who for example has been prosecuted for writing an undervalued customs declaration? Who would bring about the prosecution - tax/customs authorities in the seller's jurisdiction or the buyer's?
Has anyone ever had an item seized by customs for an under valued item and what was the outcome?

 

In the US it's CBP that handles this. You're unlikely to receive any criminal action unless you're a repeat offender or its a significant shipment. However they could just seize the item. Vintage gives you a lot of room because a 1970 Tudor Submariner doesn't mean anything to an inspector. The problem you could encounter is if it goes missing and your insurance only covers the declared value. Then it's on the seller because the buyer never received the watch and the seller can now only claim the declared value while they refund the buyer the full sales price

 

Chance of prosecution is very small imho. Main risk is lost packages.

 

Yes, that's what I thought.
It can also be argued that a parcel with a high declared value is more likely to go missing.

 

I am not sure where to access Europe specific HTS Code information, but below is some information relevant to the US. The situation will be somewhat related to Europe, although different classifications will be different with different duty rates.

For any goods being imported to the US, 4 things all play a big role in determining the value of customs duty owed:

1. What the actual item is and what it is valued at:
- different rates apply for watches with precious metal cases in chapter 91.01 vs non-precious metals in chapter 91.02
- different sub headings for <17 jewels and >17 jewels
- value declaration is asked for at time of shipment

2. What the country of origin is (and what country being imported to):
- each customs country or zone has their own interpretation of HTS codes
- each customs country/zone has different rates based on treaties and Free Trade Agreements (FTA's)

3. What company is used to make the Customs Entry
- when a shipment clears customs, an entry is made based on a specific HTS code used for the entry
- importers vary on how accurate they try to be when making the entry, some will make every effort to choose the most accurately defined code, while others might be happy to chose the nearest code with lowest applicable duty

4. What specific HTS code is used
- in the end this will be the ultimate deciding factor on what rate is applied, it is heavily influenced by items 1, 2 and 3 above
- for any good, a highly "knowledgeable" person with high motivation for correctness can find the exact HTS code that applies to any entry
- however, a regular person filling out shipping paperwork usually has little knowledge or understanding of HTS codes and so the information they provide is likely often not enough for the customs entry clerk to make a proper determination
- the lower value a good declared, likely the less time a clerk will take to be perfectly accurate
- each country HTS classification system can be quite complex and determining the right code is not so simple. See below the US HTS codes for Chapter 91.01 (precious metal watches) and Chapter 91.02 (non-precious metal watches), you'll see that rates can vary quite a lot based on what code is selected...

 

If you're based in Europe and have imported "Swiss Made" watches, I'm surprised there would have been any customs duty applied. With a Swiss Country of Origin the customs duty rate should be 0.

Are you sure it was not VAT or some kind of tax you had to pay? (maybe I'm missing something...?)

 

Switzerland, while geographically located in Europe are not part of the EU, Import and export taxes to European countries do apply in both ways.

Cheers,
Max

 

Taxes / VAT I understand, however, with a Swiss COO there should be 0% applicable preferential rate..

 

Maybe I should explain further...

I live in Canada. If I go into the US to buy a watch, when I return home and 'import' a watch there are 2 potential added costs upon entry, taxes and/or duty.

1. Ontario Canada charges a 13% HST (Harmonized Sales Tax) on goods and services. Since HST has not yet been paid on a watch purchased outside of Canada, this 13% would need to be paid if the total value exceeds my allowance (max $800 exemption if out of country >2 days).

2. Additional duty is charged based on the applicable goods HTS code. If the watch had a COO of USA, then duty would be 0% under NAFTA (North America Free Trade Agreement between the US, Canada and Mexico -- potentially will be replaced with new USMCA agreement...). If the watch had a COO of CH it would be a different rate, however, it would be charged separately from the HST.

 

Thanks a bunch, particularly to @gostang9 for the particulars on import taxes to the US and EU. There is indeed a tax treaty between Switzerland and the EU. However, I'm not sure if that's relevant for a Swiss-made watch. Regardless of where a watch was produced, you pay import taxes as a buyer to correct for parallel trade at the level of end-user sale. So if I have a Swiss-made watch shipped from the US to the EU, I pay import taxes nonetheless. Granted, I'm not a tax lawyer--but a lawyer nonetheless

Then, as @COYI suggested: there may be a 'correlation' between the declared value, and the chances of your package going missing. What's your experience with this? Even when properly insured, it's still a bummer for everyone involved when a parcel goes missing...

 

Thanks for going all this length with us! I guess you would be correct in the case of new watches. For second-hand or otherwise vintage I'm not sure. Consider an Ed White as an example: had I bought one in a previous life in 1965, I would have to pay sales tax and no additional import charges under the current EU tax harmonization in the EU. However, an Ed White maden its way to the US, changed owners a couple of times, and then would be purchased by me in 2019, living in the EU. Even though this watch was produced in CH, I would still have to pay sales tax and import duty, correct? I should have paid more attention in tax law class...

 

The country of origin is just that - the origin, not where it's located at the time of purchase...

 

Exactly! Just what I was trying to explain in a lot more words above

 

But it appears you have come to the opposite conclusion with regards to duty. Where the watch is located currently has no bearing on it's COO, so if watches with Swiss COO are duty free to the EU, it won't matter if you buy it from a seller anywhere else in the world, the duty should be 0.

Taxes are a whole other thing...

 

If you import to UK from USA for example and it's a Swiss vintage watch, you will pay VAT at 20% on the declared value plus there are a couple of small extras and costs that bring the total to about 22%. You can't get around this even if it is vintage and it was basically the same when I lived in Spain but there, the tax is called IVA. Customs duty is negligible because these are taxes as Al says. I have no idea about going the other way but there look some good answers above.

As the OP is in Europe, then if it is to and from an EU country, there will not be anything to pay. You said you're in Europe but not sure if you're in the EU.

Just declare it as it should be and insure it fully.

Cheers, Chris