VAT and other duties

[Pingu]

I was just looking at a certain site and thinking of ordering a couple of libraries, and then noticed the small print at the bottom of the page, saying that the buyer should expect to pay the relevant duties in whatever country they are ordering.

And it occurred to me that this is stupid, and we as a sampling community can get around it. The point is that duties are paid because you are adding something of a certain value to the total content of your country (or state). But the physical product that is delivered to us isn't what's worth so much. Nor do we even own it - it's just supplied as a way of enabling us to exercise the license that we're paying for. The license is certainly worth the money, but it isn't a physical thing, it doesn't reside in the package that's delivered, and thus doesn't pass customs.

The actual physical product in the package is only worth the price of a few blank CDs. A couple of people I've ordered from have been kind enough to realise this, and written a value of $5 or so on the declaration (I believe Diva was one example), so that I didn't end up paying duty or VAT. My goodwill towards those people, as developers, has increased accordingly.

Please could other developers take note. The price declared on the customs sheet should be what it will cost you to send another copy if it goes missing in the post.

[Daryl]

According to UK legislation there should be no duties payable on Sample libraries. Unfortunately some developers haven't read the various documents and therefore do not label the product correctly. The labelling will vary, depending on the country that they are shipping to, but they really should be able to sort this out, particularly as they have been told on may occasions.
Regarding VAT, I'm afraid that it is payable on Sample libraries, even though it is only a licence. If this was not the case, then performers and many others would not be required to charge it as there are no physical goods in these cases.

D

[geronimo001]

Good point, both of you.

[fitch]

interesting read..

the amount of import duty i have had to pay from buying samples in US is incredible


i could have had me another top notch orchestral library with it LOL

[peter269]

Speaking for Alexander Publishing/TrueSpec Systems, we are required by LAW to put down the value of the item. If we don't do that, we can lose our business license. In some countries we are required by THEIR import law to include a copy of the purchase invoice to verify the value claim we put on the forms. We're seeing this tightening up around the world.

Once tangible property ships outside a country, it's now an import/export issue and must be accounted for.

BTW, this is also true in the US for sales tax. Some sites say "no sales tax" if you're purchasing outside of that state. But the tax code for nearly all the states says that if you purchase a major item for your business outside of your home state, you have to declare it on your tax forms and pay the local sales tax.

There is a great difference between sales tax AVOIDANCE and sales tax EVASION.

[Herman Witkam]

I got a FedEx bill a couple of months after ordering Stormdrum from the U.S. (Eastwest online store) They managed to mis-spell my name, adress and town, but the bill was still delivered. Had I known that there would be any duties I wouldn't have ordered there.

[geronimo001]

Same here.

[Daryl]

interesting read..

the amount of import duty i have had to pay from buying samples in US is incredible


i could have had me another top notch orchestral library with it LOL

This is my point; under UK law I shouldn't have been charged duty for my EW purchases either.

D

[Daryl]

Speaking for Alexander Publishing/TrueSpec Systems, we are required by LAW to put down the value of the item. If we don't do that, we can lose our business license. In some countries we are required by THEIR import law to include a copy of the purchase invoice to verify the value claim we put on the forms. We're seeing this tightening up around the world.

Once tangible property ships outside a country, it's now an import/export issue and must be accounted for.

BTW, this is also true in the US for sales tax. Some sites say "no sales tax" if you're purchasing outside of that state. But the tax code for nearly all the states says that if you purchase a major item for your business outside of your home state, you have to declare it on your tax forms and pay the local sales tax.

There is a great difference between sales tax AVOIDANCE and sales tax EVASION.

I agree, however as an export company I'm sure that you would agree that it is also your responsibility to ensure that the packages are labelled correctly for the country to which you are exporting. I'm not accusing you of anything you understand, I'm just fed up with trying to explain it to some US company employees :>(

D

[hywyn]

Regarding labelling, If I'm about to order Garritan Orchestral Strings from the US web-site to be shipped to UK, what therefore should I ask them to place on the package. I presume "Sample Library", but I just bought six CD's from Sony Media in the US and have received a FedEx bill. I didn't double check the package labelling, as the bill arrived a week later, but the package must have been labelled as a Sample Library, or what else would they call it? Is there something more specific?

[peter269]

This is my point; under UK law I shouldn't have been charged duty for my EW purchases either.

D

According to UK import regulations, ALL goods entering the UK are subject to duties and VAT whether or not they are marked as gifts. This information is found at the USPS web site.

Follow this link and go to Index of Countries and Localities which spells out all the regs: http://pe.usps.gov/text/imm/welcome.htm

[Pingu]

Sorry, but the USPS web site has got it wrong. CDs and books are not subject to duty. In fact books aren't subject to VAT either.

[Hardy Heern]

A subject close to my heart as we get 'ripped' off in the UK in comparison to the USA.

I still buy music stuff direct from the USA in sales and Group buys as, even with the VAT, which I never escape, (damn Fedex and their efficiency!) it is STILL cheaper than buying in Britain.....shamefully. (remember that Fedex charge further handling charges too!)

One thing, that may help, is that I learnt from http://www.myus.com/ that it is only legally required for US companies to state the wholesale value. I do wish that USA music suppliers would adopt this practice as it would save us a lot and open up their direct markets into the UK, and Yurp in general, even more.

Another option is for the developers to use conveyers further down the food chain than Fedex. Then we'd have at least a chance of missing the dreaded VAT!

Some developers have, sadly, (but I guess understandably) appointed agents in UK/Europe so will oppose these ideas as it is easier for them to go with the status quo....that's life....that's business.

Frank

(All I have ever wanted is to be able to buy the same product in the UK at the same price as in the USA, adjusted by the prevailing exchange rate.....is that really too much to ask??)

[Pingu]

Yeah, Fedex really really really tick me off!! I've had deliveries from them maybe 9 or 10 times, and every single one has been an absolute nightmare. They get my address wrong. They take longer than they should.

On one occasion I kept checking a package through their tracking service, and every day it said that they'd tried to deliver it, but that nobody was in. Since I'd had my wife waiting in for the package all day every day I was naturally a bit put out by this blatant lie. So I called, and they admitted that they had simply faked the entry on the tracking system, without having attempted a delivery, because they didn't want an entry on their website to show that they were behind schedule. Eventually it took a week longer than the speed I'd paid for.

But it's that charge that's the problem. Not only do we pay VAT and duty, but then Fedex slap on a charge which they claim is a handling charge for speeding the package through customs. But this is after we've already paid the extortionate amount that they initially charge and which the sender passes on to us. I've checked a couple of times, and it turns out that Fedex don't tell the sender that they will be charging the receiver again, so the sender isn't able to warn us, and is convinced that the delivery charge that they pass on to us is all that we pay.

Please, any developers and distributors reading this, even if you must write the value of the sample library on the outside of the package, please, please, please don't use Fedex. They are downright dishonest, and also THE least efficient service. At least they are here in the UK, because they farm out their deliveries to local firms on a franchise basis, and aren't prepared to pay the decent local firms.

[Daryl]

According to UK import regulations, ALL goods entering the UK are subject to duties and VAT whether or not they are marked as gifts. This information is found at the USPS web site.

Follow this link and go to Index of Countries and Localities which spells out all the regs: http://pe.usps.gov/text/imm/welcome.htm

If that is what it say then it is wrong! It also has nothing to do with being gifts or otherwise, it is to do with the contents. I will look out the relevant Government Web Site so that you can get the information that you need, but not until tomorrow I'm afraid :>(

D

[peter269]

Sorry, but the USPS web site has got it wrong. CDs and books are not subject to duty. In fact books aren't subject to VAT either.

Would you give a link to support this.

[Pingu]

Would you give a link to support this.
Sorry, the only official site I can find just has a nominal list of zero-rated and exempt items, which it states is not complete. It does mention books and printed matter, but not CDs, which I've always been told were also exempt.

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_InfoGuides&propertyType=document&id=HMCE_CL_001225

The London School of Economics page on VAT says that CDs are only exempt when bought from within the EU, so you may well be right Peter. It would appear I was misinformed on that front. But the blanket statement that all items are subject to duty and VAT is simply not correct.

[Daryl]

Yes CDs are not exempt. As far as we are concerned the possible grey area is that audio CD/DVD is not exempt, but CD-ROM is, and is marked as "Data or Programs" which is really what a sample library is, because you can't listen to it in a CD player, even though there is audio as part of it...!

Have a look at this document which illustrates the confusion nicely.

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageTravel_ShowContent&id=HMCE_PROD_009989&propertyType=document

As you will see, this list is not clear, but now that I think about it I seem to remember ringing the VAT office and I was told that although the classification was a little grey (samples not being at the top of the VAT mans list when trying to gouge money out of us), the fact that these discs are ROM rather than audio discs meant that they had to be classified as data.

There was also a long discussion about this a year ago on "another forum", so it may well be worth doing a search.

In the meantime, when I get a moment I'll try to contact my VAT office again and see if they will put something in writing.

D

[Raindog]

The situation in Germany (which should be the case all over Europe) is the following:

You have to pay VAT (unfortunately for the shipping costs as well) in every case if it is a sample CD, an audio CD or whatsoever.

You don´t have to pay customs for software which should include samples (but that is up to the customs inspector judgement)

You have to pay customs (added to the VAT) for audio CDs.

If the package is sent by standard US mail customs often seem to neglect it. Unfortunately, it doesn´t work with Fedex (the one and only case I had to pay customs)

[Hint]

If the package is sent by standard US mail customs often seem to neglect it. Unfortunately, it doesn´t work with Fedex (the one and only case I had to pay customs)

Yes - this is also my experience. i.e. if you use a courier (FedEx, UPS etc) you are pretty much guaranteed to be billed for VAT and import duty.

Regular US Mail / UK Royal Mail often slips through the net. I assume that this is because they don't, or simply can't, check everything. The larger couriers will declare everything in bulk for each shipment, and pay all customs charges on the customers' behalf, which they then later claim back from whoever receives the package.

General rule of thumb is to add 5% to the total value of anything you order from the U.S. and then add another 17.5% to the total of everything (goods + duty + postage). The 5% figure varies according to the category of goods, but that is a good average. Bear in mind that an unreasonably high fee will also be payable to Royal Mail / your country's equivalent for overseeing the process.

You can still make substantial savings on some items, but it's often not worth the extra uncertainties that come with buying abroad. I guess that's the point.

Unfortunately, the system used to categorise items is extremely complicated:
http://europa.eu.int/comm/taxation_customs/dds/en/tarhome.htm

[peter269]

This is great input and I appreciate it. Please be aware that our company does not charge VAT. We simply label the package what is: books, educational materials.

For CDs, a CD is just a medium. It should depend what's ON the CD (or DVD). Sample libraries are considered software whether CD or DVD.

Regarding UPS and FedEx vs. Postal.

This is a real problem when shipping from the US because for both our security and those of our customers, we have to be able to track the package and know it was delivered.

[kramusica]

I've had the same issues, not only with sample libraries but also with Finale and my sound card ordered in the US. The VAT and import taxes were killing me, suddenly it wasn't the great deal anymore.

I purchase all my libraries now from Best Service (Germany). I can deduct the VAT on the order page by entering my VAT number from my tax-exempt company and they offer free shipping to Belgium on orders over 50 euros. The service is excellent.

From the group buy offer from Sampletekk I was able to download the samples and that is something developers may consider. This would not only avoid the dreaded taxes but would also secure deliveries.

Mark

[Daryl]

For CDs, a CD is just a medium. It should depend what's ON the CD (or DVD). Sample libraries are considered software whether CD or DVD.


You're quite correct, but unfortunately some products are labelled with something about laser sound discs(?) and as soon as customs sees this, it becomes an audio CD in their eyes.

As I said earlier, I'll try to get some sort of written definition that you can use when sending to the UK, so that we only get charged VAT at customs.

D

[Hermitage59]

For what it's worth, I've travelled to 12 countries, and customs people seem to be pretty well the same.

'We'll take as much as we can, because the definitions are carefully written in grey ink, instead of black and white. If you complain, we'll just charge more.'

Not that i'm cynical!

Regards,

Alex.

[Udo]

Purposeful ambiguity

[Pingu]

Purposeful ambiguity

So excise and customs are like the Wagner of administration.

[Worra]

I was just looking at a certain site and thinking of ordering a couple of libraries, and then noticed the small print at the bottom of the page, saying that the buyer should expect to pay the relevant duties in whatever country they are ordering.

And it occurred to me that this is stupid, and we as a sampling community can get around it. The point is that duties are paid because you are adding something of a certain value to the total content of your country (or state). But the physical product that is delivered to us isn't what's worth so much. Nor do we even own it - it's just supplied as a way of enabling us to exercise the license that we're paying for. The license is certainly worth the money, but it isn't a physical thing, it doesn't reside in the package that's delivered, and thus doesn't pass customs.

The actual physical product in the package is only worth the price of a few blank CDs. A couple of people I've ordered from have been kind enough to realise this, and written a value of $5 or so on the declaration (I believe Diva was one example), so that I didn't end up paying duty or VAT. My goodwill towards those people, as developers, has increased accordingly.

Please could other developers take note. The price declared on the customs sheet should be what it will cost you to send another copy if it goes missing in the post.

This is exactly what we do! I've also cleared this with the tax authorities here in Sweden.
You buy a licence, that's a non-tangible thing and is not in the envelope we send you! The value in the envelope is the value for the DVD's, and that's around $12-$13. This is also the value we put on the custome sticker.

[Pingu]

This is exactly what we do! I've also cleared this with the tax authorities here in Sweden.
You buy a licence, that's a non-tangible thing and is not in the envelope we send you! The value in the envelope is the value for the DVD's, and that's around $12-$13. This is also the value we put on the custome sticker.

Thanks Worra - you can count on my custom as often as my wife will permit me.

[Worra]

Thanks Worra - you can count on my custom as often as my wife will permit me.

Cool! I'm sure that you have a beautiful, understanding and generous wife!

[Bruce A. Richardson]

In the way of creative solutions, perhaps one solution might be to bill a separate Media Fee. The customer pays for the license online. On another invoice, he is charged a Media Fee, and sent his media valued at its appropriate worth.

[Pingu]

In the way of creative solutions, perhaps one solution might be to bill a separate Media Fee. The customer pays for the license online. On another invoice, he is charged a Media Fee, and sent his media valued at its appropriate worth.

That sounds like a superb solution. Then there would be a genuine receipt/invoice for $5-20, which could be shown when customs choose to follow things up, and this would represent the actual amount paid for what's in the package.