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VAT inside the EU

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  • 27-09-2003 4:06pm
    #1
    rob1891
    Registered Users Posts: 1,038 ✭✭✭


    A question ...

    From a quick read of oasis I gleem that when buying something in the EU, one only has to pay the VAT to the country of origin, and at their rates. However I get all this from a tourist and customs perspective.

    What I want to know is how this applies to online shopping. I would think if I am buying some equipment from Germany, I ought to pay only their 16%, however on the website www.thomann.de they have tailored pages for Ireland, the UK and many EU countries with prices calculated using our own VAT rates. Previously I figured that it must be different for shopping, but now I am thinking they are ripping us off, because there is no special treatment on another german music site, www.musicstorekoeln.de, where vat is charged at 16%. Come to think of it, amazon is the same, and I should have realised this ages ago!

    So, before I shoot my mouth off at thomann (I've spent a good bit of money with them and I'm kinda pissed) is what they are doing correct? Is it legal, or under what circumstances would it be legal, wouldn't they have to pay the tax to our government at least, if not service their Irish customers out of an Irish office (as operating out of Germany and paying tax to Ireland might not please the Germans) ...

    Any advice? Thanks,

    Rob


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    #2
    Specky
    Closed Accounts Posts: 914 ✭✭✭Specky


    There's a fair bit of debate...much of it heated...regarding the taxation situation for on line shopping.

    I'm not an expert but I'd tend to apply the same situation as with non-on-line purchases.

    There are two situations, one for business and one for consumer.

    For business, sales tax (VAT) does not apply to you as long you are registered, so when you make a purchase from another EU country (or when you sell product to a registered company in another EU country) no sales tax is applied. Of course, if you re-sell what you've bought abroad locally you apply sales tax to the sale as normal at the local rate.

    For consumers or non-registered companies, the sales tax in the source country is applied (the seller is obliged to do so) but you can claim this back as you are not a resident in that country. However when you bring it into your own country you must pay the VAT on the product at the local rate based on the price you paid.

    So if you buy something for £10 in UK you pay 17.5% bringing the price to £11.75. When you leave you can claim the £1.75 VAT back but when you bring it into Ireland you should pay 21% or (roughly...based on 70c to the £1 exchange rate) €14.29 + 21% = €17.29.

    Note the use of the word "should". I don't think the rules are extensively enforced because revenue on both sides tends to benefit from all the people who don't bother claiming back the vat on purchases they've made when they travel.





    Sales tax is local to any one country


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