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Amazon VAT - Am I being robbed.

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  • 25-07-2013 4:49pm
    #1
    Tzardine
    Registered Users Posts: 3,884 ✭✭✭


    I ordered two sets of earphones on Amazon which were advertised at £169.99 each.

    After I ordered, I noticed that the price had increased to £174.24 each and this is what I was being charged.

    I contacted Amazon by online chat and the guy said that it was because of a difference in VAT rates in Ireland, which I do know exists of course. Am I wrong on this one ? Does Amazon actually pay VAT at the Irish rate and give it to Revenue ? I have copied the chat below.

    You are now connected to Raj from Amazon.co.uk
    Me:Hello,
    I purchased two sets of earphones at €169.99 each, but I just noticed that the price of the items has been increased after my order.
    sorry £169.99 each
    Raj:Hello Justin, my name is Raj. I'll be happy to help you.
    Could you please confirm the order number?
    Me:Order # 026-9211917-********
    Raj:Thank you for the confirmation.
    Could you please hold this chat while I check this for you?
    Me:sure
    Raj:I've checked your order and can see that the delivery address is in Republic of Ireland.
    The VAT rates for the republic of Ireland vary from that of UK.
    Me:That should not matter. The VAT is paid at the UK rate. It does not matter where the items are sent. The Irish government is not getting the VAT
    Raj:Could you please hold this chat while I check this for you?
    Me:SURE
    Raj:In accordance with the laws governing members of the European Union, Amazon.co.uk is obliged to register and charge for VAT on all orders delivered to destinations in member countries of the EU.
    The VAT rate for Ire land is 23%.
    http://www.amazon.co.uk/gp/help/custome...(See full link)
    You may also see this from the link above.
    The table shows the VAT rates charged by Amazon.co.uk on physical goods dispatched to EU destinations.


Comments

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    #2
    Tzardine
    Registered Users Posts: 3,884 ✭✭✭Tzardine


    I have had a look deep within the Terms & Condition on Amazons website and it turns out that I am wrong :(

    The Recommended Retail Price (RRP) and/or price displayed for goods sold by Amazon.co.uk are inclusive of UK VAT. However, your final price may differ depending on the actual VAT rate that applies to your order.


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    #3
    dudara
    Registered Users Posts: 33,518 ✭✭✭✭dudara


    Strituck wrote: »
    Does Amazon actually pay VAT at the Irish rate and give it to Revenue

    The short answer is, yes, they do.

    Longer explanation: If a company sells in Ireland but stays below a certain threshold, then they do not have to register for VAT in Ireland. Once they cross that threshold, then they are required to register for Irish VAT and make returns to Revenue.

    Amazon are of sufficient scale that this applies to them. Therefore they are obliged to charge you Irish VAT. As this is a case of the sale of goods, they are obliged to charge VAT based on the address to which the goods will be supplied. Raj was perfectly correct.


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    #4
    AlmightyCushion
    Moderators, Education Moderators, Technology & Internet Moderators Posts: 35,083 Mod ✭✭✭✭AlmightyCushion


    Yes Amazon pay VAT on Irish purchases to revenue here. It's an EU thing. There is a certain threshold that once a companies sales to a member state surpass they must start paying that member states VAT rate.


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    #5
    ongarite
    Registered Users Posts: 8,260 ✭✭✭ongarite


    Yes, Amazon pay VAT at the Irish rate.
    Thinks its an EU law if you do over 100K of business in that country a year.


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    #6
    innocent_lover
    Registered Users Posts: 264 ✭✭innocent_lover


    ongarite wrote: »
    Yes, Amazon pay VAT at the Irish rate.
    Thinks its an EU law if you do over 100K of business in that country a year.

    Its not EU law. I think threshold is set by revenue which is 35000. Every country in EU set it's own limit.


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    #7
    coylemj
    Registered Users Posts: 25,459 ✭✭✭✭coylemj


    Agree with all of the above, I had the same issue as the OP but Amazon explained the situation regarding VAT.

    Prices quoted on Amazon include UK VAT which at the moment is 20%. The standard rate here is 23% so the conversion involves removing the UK VAT (divide by 1.2) and add the Irish VAT (multiply by 1.23). If an item is quoted at £120, that means a net (before VAT) price of £100 which will increase to £123 when you add the Irish VAT.

    The effect is that the original price will be increased by 2.5% when you go to the checkout.


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    #8
    Tzardine
    Registered Users Posts: 3,884 ✭✭✭Tzardine


    coylemj wrote: »
    Agree with all of the above, I had the same issue as the OP but Amazon explained the situation regarding VAT.

    Prices quoted on Amazon include UK VAT which at the moment is 20%. The standard rate here is 23% so the conversion involves removing the UK VAT (divide by 1.2) and add the Irish VAT (multiply by 1.23). If an item is quoted at £120, that means a net (before VAT) price of £100 which will increase to £123 when you add the Irish VAT.

    The effect is that the original price will be increased by 2.5% when you go to the checkout.

    Thank you all for the clarification. I have also figured out a work-around to avoid the higher VAT rate. I am registered for Parcel Motel, so if I use the UK delivery address then I get the items at the lower VAT. Could save a few bob on larger purchases.


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    #9
    coylemj
    Registered Users Posts: 25,459 ✭✭✭✭coylemj


    Strituck wrote: »
    Thank you all for the clarification. I have also figured out a work-around to avoid the higher VAT rate. I am registered for Parcel Motel, so if I use the UK delivery address then I get the items at the lower VAT. Could save a few bob on larger purchases.

    Agree with that conclusion for large items but bear in mind that a lot of what you buy on Amazon comes from small retailers who ship direct to you so if you're are buying a number of small items, you need to keep an eye on how many shipments it will involve in case you end up paying €3.50 (to Parcelmotel) for each item which may skew the equation in favour of shipping direct to you in Ireland.

    At the current sterling exchange rate (0.86), for items that you can get shipped to ROI for free it's only worth using Parcelmotel if the sterling list price on Amazon is £120 or greater.

    A item which costs £120 will roughly convert to €140 and 2.5% of €140 is €3.50 which is the Parcelmotel charge so that's the break-even point.


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    #10
    pleasant Co.
    Moderators, Technology & Internet Moderators Posts: 7,406 Mod ✭✭✭✭pleasant Co.


    Dragging the topic off to a bit of a tangent here but any idea how amazon deal with returns in the case of using PM?


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    #11
    foggy_lad
    Closed Accounts Posts: 20,373 ✭✭✭✭foggy_lad


    Strituck wrote: »
    Thank you all for the clarification. I have also figured out a work-around to avoid the higher VAT rate. I am registered for Parcel Motel, so if I use the UK delivery address then I get the items at the lower VAT. Could save a few bob on larger purchases.

    If you need to return the item does using parcel motel affect your ability to use your statutory rights or any warranty issued with the goods?


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    #12
    RangeR
    Registered Users Posts: 7,265 ✭✭✭RangeR


    Shirley PM is just an address. the Amazon account belongs to you. they ship to you.

    I see no difference between shipping to PM or your job. The product still gets to you.


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    #13
    pleasant Co.
    Moderators, Technology & Internet Moderators Posts: 7,406 Mod ✭✭✭✭pleasant Co.


    RangeR wrote: »
    Shirley PM is just an address. the Amazon account belongs to you. they ship to you.

    I see no difference between shipping to PM or your job. The product still gets to you.

    ...but its an address in a different country, so i wonder how amazon view it?


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    #14
    Varik
    Registered Users Posts: 12,542 ✭✭✭✭Varik


    pleasant Co. wrote: »
    ...but its an address in a different country, so i wonder how amazon view it?

    I'd say you'd be stuck under UK law and you'd only get them to partially pay for the return postage.


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    #15
    pleasant Co.
    Moderators, Technology & Internet Moderators Posts: 7,406 Mod ✭✭✭✭pleasant Co.


    Varik wrote: »
    I'd say you'd be stuck under UK law and you'd only get them to partially pay for the return postage.

    That's what I'd think too, surely someone has actually been in this situation by now though :cool:


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    #16
    rubadub
    Registered Users Posts: 32,382 ✭✭✭✭rubadub


    innocent_lover wrote: »
    Its not EU law. I think threshold is set by revenue which is 35000. Every country in EU set it's own limit.
    This is the bit on it.
    http://www.revenue.ie/en/tax/vat/leaflets/distance-sales-eu.html
    Under the EU VAT arrangements, Member States were required to adopt a distance sales threshold of either €35,000 or €100,000. Ireland has opted for €35,000.

    The value of distance sales of excisable goods should not be taken into account for the purposes of determining whether or not the threshold has been exceeded. If the threshold, excluding the value of excisable goods, is not exceeded the supplier may continue to account for VAT in the Member State from which supplies are made.

    Any supplier who makes distance sales of excisable goods e.g. alcohol, tobacco and oil to another Member State must register and account for VAT in that Member State, since distance sales of excisable goods are always subject to VAT in the Member State to which they are dispatched.

    Strituck wrote: »
    I am registered for Parcel Motel, so if I use the UK delivery address then I get the items at the lower VAT. Could save a few bob on larger purchases.
    Not having a go at you personally, I use PM & UK sites myself, but if everybody did it in the extreme you can expect your other taxes to increase to cover the shortfall in VAT (seeing as we do get amazon's VAT). AND you are paying the UK VAT too, propping up another economy which might lead to greater future discrepancies.

    Also remember not all things are the same VAT rates, e.g. sports nutrition stuff is 0% in the UK and 23% here.

    Its probably is only right you pay UK VAT as you are getting use of what is probably a subsidised postal service to NI!
    foggy_lad wrote: »
    If you need to return the item does using parcel motel affect your ability to use your statutory rights or any warranty issued with the goods?
    Probably best to ask PM, they must have dealt with this by now.


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    #17
    claytonie
    Registered Users Posts: 251 ✭✭claytonie


    I ordered and LCD screen from Amazon, knowing I wouldn't be home to meet the postman and the ridiculous hours the parcel collection office is open I sent it to NI PM.

    When the screen arrived it was faulty and needed to be returned, I contacted Amazon through the chat facility and they sent me a prepaid postage label for AnPost stuck it to the box dropped it into the Post Office and refund was done within 5 days.


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