FYI: Eastman and Aero including undisclosed upcharge on overseas sales

[Dr H]

The name's 'H'...Dr H... ;-)

 

[ButteMT61]

The name's 'H'...Dr H... ;-)

That was YOU with "the Queen" then??? The other jumper, as it were?

 

[Dr H]

I couldn't possibly comment... ;-)

 

[Otter]

Oh ffs not here as well! Just pay it, just cause for you dumping our tea in Boston harbour. Oh, and btw nobody menbtion invading anywherefor oil!

 

[Kt Templar]

This is a result of the way VAT is buried in the price of the items in countries such as the UK and other EU countries. The retailer is actually not permitted to show the pre-VAT price and tax separately.

The 'Government's' argument is that the customer might mistake the pre VAT price for the price they pay and be drawn into a purchase and then end up with a surprise 20% bill.

The reality is that the retailer ends up paying VAT it out of their profit margin, because the natural 'market price' is what they sticker the item as and the Tax gets removed from that. This is especially evident when VAT gets increased incrementally. What normally happens is that items are priced at the natural market price ie £9.99. But if VAT is increased from, say. 10% to 15%, the actual price the customer pays usually does not increase by 5%. It is most likely to stay the same and the retailer swallows the extra tax. Eventually, retailers who can reduce the product to fit the new tax level, ie a chocolate bar gets slightly smaller, but the price remains the same. Not sure how you would implement that with a jacket!!


So, what does that mean for US purchasers... technically you are paying tax you shouldn't have to. In reality, you are just helping out small businesses retain a little more of their margin rather than them losing it to the Taxman.

 

[Grayland]

VAT = Value Added Tax

VAT is included in the advertised prices - but is removed on check out for non EU customer.

This is from: http://www.pediwear.co.uk/orders/world.php

A UK-based shoe seller.

 

[SuinBruin]

This is a result of the way VAT is buried in the price of the items in countries such as the UK and other EU countries. The retailer is actually not permitted to show the pre-VAT price and tax separately.

The 'Government's' argument is that the customer might mistake the pre VAT price for the price they pay and be drawn into a purchase and then end up with a surprise 20% bill.

The reality is that the retailer ends up paying VAT it out of their profit margin, because the natural 'market price' is what they sticker the item as and the Tax gets removed from that. This is especially evident when VAT gets increased incrementally. What normally happens is that items are priced at the natural market price ie £9.99. But if VAT is increased from, say. 10% to 15%, the actual price the customer pays usually does not increase by 5%. It is most likely to stay the same and the retailer swallows the extra tax.

So, what does that mean for US purchasers... technically you are paying tax you shouldn't have to. In reality, you are just helping out small businesses retain a little more of their margin rather than them losing it to the Taxman.

I'm sure that's the gloss ELC and Aero would put on it. But we're not talking 5% on 9.99 here -- we're talking about hundreds of pounds in undisclosed profit. That's hardly "a little more of their margin." And if ELC and Aero can't be profitable in the EU because of the VAT then they and other EU businesses should take that up with their respective governments rather than gouging foreign buyers for an undisclosed 20% overcharge.

The bottom line is that it's unfair to expect foreign purchasers to pay more for the same product, especially when they don't even know they're doing it. It's discriminatory and unethical, and I'd say the exact same thing about an American company that engaged in the practice.

 

[Graemsay]

The bottom line is that it's unfair to expect foreign purchasers to pay more for the same product, especially when they don't even know they're doing it. It's discriminatory and unethical, and I'd say the exact same thing about an American company that engaged in the practice.

And American companies never charge significantly more for goods sold into the EU than they do in the US?

 

[Kt Templar]

That's the thing the foreign purchaser isn't paying any more than the domestic one. It's just that the extra isn't going to the government.

....

The other possibility... and it's a small possibility, as I expect the turnovers of both these companies is above £77,000. If their turnover is below £77,000 they do not have to register for VAT and do not include VAT in their prices.

So it's a possibility that neither domestic (EU) nor foreign customers are paying VAT.

There are ways of achieving doing this, ie having each machinist registered as sole traders, hairdressers work like this IIRC.

 

[Kt Templar]

In addition, one US based company attempted to charge me sales tax when I was ordering a jacket from the EU.... because I was paying with AMERICAN EXPRESS!!

And then there is another that boldfacedly charges "5 x US shipping" to "foreign" customers. (This means $100 for a jacket... when it costs them about $40 to ship to the UK).

 

[SuinBruin]

That's the thing the foreign purchaser isn't paying any more than the domestic one. It's just that the extra isn't going to the government.

C'mon. "Extra"? There is no "extra." There is the retail price, and there is tax. If you order something from California, you will pay the retail price, without tax. I will pay the retail price, with tax. We both pay the same retail price and I, as a California resident, have to kick in to my state's treasury. If you get charged the retail price, plus tax, but the retailer keeps the tax, then you are getting gouged... particularly if you don't even know it's happening. One of the upsides of the US approach to sales tax (it's added on to the advertised retail price) is that there is transparency in what is being charged for each component of the transaction.

The key here is that ELC and Aero are charging two different retail prices based on the location of the buyer and aren't disclosing it. You honestly think that's OK?

Look at it this way... if I bought an ELC jacket in the UK, I could get a refund of the VAT when I got back to the US. I can't do that if I purchase the jacket here in the states, because no VAT is being paid -- just extra profit to ELC. Plus you are just ignoring the fact that other UK retailers discount VAT for foreign buyers as a matter of practice. Why can't other retailers do the same? (Especially for higher-margin goods like leather jackets?)

The second part of your post is irrelevant as both ELC and Aero have confirmed that their advertised prices include VAT for EU buyers.

 

[schitzo]

And American companies never charge significantly more for goods sold into the EU than they do in the US?

Yep, they don't call this place rip-off Britain for nothing as Timberland and Levi's amongst many others know all too well. That said, it aint cricket whoever's at it

 

[SuinBruin]

In addition, one US based company attempted to charge me sales tax when I was ordering a jacket from the EU.... because I was paying with AMERICAN EXPRESS!!

And then there is another that boldfacedly charges "5 x US shipping" to "foreign" customers. (This means $100 for a jacket... when it costs them about $40 to ship to the UK).

And you were able to object in the first scenario because you could see it happening in the transaction, yes? (Was it corrected or no?)

And you could tell with the second that it was happening because the shipping cost was disclosed, yes? (In fact, it was disclosed -- "boldfacedly".)

So in both cases you could make an informed decision as to whether or not to proceed with the transaction, right? Neither ELC nor Aero disclose the VAT issue, and neither will discount when asked about it.

As for US companies charging more overseas, that is completely irrelevant to the discussion. As long as the consumer knows what is being charged (including tax, shipping, etc.), then they can make an informed decision. Concealing a "VAT" upcharge does not allow for an informed choice. Frankly I find it not in keeping with my impression of the British national character. It's not cricket.

 

[Kt Templar]

The company took a little while to work out what the issue was and then eventually didn't charge the sales tax. (however, I suspect that due to the trouble and paper work involved they probably just swallowed it anyway.)

I had the "5 x" company send the jacket to a US friend, the sales tax + the 2nd postage fee was still less than the 5 X postage!

The only reason I knew about it was ... well I knew I shouldn't have to pay US sales tax anyway... and that as per US law the sales tax is added afterwards. In the EU the companies are specifically prevented from showing it as a separate amount for retail sales. Famously, McDonald's used to show the VAT separately on their receipts and were instructed, by the courts, to change their receipts to not do this.

Aero and Eastman probably need to look up the accounting software that can cope with removing the VAT for foreign sales with out adding to their overheads, if it does they could add a foreign orders processing fee surcharge.

On the subject of different retail prices based on location....

Happens to us all the time. We see US prices... they just change the dollar sign to a pound sign.

And one more thing, am I to assume the people receiving Aeros & Eastmans in the US are declaring them to customs so they can pay the duty and sales tax due?

 

[too much coffee]

US Customs assigns a duty to those parcels coming from Aero & Eastman and the carrier collects the Customs duty when the jacket is delivered. Sometimes the jacket parcel is delivered and down the road that customer receives a bill for the duty fees. Either way the customs folks get their due.

Sales tax? Levied by whom?

 

[Kt Templar]

US Customs assigns a duty to those parcels coming from Aero & Eastman and the carrier collects the Customs duty when the jacket is delivered. Sometimes the jacket parcel is delivered and down the road that customer receives a bill for the duty fees. Either way the customs folks get their due.

Sales tax? Levied by whom?

I notice that this only happens occasionally.

The Federal Sales Tax to the US Govt.

If an item arrives in the UK from the US. Technically we should pay 20% VAT on it to the govt + import duty.

Pragmatically, I see suggest that Aero and Eastman bite the bullet and then instigate a VAT discount for their foreign purchasers... adding a processing supplement for the increased costs involved with the extra paperwork and revenue lost due to exchange rate fees.

 

[too much coffee]

OK.....there is a Federal Excise Tax that is part of the import duty paid to US Customs. So that's already being paid.

That's all we're asking for is for purchasers in the US to be exempt from the VAT when purchasing from the UK. Since Aero and Eastman do not segregate the VAT (which is 20%) from their selling price to the American consumer, take the 20% off the purchase price. As far as any supposed increased costs involved with paperwork & revenue lost to exchange rate fees, that can be addressed as a separate issue.

Matter of fact, my last Aero jacket I purchased I did so with an American Express Card. Aero charged me some money to cover the exchange rate fees. So maybe that's already being accomplished across the board. If so, any extra paperwork in this day and age of automation should be miniscule at best.

Regards,
coffee


Edit: The more I think about it...........I may be wrong. I stated that Aero charged me for the currency conversion. It may have been American Express.

 

[SuinBruin]

Aero and Eastman probably need to look up the accounting software that can cope with removing the VAT for foreign sales with out adding to their overheads, if it does they could add a foreign orders processing fee surcharge.

I will save Aero and ELC the trouble. All they have to do is divide the advertised price by 1.2 for each foreign sale. The result is the VAT-free price. Keep a copy of the invoice and the shipping/customs papers in case of an audit and presto! VAT-free foreign sales. ELC and Aero make the exact same margin they do on domestic sales (which they should be willing to do, seeing as how they are willing to sell in the US at a discount via HPA and, formerly, Mark Moye), and foreign customers are more inclined to buy from them due to the lower price. Seems like a win-win.

Or, they can keep doing what they're doing and reap their undisclosed 20% bonus.

 

[Worf]

ELC doesn't make things in my size so that's moot. There were several Jackets at Aero I was interested in. A 20% reduction would make it FAR MORE attractive a proposition to me, and would likely lead to a sale. Simple math, cut out the VAT to overseas customers, make more sales. Now that makes sense. If I were them I'd be trumpeting this from the rooftops.

Worf

 

[Graemsay]

You could order your jacket through Insurrection. They're currently charging $1099, which works out at around £700. This is a bit more than it would be direct from Aero, but customs duties would already have been paid, and shipping will be cheaper. Ironheart also have a flat price worldwide, but include shipping within that.

I suspect that some of it is to do with higher costs associated with an export, be they credit card fees, writing a customs declaration, and possibly postage, as John Lever pointed out in the original thread on VLJ.

If you're happy paying Aero's or ELC's prices then buy a jacket from them. Given that neither company is particularly large or a household name, I doubt that they're engaged in rampant profiteering. And, yes, I appreciate a 20% discount would be nice.

If you're not then Goodwear, Lost Worlds, Bill Kelso and so forth offer similar styles without any surcharge. I'm sure that they'd accept any sales you put their way. (Unless Goodwear aren't taking orders again at the moment. )