VAT charges on invoice from French auction house??

[DonnaML]

After 10 days, I finally received an email today from Burgan Numismatique Maison Florange in Paris with an invoice for the Roman Republican coin I purchased in their January 26 auction. The email stated "Please accept our apologies for the delay in sending this letter. Maintenance work by our internet provider has disrupted the smooth running of our business and has prevented us from informing you quickly." OK, fine; at least I have it now!

Here's the problem -- and it's not an exorbitant charge for shipping to the USA as is sometimes known to happen with French auction houses; the charge is 33.33 Euros. The problem is that it's always been my understanding that VAT (TVA in French) is not charged on all or any part of an invoice for items exported by mail from France, or any other country that charges VAT, to the USA. Although the invoice does not apply a VAT charge to the hammer price for the lot, it does add a purported 20% VAT charge both to the 15% buyer's commission and to the shipping fee.

This can't be correct, can it? No European seller has ever before tried to charge VAT on any part of an invoice. I highly doubt that there's some distinction between the cost of the goods and the buyer's commission and shipping fee that permits Burgan to charge VAT on the latter.
Rather than writing to Burgan to request a corrected invoice minus all VAT charges, and have to wait who knows how long for it, I have informed Burgan that I will deduct VAT charges from my payment.  Am I justified in doing so?

[Brennos]

You're right, there's no reason to charge VAT.

[Deinomenid]

It must  be an error or at least something they didn't  know, and can easily rectify.

I buy from 4 different French  houses and have never been charged VAT for US delivery.

[DonnaML]

Thank you. Do you both agree that I should simply deduct the VAT charges from my payment, rather than requesting a corrected invoice and having to wait for it, and possibly have them argue with me about it?

[John Conduitt]

32 minutes ago, DonnaML said:

Thank you. Do you both agree that I should simply deduct the VAT charges from my payment, rather than requesting a corrected invoice and having to wait for it, and possibly have them argue with me about it?

I do that when auction houses stick on the wire transfer fee and I know they won't have to pay one. They have always just sent them out. In theory, they could demand the remainder but it would be an odd amount to annoy a customer over.

[Deinomenid]

57 minutes ago, DonnaML said:

I should simply deduct the VAT charges from my payment

Yes.

 

[DonnaML]

Someone suggested to me on Facebook that certain auction houses within the EU have begun to claim that shipping charges and buyers' commissions constitute "services rendered within the EU" rather than the cost of goods, and, therefore, that VAT is due on those charges even from a non-EU customer who bought the coin online and never set foot in the EU.  But I have been unable to find a single source stating or even suggesting that when goods are shipped by an EU dealer from the EU to a non-EU country such as the USA, the dealer is permitted to charge VAT on ANY part of the costs, including shipping and other extra charges. See https://europa.eu/.../vat/vat-rules-rates/index_en.htm :

"VAT isn't charged on exports of goods to countries outside the EU. In these cases, VAT is charged and due in the country of import and you don't need to declare any VAT as an exporter. However, when exporting goods you will need to provide documentation as proof that the goods were transported outside the EU. Such proof could be provided by presenting a copy of an invoice, a transportation document or an import customs record to your tax authorities."

I see nothing from the EU or any other legal authority indicating that there's an exception for shipping or other extra charges, even if the seller tries to characterize those charges as services provided in the EU country. (In fact, if I paid such a charge I don't see anything indicating that there's any way I could even claim a refund online.) 

So I have put the ball in Burgan's court by already paying its invoice via Wise, minus the purported VAT charges. Which don't amount to much, but this really is a question of principle. I've bought a great many coins online from EU dealers over the last five years, both at auction and at retail, and not a single one until now has had the temerity to try to charge me VAT on any part of the invoice amount. 

I will send them an email pointing that out, and quoting the provision above. Let's see if they make a fuss over a few Euros and insist that I pay before they ship the coin.

 

[panzerman]

I have NEVER been charged VAT ever. They  made an error. VAT is only charged within EU.

 

John

[John Conduitt]

1 hour ago, DonnaML said:

Someone suggested to me on Facebook that certain auction houses within the EU have begun to claim that shipping charges and buyers' commissions constitute "services rendered within the EU" rather than the cost of goods, and, therefore, that VAT is due on those charges even from a non-EU customer who bought the coin online and never set foot in the EU.  But I have been unable to find a single source stating or even suggesting that when goods are shipped by an EU dealer from the EU to a non-EU country such as the USA, the dealer is permitted to charge VAT on ANY part of the costs, including shipping and other extra charges. See https://europa.eu/.../vat/vat-rules-rates/index_en.htm :

"VAT isn't charged on exports of goods to countries outside the EU. In these cases, VAT is charged and due in the country of import and you don't need to declare any VAT as an exporter. However, when exporting goods you will need to provide documentation as proof that the goods were transported outside the EU. Such proof could be provided by presenting a copy of an invoice, a transportation document or an import customs record to your tax authorities."

I see nothing from the EU or any other legal authority indicating that there's an exception for shipping or other extra charges, even if the seller tries to characterize those charges as services provided in the EU country. (In fact, if I paid such a charge I don't see anything indicating that there's any way I could even claim a refund online.) 

So I have put the ball in Burgan's court by already paying its invoice via Wise, minus the purported VAT charges. Which don't amount to much, but this really is a question of principle. I've bought a great many coins online from EU dealers over the last five years, both at auction and at retail, and not a single one until now has had the temerity to try to charge me VAT on any part of the invoice amount. 

I will send them an email pointing that out, and quoting the provision above. Let's see if they make a fuss over a few Euros and insist that I pay before they ship the coin.

 

Apparently, this is a thing. And the tax law is a complete mess.

It seems that if you're a consumer, not a business, then services are charged VAT in the country of sale (while goods, like the coins, are not). If you are a business, it is in the country of the customer. Not confused at all.

It's odd, then, that I (and apparently many others) have never been charged VAT by an overseas auction house. And many auction houses state that VAT is not payable for overseas buyers. Oh, except CNG, who both import the coins into the UK and charge an 'import fee', thereby charging the UK rate of VAT when I should, apparently, be paying the US rate of VAT.

The auction houses could, it seems, say the fee is for consultancy, and then they don't have to charge VAT in their country. Why don't they do that?

I will now be claiming back hundreds of pounds of VAT I've paid to the UK government for coins I've bought at auction, including on eBay, and they've charged me on the gross invoice amount, including any fees, when I should've paid the overseas VAT rate instead.

Except there seems to be something called 'import VAT'. Is that in addition to normal VAT? Do I have to pay VAT to both the French and UK governments? Surely then I'd be paying VAT on the VAT...

Edited February 5 by John Conduitt

[robinjojo]

Those VAT charges are very odd.  Here's a invoice for one of the Commune metals, purchased from Issoire Philatelie last month.  No VAT charges.

[DonnaML]

2 hours ago, John Conduitt said:

Apparently, this is a thing. And the tax law is a complete mess.

It seems that if you're a consumer, not a business, then services are charged VAT in the country of sale (while goods, like the coins, are not). If you are a business, it is in the country of the customer. Not confused at all.

It's odd, then, that I (and apparently many others) have never been charged VAT by an overseas auction house. And many auction houses state that VAT is not payable for overseas buyers. Oh, except CNG, who both import the coins into the UK and charge an 'import fee', thereby charging the UK rate of VAT when I should, apparently, be paying the US rate of VAT.

The auction houses could, it seems, say the fee is for consultancy, and then they don't have to charge VAT in their country. Why don't they do that?

I will now be claiming back hundreds of pounds of VAT I've paid to the UK government for coins I've bought at auction, including on eBay, and they've charged me on the gross invoice amount, including any fees, when I should've paid the overseas VAT rate instead.

Except there seems to be something called 'import VAT'. Is that in addition to normal VAT? Do I have to pay VAT to both the French and UK governments? Surely then I'd be paying VAT on the VAT...

Do we know that France has the same rules and distinctions between business and private customers located outside the EU? Even if it does, although I see the provision about VAT being payable on fees for brokerage and other intermediary services -- arguably applicable to buyers' premiums -- I doubt that VAT can be charged on the postage required to export goods! See this provision: 

"15.2 Intermediary services

You can zero rate the supply of the making of arrangements for:

the export of any goods."

I would think postage would fall into that category.

Even with respect to buyers' premiums, I wonder why EU sellers to non-EU customers have so rarely charged VAT if it's so clearly permitted. People get very annoyed at rising premiums as it is, and if adding at least an additional 4% to them in the form of VAT charges -- 20% of the 20+% premium -- becomes customary, it will not be popular!

 

 

[DonnaML]

@John Conduitt, I received an email from the French auction house this morning apologizing and withdrawing all the VAT charges, both on the buyer's premium and on the postage. So I'm glad I didn't simply throw up my hands and pay it. The total extra amount charged was only about 20 Euros, but this was one case where I thought the principle really was important! 

In any event, I can only conclude that at least as to the concept of charging VAT on the buyer's premium as a service rendered in the country where the auction house is located, either the UK rule you cited is different in France, or there's an exception somewhere for private customers in the United States, or the auction house simply isn't aware of the rule. I sincerely hope that auction houses in the UK (or any other VAT-charging country) don't suddenly get the bright idea from reading this thread that they should start charging buyers an extra 20% of the buyer's premium for VAT! Those premiums are getting way too high of late even without that amount added. An amount that wouldn't even be reimbursable under the rule you cited.

Edited February 6 by DonnaML

[Deinomenid]

31 minutes ago, DonnaML said:

either the UK rule you cited is different in France,

I really wouldn't worry about any new rule. I live in the US with UK businesses and  for ***anything*** for US use I do not  pay VAT. That includes accountancy fees from London  accountants where I'm  charged zero VAT. They, if anyone, should  know what's accepted  practice.

 

[Dafydd]

3 hours ago, DonnaML said:

@John Conduitt, I received an email from the French auction house this morning apologizing and withdrawing all the VAT charges, both on the buyer's premium and on the postage. So I'm glad I didn't simply throw up my hands and pay it. The total extra amount charged was only about 20 Euros, but this was one case where I thought the principle really was important! 

In any event, I can only conclude that at least as to the concept of charging VAT on the buyer's premium as a service rendered in the country where the auction house is located, either the UK rule you cited is different in France, or there's an exception somewhere for private customers in the United States, or the auction house simply isn't aware of the rule. I sincerely hope that auction houses in the UK (or any other VAT-charging country) don't suddenly get the bright idea from reading this thread that they should start charging buyers an extra 20% of the buyer's premium for VAT! Those premiums are getting way too high of late even without that amount added. An amount that wouldn't even be reimbursable under the rule you cited.

Well done @DonnaML sometimes principals can be expensive but I always stick to mine. Often, invoicing is raised using proprietary software that is only as good as the input data and this looks like a genuine error on behalf of the auction house. You may well have saved another collector hundreds of dollars in the future by taking a stand.