Happy Monday everyone! I hope you enjoyed your weekend.
I apologise, as I know this is probably the last thing you want to hear on a Monday morning, but today I want to talk about taxes – specifically the import and VAT that we, as importers, need to pay on goods bought from outside the EU (i.e. from China, USA, India etc.).
And actually it’s this dislike and general avoidance of the subject that has led me to write this post… as I recently received an email from someone distraught about an order they’ve placed because of the VAT and import duty.
Initially they had expected to make a healthy profit reselling the product on eBay, but they had miscalculated the import taxes! That goes completely against one of my main rules when importing – always do all of your calculations BEFORE placing an order, so that you know exactly what it’s going to cost you and how much profit you stand to make.
So today I want to share a simple and straightforward guide to calculating import taxes. Without further ado, let’s get to it!
First of all, exactly what taxes do you have to pay on goods imported from outside the EU?
And yes, this only refers to goods bought from countries outside the EU as imports within the European Union are import duty free. Just so that it’s 100% clear, the EU countries are:
Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the UK.
But when we discuss imports, 90% of the time it’s referring to China, and that obviously means there are import taxes to be paid, which are – VAT (value added tax) and import duty.
VAT is a set amount, currently 20%, whereas import duty ranges from 0% (duty-free) to 15%, depending on the product.
The exact amount is calculated using the product’s tariff code, which is a special number assigned to specific products. And by specific products I don’t mean – doll, clothes etc. I mean really specific, i.e. pyjamas of knitted cotton for boys under 14. [Read more…]