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UK purchases of sample sets from EU suppliers from 1/1/2021

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IainStinson

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UK purchases of sample sets from EU suppliers from 1/1/2021

PostThu Dec 31, 2020 4:59 am

UK purchases from EU sample set suppliers now the UK is not in the EU

On January 1st 2021 the UK will have completely left the EU: the transition period will have come to an end and the new EU/UK trade arrangements will have come into play.

Does this mean that sample set purchases made from January 1st 2021 from an EU company should be treated the same way as a purchase from a non EU country? As far as I can tell software and sample sets are not covered by the EU/UK trade deal. Sample sets would be subject to UK import VAT and possible excise duty that would have to be paid by the purchaser to the UK government rather than being charged by the sample set supplier. (There are other rules for sales less than £135 in value…)

Is this correct?

Does anyone know the accurate position?

Iain
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dhm

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Re: UK purchases of sample sets from EU suppliers from 1/1/

PostThu Dec 31, 2020 11:26 am

I don't yet know the exact position, simply because I didn't see much point in getting prepared before we knew what the deal (if any) was going to be.

What I can say is that I will continue to represent OrganArt Media, Sonus Paradisi and Voxus Organs, so that UK customers can, if they wish, purchase those products through my online store (http://en.midi-organs.eu/index.php/shop ... ample-sets) with all-inclusive prices in GB£ - at least so far as downloads are concerned.
I'm guessing the situation would be different where physical media (DVD or USB sticks) was concerned, and I will take further advice on that.
Douglas Henn-Macrae
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srw647

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Re: UK purchases of sample sets from EU suppliers from 1/1/

PostThu Dec 31, 2020 5:34 pm

Does anyone suppose the UK government knows the right answer?

There are EU suppliers of physical goods who are currently refusing to supply them to UK consumers because the UK government demands that they register for UK tax. I guess we'll find out over the next few months whether we'll rely on UK resellers being willing to do the hard work for us or whether an easy way of buying virtual goods will be found.
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dhm

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Re: UK purchases of sample sets from EU suppliers from 1/1/

PostThu Dec 31, 2020 5:54 pm

Just to add to my previous post above, and to clarify:
If a UK customer buys an EU producer's sample-set from me, I give the customer a download link and an iLok activation code (provided to me by the producer).
The UK/EU agreement says trade will be tariff-free, so I'm assuming that means no import duty.
Therefore, provided there are no drastic changes to £/€ exchange rates, or UK VAT, there should be no major changes to UK prices.
Douglas Henn-Macrae
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burtonwurli

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Re: UK purchases of sample sets from EU suppliers from 1/1/

PostThu Dec 31, 2020 8:02 pm

There should be a change in all VAT rates. My understanding has always been that a percentage of VAT charged went into the EU coffers. If not then the UK governemnt will be pocketing it.
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JulianMoney-Kyrle

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Re: UK purchases of sample sets from EU suppliers from 1/1/

PostFri Jan 01, 2021 10:37 am

If a proportion of VAT charged in the UK on EU imports has been going to the EU, I doubt very much if it will now be returned to the customer. The Government is in so much debt at the moment as a result of the pandemic that I would imagine they would jump at the chance to collect additional revenue without the taxpayer noticing that anything was amiss. There is a long history of stealth taxes and confusing ways of calculating liability so that it isn't obvious just how much we are all paying in tax. For a while I was earning enough to reduce my tax-free allowance, which effectively meant that I was paying 60% income tax on part of my earnings, even though the top rate of tax was officially 45% and I wasn't earning enough to be liable for that. When I tried to explain this to people they mainly didn't believe me, essentially because the arithmetic required wasn't entirely straightforward.
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IainStinson

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Re: UK purchases of sample sets from EU suppliers from 1/1/

PostFri Jan 01, 2021 12:59 pm

From some “research” it would seem that where goods over £135 in value are purchased from outside the UK, including the EU, the purchaser will be charged import VAT and duty by the UK government on the item being imported. Usually the supplier does not charge sales tax (or VAT) on items they sell for export. The payment of the import VAT and duty is usually paid to an agent in the UK before the goods are delivered to the customer.
(When the UK was in the EU the supplier charged VAT (at the appropriate rate) at the point of sale and the customer got the goods without any further payment.)
(See https://www.gov.uk/guidance/vat-and-ove ... nuary-2021)
For goods worth less than £135, the supplier can register for UK VAT and charge the VAT at the time of purchase saving the purchaser from having to deal with import payments.
(You can see this in action if you try buying some items from a company such as thomann.de.)

Sample sets and other software which is delivered on physical medium are regarded as ‘goods’. However, sample sets and software supplied as a download only are considered as a ‘digital service’ and importing digital services is different to importing ‘goods’.

Again from my ‘research’, digital service suppliers would not be expected to charge VAT or sales tax on the downloads and the responsibilities for paying the import VAT and duty rests with the UK based consumer. The supplier can register for UK VAT and charge customers UK VAT on their purchase, absolving the purchaser from any other payment to the UK for importing the software / sample set. The supplier has to pay the VAT to the UK government. (See https://www.gov.uk/guidance/the-vat-rul ... ide-the-eu).

My expectation is that EU sample set suppliers offering download only purchase will treat UK purchasers in the same way as they treat other non-EU customers, giving us the responsibility of paying import VAT and duty.

UK companies selling sample sets made outside the UK can of course deal with these ‘complications’ for UK purchasers.

If you live in Northern Ireland part of the UK but within the EU single market still, well.....

Comments, corrections and new information welcome.

Iain
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Re: UK purchases of sample sets from EU suppliers from 1/1/

PostTue Feb 02, 2021 11:47 am

Well it looks like Sonus Paradisi aren't selling to the UK any more :-(

I've just tried to get some Impulse Responses and was directed to the reseller page- but Douglas' page only show lists of instruments and not the IRs.

One day it's cheese, next it's organs and impulse responses.

We can't travel to Europe for real at the moment, and neither, it seems can we do so virtually!
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dhm

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Re: UK purchases of sample sets from EU suppliers from 1/1/

PostTue Feb 02, 2021 1:11 pm

rogbi200 wrote:Well it looks like Sonus Paradisi aren't selling to the UK any more :-(

I've just tried to get some Impulse Responses and was directed to the reseller page- but Douglas' page only show lists of instruments and not the IRs.


Thanks for pointing that out., and my apologies - it had never occurred to me to put anything other than sample-sets in my SP shop pages. If Jiri sells them, I ought to be able to offer them too. So I'll check that out. Give me a day or two...
Douglas Henn-Macrae
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Theorbe

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Re: UK purchases of sample sets from EU suppliers from 1/1/

PostWed Feb 03, 2021 5:43 am

As far as I'm aware, hauptwerkshop.de are still selling sample sets to UK and their prices are the cheapest I've found. Their website is only in German so you may need to use a web translation tool.

Andy
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JulianMoney-Kyrle

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Re: UK purchases of sample sets from EU suppliers from 1/1/

PostMon Feb 08, 2021 4:41 am

I recently tried to purchase the new Noordbroek set from Sonus Paradisi, and the site wouldn't let me as I am based in the UK. Instead I was directed to DHM Organs, who are the official UK reseller. However, the price I was quoted was 30% higher than the price on the SP Web site (which was inclusive of Czech VAT at a rate of 21%, which is marginally higher than the UK's 20%). Part of this was that there is no system in place for applying the loyalty discount that SP offers to customers who have previously spent more than £2,500 euros with them, and part of it was presumably Douglas's fee, which I don't begrudge as he has always given me very good service and I know he has costs to cover. The difference probably also included a charge for converting the currency, and of course UK VAT is chargeable on the final total (e.g. if you import something that is liable for import duty then you pay VAT on the duty itself, as I found out when I bought my CMK keyboards from Classic Midi Works in Canada).

However you break it down, 30% is a huge premium to pay, and in the case of Noordbroek it moved it from the "well under £200, worth a punt" category to the "this is serious money - only worth it if it turns out to be unusually good" category. I am particularly upset by this as I had planned to buy St. Martinikerk, Groningen for myself as a birthday present, but now that the price that I would have to pay has risen by nearly £300 that is hard to justify. I took a big and unplanned hit in income when I had to give up working and take early retirement because of cancer, and expensive hobbies are a casualty (hearing loss as a result of chemotherapy is another, but that is a different story).
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Re: UK purchases of sample sets from EU suppliers from 1/1/

PostMon Feb 08, 2021 6:15 am

I succesfully purchased Noordbroek from hauptwerkshop.de
No problems, great service. Seems to be the best price for UK based buyers as well for the majority of samplesets.
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Re: UK purchases of sample sets from EU suppliers from 1/1/

PostMon Feb 08, 2021 7:13 am

I have had email discussions with Sonus Paradisi about this, and Jiri's position is that he will not sell to the UK because he understands that he would have to register with the UK government and pay them the appropriate amount of tax which he would charge his UK customers. He does this for Switzerland and has found it costs him money and time to do this. He suggests using a dealer, but dealers are unable to obtain and pass on the discount "regular" SP customers have built up over the years. I asked if he sold directly to the USA and he said that he did (and that USA thresholds for him to register for tax are much higher than the UK's threshold).

DH-Midi's price for the Noorbroek set in the UK is £215. The price on the SP site, excluding tax price is 179 Euro. In the UK it would cost about £164 to purchase 179 Euro from the UK Post Office. With UK VAT at 20% this brings the total cost to £196.80, which is 92% of the price from DH-Midi. I don't know if there is also import duty to be paid by the dealer. I understand that the downloads go into you SP account.

As others have said, hauptwerk.de sells to the UK (Vereinigtes Königreich). They list the cost of the Noorbroek sample set as 183 Euro including 19% sales tax. 190 Euro from the UK Post Office cost £173. The PayPal fee for currency conversion is 0.5%.

I suppose there is a risk that the UK Government will try to recover import VAT on such a purchase if hauptwerk.de are not registered with the UK tax authorities. On their ordering system de.hauptwerk do say that "BEI LIEFERUNG INS NICHT-EU-AUSLAND KÖNNEN ZUSÄTZLICH ZÖLLE, STEUERN UND GEBÜHREN ANFALLEN (==ADDITIONAL DUTIES, TAXES AND CHARGES MAY APPLY FOR DELIVERIES TO NON-EU ABROAD)" I think you collect the downloads from hauptwerk.de.
Iain
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JulianMoney-Kyrle

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Re: UK purchases of sample sets from EU suppliers from 1/1/

PostMon Feb 08, 2021 4:28 pm

I can quite understand why Jiri does not want to be involved with the British taxation system.

DHMidi's price works out at a little under 9% more than buying from Sonus Paradisi direct, which I think is fair given all the trouble involved and the service Douglas provides. However, when you factor in the loyalty discount, the price from SP directly including taxes, is just over £169 as calculated by PayPal. The difference, £46, is just over 27%, which is quite a difference.

I have also looked at Groningen, and in fact it would cost me £220 more, not £300 as I had first thought, though still a lot of money.

I predicted that this sort of thing would happen before the Brexit vote, which is one of many reasons why I voted to remain. However, I hadn't thought it through to the point of realising the impact it would have on my use of Hauptwerk. I don't think that we in the UK have seen a fraction of the trouble that is in store for us, though. I am also quite sure that the Brexiteers will lay the blame on the Government for not implementing the Brexit that they naively expected would be possible, if indeed they had any notion of what leaving the EU actually meant.
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Re: UK purchases of sample sets from EU suppliers from 1/1/

PostTue Feb 09, 2021 9:45 am

To respond to various points made above:

The tax lawyers among us will please correct me if I'm wrong, but my understanding is that any UK customer buying goods from an EU supplier is liable to pay UK VAT and any applicable import duty on delivery.
However, I believe this applies only to physical goods, and may not apply to software.
If that is so, and Hauptwerkshop.de is operating within the law, then that may be the cheapest place the place to go.
Being a UK VAT-registered trader I still have to charge VAT on everything I sell to UK-based customers.

In the interests of fairness I should probably explain how my prices are calculated.
They are based on the EU supplier's regular retail price in €, but excluding his local VAT.
I convert that to GB£ based on the rates quoted online by Moneycorp (showing the Interbank rate, which virtually nobody ever gets) and the PayPal Currency Converter (which quotes the rate you actually do get). Since most of my online sales use PayPal for payment I have to add the percentage which they charge for payment processing. Then add UK VAT and round up to the nearest £5. (This last step creates a little wiggle-room for minor exchange-rate fluctuations, and avoids having to spend an hour or more every day checking rates and updating.)
I have updated some of my prices today.

As regards Jiri's IRs, there are too many of them to list individually, but I'm happy to quote prices on request to anyone interested.
Douglas Henn-Macrae
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