European backers, Reward tiers, Duty and Tax hassle

[Svetlovska]

Just an aside: All this earnest discussion about differential nation-state tax rates makes me realise that this community is no longer in the first flush of youth (disclosure: I'm 49). Either that, or it's the prologue to another interminable Star Wars reboot.

[SDX]

I am also willing to go for 65$ level up from 15$, but this uncertainty with taxes and final price for now is putting me off from any physical tiers.

[infestor]

i think it's high time we have have someone from inXile have an explanation/share thoughts here. it seems that this customs issue is putting off many non-us backers.
as for me, i will abide the danish customs and am prepared to pay 25% monstrous customs fee. i gotta have that box! but the customs tax still hurts!

[ButchinMelancholy]

I wonder what's the difference between them shipping me a 50$ game and someone in China shipping me some 30$ CD? Because I have never paid myself any tax fees before apart from the shipping costs (which are supposed to be 15$ here).

I'm from France by the way (does it changes anything?).

Annoying matter...

[Vaux]

I wonder what's the difference between them shipping me a 50$ game and someone in China shipping me some 30$ CD? Because I have never paid myself any tax fees before apart from the shipping costs (which are supposed to be 15$ here).

I'm from France by the way (does it changes anything?).

Annoying matter...

French custom don't check automatically airmail.

[Egg-shen]

I wonder what's the difference between them shipping me a 50$ game [...]
I'm from France by the way (does it changes anything?).
Annoying matter...

you pay 50$ for the game + 15$ shipping and maybe you'll have to pay the TVA (french tax) 19.6% of 65$...and sometimes a bonus (10-15euros charged by dhl recently) if you choose such delivering companys.


-sinon c'est pas appliqué souvent par chez nous pour des trucs de moins de 100 euros envoyées de facon classique, les douaniers se basent sur la valeur déclarée, et regardent pas tout alors que pour des boites comme ups/dhl c'est automatisé.

[Mabec]

I can't make my 1000$ Pledge if it turns out i have to pay custom taxes on top of that.
Please, someone from InXile, shed some light on this topic before the time runs out.

[talkingcrows]

QUESTION
If I have a $1000 pledge,do I get A...
...ere is $50 less for the cause.
Can you give me any answers on this?

I do not know exactly how Kickstart works, but I believe you aren't able to select the $1000 pledge reward because it's "full". 100 of the 100 available rewards have been given. If you had it chosen before, one should have freed up when you deselected it to allow you to re-select it. Unless some lighting finger got to it first, better double check which reward you have selected and possibly contact inXile/Kickstart for further assistance.

P.S. Sorry to hear about you getting scammed. As I understand it, you do get the reward you select and all the previous rewards as well (since the previous reward also gives you the previous reward), except with the new $2500 reward which doesn't give you previous rewards. This is a little off topic so I advice you to make a new topic if you wish to continue.

Thanks man.I should point out ,the scam was in no way related to this site whatsoever.

[JakBot]

I received an astonishingly fast reply from our (Finnish) customs office. For some reason the message was tagged as "For receivers eyes only" so I can't paste it here, but the main points were:

1. They can't be classified as gifts (So taxes and duty fee must be paid for under 45 € products as well).
2. They would need a better understanding of the financing behind Kickstart projects to answer more precisely, but most likely the value will be determined using this table (In Finnish):
http://www.tulli.fi/fi/yrityksille/tuon ... /index.jsp
It states the value of the product will be determined by the value of the same or similar products.

What this means is that at least here in Finland we will have to pay taxes and duty fees from the determined value of the products we receive. I imagine that at a best case scenario that could roughly mean; Normal game: 30 € -> VAT/Duty: 7,95 €, Collector's Edition: 40 € -> VAT/Duty: 10,60 €.

The best choice would still be that, what ever company inXile will use to ship these products, they would include a recipe that would only include rough estimates of what producing the physical items cost. I fear this is way too early for inXile to have an answer to this question as a week ago they had no idea were they even making this.

@talkingcrows
No problemo.

[Ekaros]

I received an astonishingly fast reply from our (Finnish) customs office. For some reason the message was tagged as "For receivers eyes only" so I can't paste it here, but the main points were:

1. They can't be classified as gifts (So taxes and duty fee must be paid for under 45 € products as well).
2. They would need a better understanding of the financing behind Kickstart projects to answer more precisely, but most likely the value will be determined using this table (In Finnish):
http://www.tulli.fi/fi/yrityksille/tuon ... /index.jsp
It states the value of the product will be determined by the value of the same or similar products.

What this means is that at least here in Finland we will have to pay taxes and duty fees from the determined value of the products we receive. I imagine that at a best case scenario that could roughly mean; Normal game: 30 € -> VAT/Duty: 7,95 €, Collector's Edition: 40 € -> VAT/Duty: 10,60 €.

The best choice would still be that, what ever company inXile will use to ship these products, they would include a recipe that would only include rough estimates of what producing the physical items cost. I fear this is way too early for inXile to have an answer to this question as a week ago they had no idea were they even making this.

@talkingcrows
No problemo.

On other hand once shipped they would have pretty clear picture.

Still my belive is that cheapest way is to import them to some location with low VAT+toll and distribute from there... Also price of shipping can be considered, likely it could be cheaper...

[imhotep]

1. They can't be classified as gifts (So taxes and duty fee must be paid for under 45 € products as well).
No problemo.

This is not true. As stated in the official guide (in English) (on page 8, the section on "The lowest amount of customs duty and tax levied"), if either the tax or the duty is below 10 €, it is not collected. For VAT, this limit will change in 2013 to 5 € due to new legislation (in Finnish, 101 b §).

In plain english this means that there are duties and taxes only when the value including shipping is over some 43 €, since the 23 % VAT is the larger percentage. In 2013, this becomes some 21 €. (One can calculate more precise limits, but the value will depend on the USD-EUR exchange rate). ADDITION: And the VAT is about to be risen to 25 % according to recent news.

2. They would need a better understanding of the financing behind Kickstart projects to answer more precisely, but most likely the value will be determined using this table (In Finnish):
http://www.tulli.fi/fi/yrityksille/tuon ... /index.jsp
It states the value of the product will be determined by the value of the same or similar products.

I stated this worry already in my previous post.

The Finnish Money Collection Act (in English) and Government Decree on Money Collections (in English) do not know of these types of fund-raisers to companies. In addition, you have to apply for this sort of a licence from the Police. Hence, the logical conclusion is that the full donation amount can only be viewed as a payment for the reward. And for paid products, the duties and taxes are primarily based on the paid price, not the value on our market.

Considering the true intentions behind this Kickstarter, I feel it is better to collect tax and duty only from the value of the product, if that is a decision the customs can live with (at this point). Based on your translation of their letter, that interpretation might change, however.

[Mabec]

Well, shouldn't we just have to pay custom/taxes for the physical items only that we receive? No?

I mean, really, pay 30% (or whatever the amount is) extra if you happen to live in sweden and Pledged 10.000 USD (OR MORE)

It doesn't make a whole lot of sense to me.

[imhotep]

Well, depending on the country the legislation has not necessarily yet caught up with the pace of these new ideas arising in the internet. Who wants to be the first to set an example for the legal system?

[ButchinMelancholy]

you pay 50$ for the game + 15$ shipping and maybe you'll have to pay the TVA (french tax) 19.6% of 65$...and sometimes a bonus (10-15euros charged by dhl recently) if you choose such delivering companys.


-sinon c'est pas appliqué souvent par chez nous pour des trucs de moins de 100 euros envoyées de facon classique, les douaniers se basent sur la valeur déclarée, et regardent pas tout alors que pour des boites comme ups/dhl c'est automatisé.

Cela veut dire qu'il y a moyen pour nous de ne pas rencontrer ce genre de problème?


I don't really understand why there is this issue though. What's the difference between them shipping the item directly by their own or when you buy it on a web retail place? All those taxes are included in the price of the item, and you just pay some additional shipping costs eventually. So what is all this (common...) fanciful convoluted legislative mess?

[JakBot]

The Finnish Money Collection Act (in English) and Government D...
...es are primarily based on the paid price, not the value on our market.

I'm quite sure if it came to that, it could very well be challenged. It would be a hassle though and in the worst case it could end up in court. I also don't think that Finnish law/licenses need to be followed/acquired for fund raising in foreign countries thus such licenses should not play a role when determining the value of an imported product. I sent back a message to our customs office clearly stating the idea behind Kickstarter and as refined examples of $65 and $265 deals that I can come up with. Lets see if they reply as fast as they did with the previous message.

One question did pop in to my mind which could matter a great deal legally: Does kickstarting a project set any legal demands for the project starter? Do they have to finish the product? If they can't, do they have to return the funding? As I guess the answers are no, no and no the original pledge can easily be defined as donation.

[imhotep]

I also don't think that Finnish law/licenses need to be followed/acquired for fund raising in foreign countries thus such licenses should not play a role when determining the value of an imported product.

Perhaps so, but it would be difficult to claim the money transaction related to the shipment to be a donation when such donations for non-humanitarian aims and with rewards cannot exist in our country.

I sent back a message to our customs office clearly stating the idea behind Kickstarter and as refined examples of $65 and $265 deals that I can come up with. Lets see if they reply as fast as they did with the previous message.

I will be nice to hear their response. But we should keep in mind that it does not constitute a final decision which may only come from a courtroom.

Cutting some corners, basically any item bought from outside EU could hereon be just a gift for backing leading to massive duty and tax losses. I am pretty sure that will not be permitted ever. At least, there will have to be some sort of process to validate that it is actually this type of a backing to let it be treated differently. E.g., the requirement for a fund-raising licence here in Finland.

[SDX]

SOLUTION?
What if the final delivery is made from within the European Union? If all EU deliveries are sent out from within EU then I think by free trade rules there are no additional taxes for the recipient.
Am I right?

[infestor]

SOLUTION?
What if the final delivery is made from within the European Union? If all EU deliveries are sent out from within EU then I think by free trade rules there are no additional taxes for the recipient.
Am I right?

you're right but they still need to send the material to EU. then inXile will pay all the customs fee. they can also manufacture the materials in EU straight away but this seems rather a long shot.

[imhotep]

SOLUTION?
What if the final delivery is made from within the European Union? If all EU deliveries are sent out from within EU then I think by free trade rules there are no additional taxes for the recipient.
Am I right?

Infestor already suggested that. That could be a good solution. The third-party will most likely have to import the items into EU paying duties (a few percent). The third-party may avoid paying the VAT if the value of the product is low enough, or if they operate from an advantageous location that is not part of the tax territory but of the customs territory of the union, e.g. Jersey.

Even with this arrangement, individual nations or some companies within those nations (angry publishers perhaps) still might want to sue that third-party on the basis that the end-user pays this large sum, but the company imports the product as a low-priced item and tries to avoid VAT. (The argument being that of my previous posts).

[imhotep]

The undeniable facts of the situation are that a backer sends a company (outside EU) some money and then, for that action, receives a tangible good (within EU). Without that money transfer, he/she cannot receive the item from the company.

Now the question is, how his/her money transfer is legally treated in his/her country and how it affects him/her.

Most importantly, is the transferred money, the pledge, in this respect

• a donation: no (at least in Finland). Counterarguments are already given above.
• a gift: no. Legally a gift has no expectation of repayment.
• an investment: no. You do not get ownership, stocks or any other asset.
• a loan: no. The capital is never paid back.
• an inheritance: no. Not applicable.
• a payment: Yes. Nothing excludes this possibility and no other categories match.

If one insists that the boxed game is the return for an investment or a loan, then one most likely would have to pay some sort of capital gains tax. Moreover, the expected sales price of the game would be evaluated to well exceed the pledge (the investment) so that this would not be a fraud. Then the boxed game, with this kind of a value, would be crossing the border of the EU. There could be some import duties to be paid too... And the company is clearly saying that it is a donation to them, so how could it be a loan or an investment.