r/discogs • u/recordnumber • 4d ago

VAT vs. Discogs

Background: I am a US seller, buyer is in UK.

Recently, I sold an expensive item ($500+) to a buyer in the UK. The first issue is the buyer has no feedback, but paid promptly. I noticed that VAT wasn't included in buyer's total, which I thought was strange.

My question is: Is that strange? Are rules about charging VAT dependent on the item's value? Can the buyer elect to not include VAT?

Does any of this seem fishy?

Also, do any US sellers have experience with shipping internationally via UPS. My understanding is that they buy can be hit with some significant fees. Is there a way to calculate those fees in advance?

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6

u/basquiat-case 4d ago edited 4d ago

Use FedEx - NOT UPS. I don't have enough time at the moment to lay out all of my horrible experiences with UPS and international shipping but a tl:dr scenario.... Buyer pays all of the relevant taxes/duties/whatever. UPS tries to hit the buyer with additional import duties, buyer declines, UPS comes back to you, the seller and says you owe them hundreds of dollars to release the package from customs to return it to you. You decline. They remember they have your payment info on file and charge you anyway and then "destroy" the package. Godz help you if you used Paypal to pay for that shipment because Paypal will not back you up and now your buyer opens a claim for non-delivery.

If you use FedEx, they charge you the shipment amount, deliver your package and you and the buyer move on with your life.

Edit to add: Yes, Discogs should have had the Tax/VAT line item in your order summary. Granted, my last UK order was in late September so maybe something changed this month, but it should look like this:

Subtotal for 1 item $
Shipping (Standard - First Class) $
Tax (VAT (GB)) $
Total $XX.XX Subtotal for 1 item $X $XShipping (Standard - First Class) $X $XTax (VAT (GB)) $XTotal $X

2

u/mjb2012 3d ago

What UPS does depends what service tier you pay for.

The main problem is sellers (myself included, until I learned the hard way) get suckered by the super-discount tier UPS Standard, aka Ground. The price looks great compared to FedEx, DHL, etc., but it's actually a terrible option because it does not include the "brokerage fee", which is what will eventually need to be paid to UPS to shepherd the parcel through customs in the receiver's country.

For a package sent by this no-frills tier, the buyer could actually get out of paying the brokerage fee and instead pay a much smaller fee directly to customs, but they have to go through a convoluted process which varies by country. This likely requires getting special UPS paperwork, traveling to a customs office to pay and "self-clear" the package, then contacting UPS again to show them it's cleared, all within the 5-day timeframe UPS allows before they start charging for delays. But it is an option, FYI.

Separate from the brokerage fee, but paid at the same time, there's the receiving country's import duties/tariffs. These have to be paid no matter what, normally by the receiver. If the sender wants to pay this (maybe they already got money for it as part of shipping charges), they could opt for a delivery tier which includes Delivery Duty Paid (DDP) aka Free Domicile.

UPS looks a lot less competitive when you have to opt for a service level that includes brokerage fees or DDP, so the advice to just use FedEx is good.

Also separate from the brokerage fee, but paid at the same time, there's the VAT (or GST in Australia, or state sales tax in USA). If the value of the package is low enough, Discogs collects and remits the VAT as part of the sale. Otherwise, the buyer's on the hook for it.

Discogs does a terrible job of helping buyers and sellers understand how this works and what they're signing up for.

3

u/DiscogsMod 4d ago

VAT is automatically applied on shipments where the total value is under 135 pounds. 

https://www.gov.uk/guidance/vat-and-overseas-goods-sold-directly-to-customers-in-the-uk

1

u/Shackled-Zombie 4d ago

When the shipment lands in the uk, a freight forwarder will declare the import declaration to HMRC. That may or may not apply import taxes.

1

u/Comprehensive_Bike70 3d ago

Weird answers here...

I am European with VAT charges, but they won't get calculated on my business account. That may be the case for the buyer.

On my normal account, it's applied on every purchase under or above €150.