VAT charged to a non EU resident?

[go930user]

Hi,

Upgraded the Oz map to the latest version and bought the 12 month subscription ( which included a 6 month gratis extention ie 18 months of upgrades for 12 months cost)

Was surprised to see on the invoice (provided after payment via Amex) that the invoice had VAT added.

Now I don't object to paying my fair share of taxes - but I am not a resident of an EU country!

Has anyone else who is not an EU resident had a similar experience? One wonders if the VAT is remitted to the appropriate Government.

I have asked a question of Tom Tom. I'll keep the forum informed about the response (If any!!)

Cheers

Go 930 user

 

[dhn]

Yep, We Canadians get nailed with the same 20% VAT when we make a map purchase...........

 

[go930user]

Well this bears some investigation, mainly because, as I understand things a country can only levy taxes against residents of the country, or group of countries having put in place legal agreements, which I understand is the case for the EU group - in this case the Netherlands being a part of the EU group can charge VAT to any resident of an EU country and remit this "tax" to the Netherland's Government, which country is part of the EU.

If I were the CFO of Tomtom I would certainly be keeping track of all purchases from outside the EU since any VAT received would not be remittable to a Government. And it seems that they are charging VAT to non EU residents.

If in any 12 month period a couple of million non EU Tom Tom users upgraded maps at, say, $50 equivalent this would amount to $20,000,000 in income that legally would have no-where to go.

Go Figure

Cheers

Go 930 User

 

[Arno]

Well this bears some investigation, mainly because, as I understand things a country can only levy taxes against residents of the country,

I don't think it is a question of residence but rather the location of that purchase.
(When visiting one must pay but can get a form for a refund to be certified by a customs officer upon leaving the territory where the Act is applied, e.g. att he Airport boarding an overseas flight)

I presume that TomTom's council interpretes the Act as a delivery of the goods within the Netherlands once made available for download from their servers as they do not access the computer in a foreign country and upload the programmes to individuals.

I used to be upset when they wanted EUR 90+ VAT for a NA map but now, that is has come down to a year's subscription, including update to current map and VAT for EUR 64 I stopped crabbing.

 

[canderson]

As you noted, the EU point of sale is not relevant to those outside the EU. For the same reason that I am able to reclaim my VAT for articles I purchase in Europe and take with me back to America, there's no excuse for TT to be charging me EU VAT for a product that is bought over the net and used here. The little $ that they will lose due to strange proxy routing is a drop in the bucket. They can use IP addresses to make the EU/non-EU decision.

 

[go930user]

Hi Arno,

Yes, a sale to a person physically present in an EU country gets VAT added since the seller can't be certain of the ultimate location of the goods, but as you point out the VAT can be reclaimed when the purchaser exits the EU at the point of departure.

But (normally) VAT doesn't get added to goods that are exported, and where a customer is buying from a country outside the EU, for delivery to a non EU location, then I don't think that VAT is chargeable, irrespective of where the goods "originate". Indeed as the "goods" enter the non EU country the authorities could charge local duties and taxes if they wished (and had the capability to "know" about the transaction). Then the hard suffering purchaser would be getting taxed twice.

But I take your point about TT's interpretation, because it is their financial interest to make such a decision, given that the "tax" moneys they get are not legally payable to the Netherlands Government (I suspect).

Indeed it would be possible to locate the servers in a tax free environment and then, by their interpretation, no taxes would be chargable at all.

And while the charge at an individual level is small (about $Au12 in my case) when that gets multiplied by a few milion TT owners upgrading maps who are outside the EU, then we are starting to be in the 10s of millions of dollars (or Euros). If it is a million customers (conservative?) then the amount is $AU12,000,000 So, Canderson, we are not talking about a "drop in the bucket" (IMV) - and it isn't a "loss" it is a potential increased profit if TT do not remit these moneys to an authority

Since the Nokia that came with my new cell phone plan has OVi maps with free upgrades for the life of the phone there is some competition now. Currently it isn't as well set up as the 930, but with Nokia's clout I anticipate quite a fast ramp up of capability.

Makes me wonder if, with some OS tweaks, the OVi software would run on a TT hardware platform.

Cheers

Go930User