Foreign exchange and tax clarification

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#1

Hi Dan,

So I’m in the UK, and getting really excited for the forge now that there seem to be loads of pre-release units shipping but I have a financial question which is worrying me:

Since I ordered, the GPB has tanked against the USD which means that if I pull out now I’ll get more money back than I put in, but if I stick with it (and I intend to) and glowforge marks the shipment value in USD, then I’ll be taxed on the current dollar value which is WAY more than it was (over 25% more!!). So, my question is, will glowforge please mark my shipment value up with the GBP value I actually paid for it? Pretty please…!!


#2

I am not sure that is possible because I think they charged in USD and your bank did the GBP conversion. Their invoice would have to match what they charged.


#3

Shipment value doesn’t necessarily have to tally with what they invoice. They can invoice in dollars but list the value of the shipment in GBP. Essentially, UK customs want to know what it’s worth so they can tax it accordingly. Since it’'s only worth what I paid for it surely they cant tax me on appreciation prior to shipping?

The difference is massive too. I’d paying the £400 I was expecting to pay plus an additional £500 for the pleasure of having to wait an additional 12 months for the product, and I’m really not sure I can stomach that :frowning:


#4

I hope that is the case as I am in the same boat, but I have never seen a shipping invoice with a different currency to the sale. They probably didn’t even get to see how many GBP you paid as they will have just received USD.


#5

Perhaps they can back date the invoice to the point we actually paid. Customs would then need to use the standard VAT currency tables for that month to work out the GBP value. I have no idea if customs are that sophisticated though. I would be very surprised if they are.


#6

I can send them a bank statement for that of they need something official. That’s not an issue.


#7

Hmm that’s not a bad idea. Back dating the invoice shouldn’t be hard. I’d want to get an HMRC / customs assurance that it’d go through as expected though.

We’re you just going to pay it like?!


#8

I hadn’t thought about the currency change affecting the import duty until you mentioned it.

When I bought it it was for a my VAT registered business, so I would have reclaimed the VAT, but as it didn’t turn up in Dec 15 I closed my business and retired instead.


#9

This might not be possible, it depends on the regulations of the UK.

Speaking of experience for Canada, the duty is calculated on a percentage of the invoice amount. The exchange rate for currency conversion is calculated on the exchange rate at NOON of the date it SHIPS, not the date in which it was actually invoiced at.

If the UK functions in a similar way, the only way you’d benefit from the exchange rate would be to completely cancel your order and (somehow) get it at the same price you originally ordered it at. Since Glowforge is no longer offering the old price, you’d have to pry/buy it out of the cold dead hands of another Glowforge order holder. :grin:


#10

I don’t know the answer yet, I’m afraid - will post here when I do.


#11

Thanks for looking into this Dan. It’s obviously going to affect a lot of us outside US too :frowning:

Side question: if I chose to have it shipped to a US address, would that be OK and would you guys refund the excess shipping?


#12

How does that help? Are you thinking of emigrating to the US to avoid import duty or do you plan to smuggle it back to the UK somehow?


#13

I’m just wondering if theres a creative, legal route, around it to be honest. At the moment I just want to know whats possible :slight_smile:

You mentioned retiring but out of curiosity, is your business still alive? If it were and you were VAT registered then of course you can claim it back… It’s just if it’s a personal purchase.


#14

I think if you carry it through customs yourself you should go through the “something to declare route” and pay the same duty.

I am still VAT registered at the moment and do a very small amount of trade (to support my customers in spare parts) but I can no longer justify it as a business expense unless I start making things to sell with it. However, I don’t think I will be VAT registered by the time my GF is delivered, my business will be closed and I will be drawing my pension!


#15

Yeh if I brought it back by hand I’d have to declare it. Wondering if I could show proof of purchase in GBP at that point though for tax purposes. Only any good if you’re already inbound of the cost of the flight would wipe out the saving.

Are you thinking you’ll just stump up the £900 then chief? I have like £1000 set aside to start my business but I was only counting on £500 max going to pay the tax on GF. This pretty much wipes me out :frowning: hell, the tax and duty I’ll pay on GF would almost pay for a Shapeoko 3 CNC router.


#16

My order came to $4,849.00, so I expect to pay 20% of that in VAT plus perhaps some duty and the courier’s brokerage charge. I don’t resent VAT on imports because it would be unfair competition to domestic companies if imports were VAT free.

So say about $1000 in total. At today’s exchange rate that is £813, but who knows what it will be when it is delivered? At the time I ordered $1000 would have been about £640 so I don’t see as big a change as you.

So yes the currency shift is a pain for this import but then everything I own is in GBP and has lost the same amount of value, so this is just a tiny drop in the ocean.


#17

yeah i’m waiting until they start shipping to figure out how i want to proceed; if they get shipped using UPS ground, for example, i’ll get charged with 20% UPS fee plus 13.5% taxes. at that point it makes sense to cross the border myself and pick it up.


#18

Brokerage charges have always been a fixed amount for the things I have imported into the UK and a lot less than the tax. UPS charge me £11, Fedex £10.50 and Parcel Force £13.50 . Not sure if that goes up when the value gets over certain threshold but certainly up to $1200 that has been the case


#19

here, ups has decided that ground shipping is subject to a brokerage fee, that is, a fee for paying the customs bill for us, of 20% of shipment value on top of any tax owed. for ups express, they waive that fee. it’s heinous.


#20

Crazy because brokerage is just administration and doesn’t change with the value. Here, for low value items they cap it at the item value, so you can pay 50% and that does irritate.