Differentiated taxation?? With regards to a watch purchase

[liner33]

Could someone explain what differentiated taxation is and how it applies with regard to a purchase subject to vat??

I'm buying a watch and one of the dealers replied with this

Me - Can I confirm the price listed is plus vat @20% for UK sales . Thanks


Seller - Greetings.
4080EUR + 90EUR shipping is final price. No additional taxes and fees.
We work on differentiated taxation. All our watches are VAT free. VAT is not refundable. You do not need to pay VAT

[anonymous-user]

Is it a used watch?

[liner33]

JPJPJP said:

Is it a used watch?

No its new , after some research it looks like the company is registered in Hungary so I assume its taxed at source which is lower than the 20% vat

[anonymous-user]

"Differentiated taxation" in the case of VAT usually means different rates of VAT on different types of goods.

The standard rate of Hungarian VAT is 27%, but reduced rates of 18% or 5% apply to some things.

18% applies for certain foodstuffs; some take away food; admission to certain open-air concerts.

5% applies for certain foodstuffs; pharmaceutical products; some medical equipment for disabled persons; books; newspapers and periodicals; some social housing; district heating; some supplies of new buildings; restaurant and catering services; internet access services; certain writers and composers services; accommodation services from hotels, B&B and house sharing.

I can't see any watches in there so it's not obvious what's going on. "VAT free" sounds unusual.

[Simpo Two]

rockin said:

I can't see any watches in there so it's not obvious what's going on. "VAT free" sounds unusual.

May be rolled into the price so you can pretend you're not paying VAT. Looks better against competitors.

[Mr Pointy]

Surely Hungary is in the EU so there wouldn't be any additional VAT payable, just as if it was coming from France or Germany? Mind you, now that we aren't I'm not sure what the situation is. I'm pretty sure everything coming from the EU isn't getting hit with VAT when imported.

[Simpo Two]

Mr Pointy said:

Mind you, now that we aren't...

Currently everything is just the same; we are, to all practical purposes, still in the EU until at least 31 Dec, and I wouldn't be at all surprised then if some infinitely infinite 'transition extension' scheme is cooked up so we never actually leave. In short, I'll believe it when I see it.

[liner33]

The confusion for me was/is that the company has a London Address , so the purchase would be subject to vat ,

So "All our watches are VAT free. VAT is not refundable. You do not need to pay VAT" would not be correct

I thought I had it sussed realising the watches are shipped from Hungary but if they have vat at 27% its no clearer

[Simpo Two]

You could cut out the complicated bit in the middle and just ask yourself 'Is it worth 4080EUR + 90EUR shipping?' If it is, buy it, if not, don't

You might like to ask about import duty though.

[liner33]

Simpo Two said:

You could cut out the complicated bit in the middle and just ask yourself 'Is it worth 4080EUR + 90EUR shipping?' If it is, buy it, if not, don't

Give or take plus 20% you mean which is kinda key here

[Simpo Two]

liner33 said:

Give or take plus 20% you mean which is kinda key here

Can you personally reclaim VAT?

ETA If they won't issue a VAT receipt you can't reclaim it anyway.

[Mr Pointy]

Simpo Two said:

You could cut out the complicated bit in the middle and just ask yourself 'Is it worth 4080EUR + 90EUR shipping?' If it is, buy it, if not, don't

You might like to ask about import duty though.

There's no collectible duty on watches. The duty payable is around 80 eurocents which is below the threshold for collection. VAT is 20% of course for watches brought in from outside the EU.