FedEx/VAT and Duty Charges? (Full Version)

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Ted G -> FedEx/VAT and Duty Charges? (Mar. 15 2009 14:28:58)

I just recent shipped a guitar from the US to europe (Belgium) and paid for shipping and insurance. So I just assumed that if there were any more Duties, VATs or additional fees to pay, it would be the responsibility of the recipient to pay, right. However, I just received a bill from Fedex to pay Duty, VAT and Advancement Fees.

Am I missing something?



gj Michelob -> RE: FedEx/VAT and Duty Charges? (Mar. 15 2009 16:17:45)

quote:

I just recent shipped a guitar from the US to europe (Belgium) and paid for shipping and insurance. So I just assumed that if there were any more Duties, VATs or additional fees to pay, it would be the responsibility of the recipient to pay, right. However, I just received a bill from Fedex to pay Duty, VAT and Advancement Fees.

Am I missing something?


Ted, in broad strokes, a sale to a buyer located in another country can be structured as either “FOB” [free on board] or “Landed [duties paid].

If you and the buyer agreed on:

FOB: your responsibilities in connection with selling and shipping the guitar end when you will deliver it in the hands of the designated courier (FedEx). Any risk of loss (should the guitar disappear during transportation) will be borne by the buyer who acquires title, ownership and liability upon such limited delivery. Costs of shipping, insurance, customs duties and any other taxes or imposts (but generally if you pay duties you should not be imposed twice by a paying also local sales taxes [VAT]) will be the buyer’s responsibility.

LANDED: requires the seller to deliver to the buyer’s “door”. Therefore, all costs and risks will be borne by you –as seller- until the instrument be a safely delivered to the buyer.
Obviously a Landed sale price will include (be marked up by the value of) at least an estimate of shipping, insurance and duties.

What happens when Seller and Buyer do not discuss nor agree on any such choice of shifting costs and risks?
Well in this particular case the parties’ conduct supplies the missing terms. Since you paid for shipping and insurance you have implicitly entered into a “landed” transaction. You must pay for duties, but you should seek reimbursement of this payment from the Buyer; should the buyer refuse, you can rescind the sale on the basis of the good-faith mistake you made, if such cost (duties) substantially changes your expected profit.

I hope this helps.



cathulu -> RE: FedEx/VAT and Duty Charges? (Mar. 15 2009 16:36:08)

IMHO, what you should never do is send items using private carriers unless you are willing to PAY (e.g. Fedex, Purolator, etc). Privates will overcharge you for customs brokering and other fees. You are also doing the recipient a disservice as they will pay more to. Perhaps you are getting stiffed by Fedex or you checked a box incorrectly when you paid for shipping?

In future I suggest you use the National Postal Carriers, like US Postal Service or Royal Mail (UK) as they will ship to the postal carrier of the destination country. In your case it is USPS. They have similar shipping options equal to Fedex so no reason to go private. The package is normally assessed taxes and duties by the destination country's postal carrier and the recipient pays them prior to pick-up. There usually are no brokering fees or other charges as would be charged by Fedex.

I get lots of bicycle stuff from the UK and Royal Mail is excellent, they send to Canada Post and bicycle parts for example in Canada are duty free. All I pay is 5% GST and shipping is usually free (i.e. in the item price already). I don't pay VAT either, I am exempt as I am out of country.



Arash -> RE: FedEx/VAT and Duty Charges? (Mar. 15 2009 17:50:42)

quote:

ORIGINAL: gj Michelob

quote:

I just recent shipped a guitar from the US to europe (Belgium) and paid for shipping and insurance. So I just assumed that if there were any more Duties, VATs or additional fees to pay, it would be the responsibility of the recipient to pay, right. However, I just received a bill from Fedex to pay Duty, VAT and Advancement Fees.

Am I missing something?


Ted, in broad strokes, a sale to a buyer located in another country can be structured as either “FOB” [free on board] or “Landed [duties paid].

If you and the buyer agreed on:

FOB: your responsibilities in connection with selling and shipping the guitar end when you will deliver it in the hands of the designated courier (FedEx). Any risk of loss (should the guitar disappear during transportation) will be borne by the buyer who acquires title, ownership and liability upon such limited delivery. Costs of shipping, insurance, customs duties and any other taxes or imposts (but generally if you pay duties you should not be imposed twice by a paying also local sales taxes [VAT]) will be the buyer’s responsibility.

LANDED: requires the seller to deliver to the buyer’s “door”. Therefore, all costs and risks will be borne by you –as seller- until the instrument be a safely delivered to the buyer.
Obviously a Landed sale price will include (be marked up by the value of) at least an estimate of shipping, insurance and duties.

What happens when Seller and Buyer do not discuss nor agree on any such choice of shifting costs and risks?
Well in this particular case the parties’ conduct supplies the missing terms. Since you paid for shipping and insurance you have implicitly entered into a “landed” transaction. You must pay for duties, but you should seek reimbursement of this payment from the Buyer; should the buyer refuse, you can rescind the sale on the basis of the good-faith mistake you made, if such cost (duties) substantially changes your expected profit.

I hope this helps.


Actually there are many more possibilities inbetween and not only FOB and DDU.
For example when i sell some of my goods to a customer in another country, i sometimes use CIF term (cost, insurance, freight), so i have to pay freight charges and insurance but buyer has to pay all other costs like his country import duties , etc.
But usually i dont think that these incoterms are used for such cases.

---

Ted, normally sellers in US (ebay, or online shops) mention something like:

"We are not responsible for any duty, brokerage, or taxes that your country may charge on items. "

when they ship internationally.



kovachian -> RE: FedEx/VAT and Duty Charges? (Mar. 15 2009 18:37:49)

So what happens if he just doesn't pay the bill? Will FedEx try pushing the bill on the buyer?



gj Michelob -> RE: FedEx/VAT and Duty Charges? (Mar. 15 2009 18:43:38)

quote:

Actually there are many more possibilities inbetween and not only FOB and DDU.


Indeed, Arash, but here none of the INCO terms was used. That is why I opened my shortest symposium on Seller and Buyer’s "risk of loss" and "title-passing" with the disclaiming preamble “in broad strokes”.

However, I felt that Ted wanted to understand who is liable for which part of the costs under the specific circumstances he described, rather than seeking general advice for future shipments.

On the other hand, I agree with you that using terms accurately is absolutely important, and worth investigating further before entering into a sale requiring shipping and particularly if into a different jurisdiction.



Ted G -> RE: FedEx/VAT and Duty Charges? (Mar. 16 2009 8:49:48)

Thanks to all for your responses. I have to tell you, this is really aggravating to me. But I guess I'll have to find my paperwork to see what I actually agreed to.

To tell the truth, I just told the gal behind the counter where I wanted to ship it, and let them tell me what boxes to check and where to sign and then just stuck my copy in my pocket.

The bill amount from FedEx is such that, if I had known I would had to pay this amount, I would not have agreed to the deal, or made sure it was the buyer's responsibility to pay for such fees, etc. Although I shipped the guitar, the seller is the one who paid me additional money for shipping and insurance and thus it was understood that any other fees, duties, VAT or whatever, would be his responsibility.

I'm gonna look for my FedEx copy and see exactly what I agreed to, to see if anything indicates that I'm responsible for this bill. I'll report back.



HemeolaMan -> RE: FedEx/VAT and Duty Charges? (Mar. 19 2009 19:33:29)

SOP for a fedex employee is to billthe sender with the duties and customs. since you did not indicate otherwise, that is the standard.

always ask what boxes mean before you check them.



Guest -> [Deleted] (Mar. 25 2009 11:04:02)

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