TLG acquires Bricklink

[TeriXeri]

16 minutes ago, anothergol said:

But that's for those who already apply (most likely because they're registered businesses and deduct it when they buy the sets) it.

I don't see how reselling what you've already paid the VAT on should require you to add it again. Like, is Ebay doing that?

-normally- the only thing that should require VAT is Lego's own service, that is, what they charge to sellers. That's the only "value" that has been "added".

I hope not, I know most EU webshops already include VAT in their prices, but when it's from outside the EU and over €22 (for netherlands), I have to pay another 21% on top of that.

I hope there'll be something like a generic VAT setting which is calculated on all listed objects from a seller, so a €100 set would not be €121 after checkout (if bought in same country), I know US has different rules where VAT applies on top of the purchase, but in EU it's included in the price.

I don't remember Ebay having extra VAT either, as I bought something from the UK in 2018, and it was just the list price + shipping, and then converted Pound to Euro, no VAT listed anywhere, even with the VAT difference of 21% vs 20% 

Maybe those sellers were registered as exception from VAT, I haven't used Ebay a lot, especially not in recent 2 years.

Edited July 29, 2020 by TeriXeri

[ShaydDeGrai]

22 hours ago, TeriXeri said:

I know US has different rules where VAT applies on top of the purchase, but in EU it's included in the price.

Yeah, in the US the "Sales Tax" is a different beast, it's really a "consumer" tax and varies by state, county and, in some cases, even city.   Some combined rates are as low as 0%, others get into the 10-12% range, depending on how many other ways the local government is trying to separate you from your money (real estate taxes, excise taxes, income taxes - basically whether you have assets, acquire assets, liquidate assets or trade assets with someone else, the government wants a piece of the action)  Also, the tax code is so convoluted that the same item may or may not be taxable based on circumstances.  For example, if I buy a can of Coke at the corner store, it's tax free (no tax on "grocery items" locally).  If I buy it in the next town over (ten minute walk) there's a 25 cent "junk food tax" because it's mostly sugar.  If I buy that same can of Coke from a hot dog vendor in the street, it's subject to a 6.25% Meal Tax because I was "served" it even though it's the same can and I have to open it myself.  But that's just the start of this bizarre journey.

The really weird part about the way US local sales tax laws are worded, is that the tax is on the consumer spending money (the type of item being bought dictates the rate) and where that person lives, but where it is bought _from_ is supposed to be irrelevant (aside from the above question of whether a prepared food item is a "grocery" or a "meal").   For example Massachusetts (6.25% sales tax on most items) abuts New Hampshire (no sales tax).  If someone from New Hampshire buys something in Massachusetts, they have the right to save their receipt and file an out of state income tax return with Massachusetts and get their 6.25% tax money back at the end of the year.  If someone from Massachusetts drives up to New Hampshire to buy a big ticket item "tax free," they are supposed to disclose that purchase on their own tax filing and pay the 6.25% anyway; Around the holidays, Mass Department of Revenue agents have been known to look for Mass plates on cars in New Hampshire mall parking lots just over the border, and approach people as they are loading up their big screen TVs and bags from jewelry stores.  While they can't do much on site (outside their jurisdiction) they have been known to "educate" shoppers about tax evasion and let people know that they "know who they are" and that they'll be "expecting" to see an unpaid sales tax filing on that year's return.

This mindset of "the sales taxes I pay is a function of where _I_ live not where I buy it" can make for a convoluted mess, which is why the sales taxes are usually a separate item over and above the base price (one exception being fuel taxes; if you're buying petrol in a given state, they assume you're putting wear and tear on their roads and, whether you live in that state or not, should contribute to their upkeep)  so that accountants and lawyers can figure out what taxes are owed where - If I buy something in Maine, the tax is 5.5% so I, technically, should file in Maine to get my 5.5% back and then pay Massachusetts 6.25% on the same item, unless it was an article of clothing which is taxable in Maine but exempt in Mass...

If you travel out of state and follow the letter of the law, it all gets very ugly, very quickly and in most cases would cost more in accounting fees (to you) and processing fees (to the governments) to itemize everything, not to mention the clerical hassle of saving all your receipts for seven years as evidence should your claim be audited..  If you follow the exact letter of the law, it ends up costing more money to process the forms and cut the checks to balance the books, than it would to simply assume it will all average out in the end and call it a wash.  Technically, if I buy something at a yard sale, I'm supposed to pay sales tax and if the seller made a profit, s/he is supposed to pay capital gains taxes on the income and file a return to give all collected sales taxes over to the state, but, realistically, no one wants to spend $10,000 processing paperwork for a yard sale with gross sales totaling at best a couple hundred bucks.   Most states are fairly lax on enforcement for all but the most glaring of gray market abuses and offer a standard deduction and exemption amounts for people who don't want to split hairs.  Some people DO itemize and file, but usually this the case when someone lives in one state, works in another and the accounting works to their advantage.   For casual consumerism, it's just too much of a hassle for everyone involved.

As for internet purchases, a lot of states in US are still trying to work things out.  The rise of Amazon and eBay really caught a lot of states off-guard and 20+ years later the legislation still hasn't caught up. The vendors didn't want to be collecting sales taxes (especially given that the rules varied so much from state to state and were always subject to change).  The states were seeing noticeable declines in revenue.  The brick and mortar stores were getting crunched enough just on basic price competition before you slapped on tax free versus taxable surcharges.  And the federal government, which does not collect sales taxes to begin with, was lobbying heavily for states not to interfere with budding eCommerce (at least for some grace period - like Jeff Bezos' first $10B in bonuses).  The legislation is still a bit of a mess today.  For Massachusetts the rule has become, "if you have a physical presence in the state and you are delivering to Massachusetts address, you collect sales tax at the same rate as a physical retailer." So now, if I buy from Amazon (which has a distribution hub in the state) or Lego (which has several stores, here) I pay sales tax.  If I buy from a certain independent toy store in Maine that has no presence in Mass, they don't charge me sales tax (they only tax Maine residents, the rest of the world is free).  And if I order a Coke with my pizza from Grub Hub it gets hit with a meal tax; if I buy a Coke and a frozen pizza from Amazon Fresh it gets the grocery tax exemption).  This gets confusing for the consumer; it must be a far worse for a vendor who needs to know what surcharges apply to whom, when, and how to pay each state, county and city their due at the end of the quarter/year.

I realize this is bit long-winded (I'm sorry, I have a Ph.D. I've been trained to run out of room on postcards just expressing "wish you were here" sentiments - which BTW is better than running out of room while _literally_ writing that, as sending a note to the effect of "Having a wonderful time, wish you were her" is a very different sentiment)  but this is really just a round-about way of saying that I have no idea how the new Bricklink will sort this out.  Do they expect individual shops to know all the local tax rules?  Will they provide software to sort it out?  Will every transaction have to go through Lego Shop USA's tax calculator to ensure that the proper duties are being applied?  Will the individual shops be collecting taxes (which means they'd need to file sales tax statements with each state that they ship to) or with TLG collect the taxes for them and add it to the filings that they already need to do for their own eCommerce ventures.  If TLG manages the tax collection side of things, will they increase their own commission to cover the cost of the extra accounting they need to do?  Who does the bookkeeping for refunds and cancelled orders with respect to wrongfully taxes collected?  If I'm buying from an out of state vendor (currently tax free) do I now get charged taxes because TLG has an instate presence and is brokering the sale?  If so, is the tax applied to the full purchase price or only on Bricklink's commission?  

This could get real messy, real fast.

[Grover]

If the VAT is applied to sellers in the EU, will the sellers pass this along to sellers in the US despite the US not requiring VAT?  If so, it will be the end of my purchases from Europe, since postage, 20% VAT, and US sales tax, plus fees, will make ridiculously high charges from the EU (I wouldn't be surprised if this amounted to a 40-50% surcharge).

[Toastie]

4 hours ago, ShaydDeGrai said:

I'm sorry, I have a Ph.D.

Hee hee ...

Thank you very much for that very nice summary. I really enjoyed reading it - well I do enjoy everything you write ("post" is not appropriate). 

Also, I notice that you have become a moldy tax expert - this forum is just so far ahead and educated - I am proud to be here.

Thanks again.

All the very best,
Thorsten

[TeriXeri]

15 hours ago, Grover said:

If the VAT is applied to sellers in the EU, will the sellers pass this along to sellers in the US despite the US not requiring VAT?  If so, it will be the end of my purchases from Europe, since postage, 20% VAT, and US sales tax, plus fees, will make ridiculously high charges from the EU (I wouldn't be surprised if this amounted to a 40-50% surcharge).

Buying from non-EU to EU , goods are subject to 16-27% VAT (varies per EU country), if the cost amounts to €10-€22 (varies per EU country)

And then added rules if it's over €150 (import tax, customs fees), and then the 16-27% VAT is calculated over the total.

I did some calculations for my country, buying Castle Lowenstein in 2019, from Bricklink would end up at $296 , instead  of $200 (with the free shipping they had) for me due to the customs clearance, import duties and VAT, since the base price was over €150.

Edited July 31, 2020 by TeriXeri

[howitzer]

VAT is a complex issue but at least technically, TLG acquiring BL shouldn't affect anything at all, as it has no effect on by who and how the taxes should be paid. I've been doing other sort of international online business for years, and I have to charge (and then pay) VAT for every EU order but not for non-EU orders, which of course means that either I can keep the same prices for everyone and then get more profit from for example orders from USA and less from those within the EU - or I can have different prices for different buyers, depending on their locale. Still, the relevant tax laws have been around for at least a decade so I'm not sure what would change regarding Bricklink? Of course, secondhand sales are not subject to VAT at all, at least where I live so they shouldn't apply to BL sellers either, at least not as far as used bricks and sets are concerned.

[TeriXeri]

-

Edited July 31, 2020 by TeriXeri

[howitzer]

1 minute ago, TeriXeri said:

But if a EU store will now have to pay more of their earnings to Seller Fees, won't that result in adjusting their prices to compensate to earn the same?

I figure this will result in EU to EU becoming more expensive.

If TLG decides to raise seller fees, then of course yes, but it has nothing to do with the VAT. Beyond that, why would the application of tax laws change with TLG acquiring BL?

[TeriXeri]

-

Edited July 31, 2020 by TeriXeri

[hagridshut]

I wonder if TLG could implement some things to improve the buying experience on Bricklink. 

Bricklink set listings often don't have photos.  This may be a limitation of the site's current architecture, but not being able to get a sense of a used set's condition is a major disadvantage at Bricklink vs. eBay.  

I don't know if this is possible, but setting some common standards/guidelines for the condition used pieces/sets might be helpful.  I've gotten minifigures described as "good" that were basically in like-new condition, and some "good" minifigures that had faded print, gouges, and other obvious damage.  Reducing uncertainty in quality of product would make me more confident in using Bricklink.  

[howitzer]

8 hours ago, TeriXeri said:

True,  I can understand the VAT itself isn't changing as that's not decided by LEGO or Bricklink, but different per EU country, from 16% in Germany, to 27% in Hungary, and anything in-between in the other 25(26) countries.

But still, this change will make it mandatory to charge the VAT or Sales tax, before this change, it was optional, so some stores will have to increase their prices to compensate.

Why is it mandatory now but was not before?

[Peppermint_M]

16 minutes ago, howitzer said:

Why is it mandatory now but was not before?

Before, it was independent and fan-run, so it was something like a flea-market or bazaar of the wonderful.

Now TLG have bought it:

Quote

These changes are necessary for our platform to be compliant with sales and use tax and VAT legislation where applicable. We also feel they will help build our reputation as a well-regarded ecommerce site. These changes are broken down into three categories outlined below.

So they want a shiny megacorp sales box. Turning it from "protecting the fans" to, Build our investment regardless of how it affects the fans.

[howitzer]

 

10 hours ago, TeriXeri said:

But if a EU store will now have to pay more of their earnings to Seller Fees, won't that result in adjusting their prices to compensate to earn the same?

I figure this will result in EU to EU becoming more expensive, otherwise it'll be a 16-27% decrease of their earnings.

Hmm, I might have misunderstood what this was about, just to make sure we're on the same page, is this only about the seller fees, or also about the customer VAT?

The latter shouldn't be changing at all. The former on the other hand, is apparently being affected by TLG acquirement, as the seller fees are now subject to danish/EU tax laws. So BL sales fees now get an added VAT, which is dependent on their location, but that only affects the sales fee and not the whole price of the purchase. Customer shouldn't even see it, as they are not seeing (now a bit bigger) sales fees either. In theory, the VAT should be collected according to the buyer's location, but this is quite a complex process and I'm guessing that in the end it's the seller's location that decides which VAT percentage is being used.

So for example an order totaling 100€ has 3% (= 3€) seller fee, which wasn't previously subject to VAT but now is. For a Finnish shop this means that with 24% VAT the actual fee is now 3 * 1,24 = 3,72€. The buyer still pays 100€ but the seller must now file additional 0,72€ in taxes which means that this additional cost must be covered somehow, probably by raising their prices slightly. From customer's perspective the increase isn't huge though, what they were previously buying for 100€ would now cost maybe 100,5 - 101€ depending on how much the seller decides to raise their price.

Sellers outside the EU shouldn't be affected, as they aren't subjected to VAT anyway.

[MAB]

The VAT in EU is for seller fees only. So if the VAT rate is 20%, then you will pay 3% + 20% of that, so 3.6% in fees.

However, I suggest EU sellers stop selling to America. If you get a US sale, then the buyer gets charged the US sales tax which bricklink collects in the same paypal transaction as when the buyer pays you. You are responsible for the paypal fees on that whole transaction so you are paying the paypal fee on the portion that BL collects. LEGO says this is fair as they are paying for the calculation of the US sales tax. So if you sell the same item to a US buyer or to a EU buyer, you are worse off if the US buyer buys it. So it is better to get EU sales than US sales.

Whereas the reverse is not true. If a US seller sells to an EU buyer, then the buyer is responsible for paying the VAT on import and of course the calculation and collection fee too.

Edited July 31, 2020 by MAB

[TeriXeri]

 

1 hour ago, MAB said:

The VAT in EU is for seller fees only. So if the VAT rate is 20%, then you will pay 3% + 20% of that, so 3.6% in fees.

If that's all that's changing for EU to EU sales, that's not too bad then.

Non-EU to EU sales were already subject to extra VAT when buying something that cost €10-€22 (depending on EU country) , so already unfavored unless the purchase was really small.

But then the paradox is that small overseas packages are still inefficient because shipping rates has risen quite a lot in recent years.

Edited July 31, 2020 by TeriXeri

[TeriXeri]

2 hours ago, howitzer said:

Hmm, I might have misunderstood what this was about, just to make sure we're on the same page, is this only about the seller fees, or also about the customer VAT?

Well, if it's just affecting EU seller fees (3% + VAT ) as @MAB mentioned, then my posts were wrong, and it's a lot smaller change compared to the US Tax change.

Edited July 31, 2020 by TeriXeri

[MAB]

32 minutes ago, TeriXeri said:

 

If that's all that's changing for EU to EU sales, that's not too bad then.

 

They are also checking VAT registration of EU sellers, but again it should not really affect much at all.

33 minutes ago, TeriXeri said:

Non-EU to EU sales were already subject to extra VAT when buying something that cost €10-€22 (depending on EU country) , so already unfavored unless the purchase was really small.

But then the paradox is that small overseas packages are still inefficient because shipping rates has risen quite a lot in recent years.

Yes, I used to buy quite a bit at just under £15 from the USA (to get under the VAT threshold), but stopped in about 2011/12 due to price increases for postage. Now postage prices from the USA have gone crazy.

[Darkdragon]

5 hours ago, MAB said:

Now postage prices from the USA have gone crazy.

This is the truth. I just sent something out yesterday, the smallest packet and cost to the UK is now $14.50.  The worldwide market is becoming  less and less feasible.

[MAB]

On 7/31/2020 at 6:10 PM, Darkdragon said:

This is the truth. I just sent something out yesterday, the smallest packet and cost to the UK is now $14.50.  The worldwide market is becoming  less and less feasible.

It is similar (although not quite as bad) in reverse.

[Verodin]

On 7/31/2020 at 9:14 AM, Peppermint_M said:

So they want a shiny megacorp sales box. Turning it from "protecting the fans" to, Build our investment regardless of how it affects the fans.

Was there ever any doubt? TLG is a for profit company. Their sole purpose in life is to make money. Fair enough and no secret, but don't for a second think they bought BL for our benefit. They will milk this thing any way they can.

[1974]

TLG bought BL to control the LEGO brand, not to make money. BL is no fat cow ready to milk. Those measly few millions they rack in in fees are nothing compared to the billions TLG makes

But ultimate control of the brand is worth a LOT to TLG, I wager so much they would run BL with a loss if they have to

Cheers,

Ole

[Peppermint_M]

10 hours ago, Verodin said:

Was there ever any doubt? TLG is a for profit company. Their sole purpose in life is to make money. Fair enough and no secret, but don't for a second think they bought BL for our benefit. They will milk this thing any way they can.

Nope, not on my part. I thought it was a terrible thing from the start. Those who thought me and my ilk were overreacting are now much quieter as time goes on.

[Toastie]

1 hour ago, Peppermint_M said:

Nope, not on my part. I thought it was a terrible thing from the start.

Same here, for sure.

[MKJoshA]

Anyone else read the new Data Consent Bricklink just made mandatory to agree to? Nothing crazy stood out to me. But I don't know legalise.

[MAB]

I had to agree to it this morning. Most of the changes are to get through the VAT changes for Europe, and the charging of sales tax for (some) US customers.