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  1. #1
    Join Date
    Feb. 7, 2003
    Posts
    646

    Exclamation Good News for US breeders?

    The special 7% VAT tax rate on the purchase of horses in Europe has just been overturned by the EU Finance committee. In the future the cost of most horses will go up, as the full 19% VAT tax can be charged (it's actually more complicated than that). The Hannoverian Verband will now be acting as a broker for sellers. Here is the description of the change from the HV's Mgr. of Finance Gerhard Wiechers:

    Gerhard Wiechers: That is the calculation model in
    a commission based business. The Verband on the
    other side is now a broker in an agency based
    business, and the individual sales tax rate of the
    exhibitor (commercial or farmer opting to tax =
    19%; flat tax farmer = 10.7%; hobby breeder/private
    + 0%) gets billed to the buyer. This is what
    the purchaser’s settlement looks like:

    Knock down price + sales tax rate of the seller
    (0%, 10.7% or 19%)
    = subtotal 1

    + auction fee in the amount of 6% of the knock
    down price plus 19% VAT on this (as is laid down
    in §§ 12, 2 German VAT Act)
    = subtotal 2

    Subtotal 1 plus subtotal 2= gross price + 1% insurance
    plus 19% tax on insurance
    = final balance amount

    The change is that the sales tax rate of the seller
    gets added to the knock down price. The commission
    amount and the VAT of 19% on this commission
    as well as the insurance premium stay the
    same.
    Judy
    Sylvan Farm~Breeding for Performance
    Ramzes SF, approved GOV and Belgian http://sylvanfarm.com
    Chair, USSHBA Positive ID Working Group; USSHBA Steering Committe member



  2. #2

    Default

    How does HV becoming the broker for the seller affect this? Will horses they sell will be charged the max amount of tax which is 19%?
    Private farmers have 0% sales tax?


    So a 10,000 E horse bought from an auction will cost:

    Cost of horse +19% VAT = 10000+1900 = 11900.
    Cost of horse* 6% auction fee = 10000*6% = 600.
    Auction fee VAT tax: $600*19%=114

    Subtotal 1: 11900+600+114 = 12614.


    Insurance: 12614*1%= $126.
    Tax on insurance = 126*19%= $24.
    Subtotal 2= 126+24= 150.

    total 12764.


    SO.... for every 10k worth of horse you buy, you pay 2764 in fees and taxes in addition to the cost of the horse.

    Is that right?
    www.northgeorgiasporthorses.com
    We have moved to Texas!



  3. #3
    Join Date
    Feb. 10, 2006
    Location
    SF Bay area
    Posts
    1,073

    Default

    BITS - that's not correct.

    What this means is that VAT of 19% will be charged on the 6% commission paid to the auction house. The VAT on the price of the horse will be determined by the sellers status (0%, 10%, 19%).

    Old System
    10,000 horse + 6% commission
    10,600
    10,600*.19 = 12614.00
    Plus 1% insurance and 19% on the insurance
    Grand total 12764.10 euros

    New system
    10,000 +19% (use this as an example) seller tax
    11,900 + 6% commission = 12614 + 19% on the 6% is another 714.
    Gross price 13328
    Insurance + tax on insurance = 158.60
    New final total due = 13486.60

    It will make a difference of about 722 euros per 10,000 euros knock down (if the seller is in the 19% category - many of the small hobby breeders may fall into the 0% category)
    Last edited by honeylips; Aug. 21, 2013 at 09:36 PM.
    RoseLane Sporthorses-Westfalen horses and ponies
    Home of Golden State- 2012 Bundeschampion 3yo Pony Stallion
    Home of Golden West - 2013 Reserve Champion Westfalen Pony Stallion Licensing



  4. #4
    Join Date
    Aug. 14, 2000
    Location
    Clarksdale, MS--the golden buckle on the cotton belt
    Posts
    18,646

    Default

    But isn't VAT refunded for exports?
    "I'm a lumberjack, and I'm okay."
    Thread killer Extraordinaire



  5. #5
    Join Date
    Feb. 10, 2006
    Location
    SF Bay area
    Posts
    1,073

    Default

    yes - if they are exported in the allowed timeframe
    RoseLane Sporthorses-Westfalen horses and ponies
    Home of Golden State- 2012 Bundeschampion 3yo Pony Stallion
    Home of Golden West - 2013 Reserve Champion Westfalen Pony Stallion Licensing



  6. #6

    Default

    I got that number once but it looks like they're taxing on an amount that's already been taxed.

    What is the time frame you can get the tax back? Is it hard to get back?

    What if you buy a horse there and keep it there for a while and then export it? No refund?
    www.northgeorgiasporthorses.com
    We have moved to Texas!



  7. #7
    Join Date
    Apr. 2, 2002
    Location
    Germany
    Posts
    2,810

    Default

    The tax has already been raised to 19% by August 1, 2012 not only now. The tax can be taken out of the horses price if the horse is going out of Europe as then the seller does not have to pay any tax on the horse sale.
    Gwendolyn
    http://www.gestuet-falkenhorst.com
    Exceptional colored German WBs, TBs and Arabians



  8. #8
    Join Date
    Feb. 10, 2006
    Location
    SF Bay area
    Posts
    1,073

    Default

    In the past i have gotten the tax back on the sales price of the horse, but not the tax on the commission or insurance. Yes - there is a time limit and if you don't export in the timelimit - you can't reclaim the tax. So you out of luck
    RoseLane Sporthorses-Westfalen horses and ponies
    Home of Golden State- 2012 Bundeschampion 3yo Pony Stallion
    Home of Golden West - 2013 Reserve Champion Westfalen Pony Stallion Licensing



  9. #9
    Join Date
    Dec. 2, 2002
    Location
    Waterford, VA USA
    Posts
    4,876

    Default

    Yes, another VERY good reason to buy American....!
    Siegi Belz
    www.stalleuropa.com
    2007 KWPN-NA Breeder of the Year
    Dutch Warmbloods Made in the U. S. A.


    3 members found this post helpful.

  10. #10

    Default

    What if you buy a foal at auction who's still with the dam? This is when the time limit could become really important. How long from date of purchase to import can you get the VAT refund?
    www.northgeorgiasporthorses.com
    We have moved to Texas!



  11. #11
    Join Date
    Sep. 20, 2002
    Location
    Hannover, Germany
    Posts
    3,728

    Default

    As far as my Information goes the timeframe is two years. And obviously you can get VAT back only on what you Export. The comission is a service rendered in Germany and can not be exported, hence the VAT for that is not given back.
    The tax on the insurance is not a VAT - so not refundable.

    The only party that has a positive effect with the new system is the Verband who faces a financial situation that we all will first see how bad it is when they will show the numbers in March 2014 for the next meeting of delegates. I prognose a deficit, unless the new opening of the Verband for Westfalen (and by this a backdoor for westfalian) brings expensive horses to the auctions ! Fresh example the westfalian stallion e something.

    Stragenly there is a large number of breeders in the foal auction catalog with 0%. Everyone who has more than 14000€ sales (of any kind not just horses) lies under the law for VAT for the sales. Only people with under 14000 per year of sales are in the 0% rule. It seems very strange to me that there are so many who have 0%.
    As I have another business I fall under the rule that I have to apply VAT on my horses. It is a pain in the rear end as I Need to do bookkeeping for it now. I am much better of if I sell each and every foal to either a NON EU inhabitant or to someone within the EU with a VAT number he can use for the purchase. (In that case I do not need to charge VAT in the beginning).


    Bottom line: as the Verband charges now more in case there is a seller who has 19% to declare. One either tries to check out the 0% horses or one buys privately and asks for the sales price net ! As that is what an american buyer planning on Export really has to pay... net !

    Old System
    10,000 horse + 6% commission
    10,600
    10,600*.19 = 12614.00
    Plus 1% insurance and 19% on the insurance
    Grand total 12764.10 euros

    refundable 1900 so Price is 10864.10

    New system
    10,000 +19% (use this as an example) seller tax
    11,900 + 6% commission = 12614 + 19% on the 6% is another 714.
    Gross price 13328
    Insurance + tax on insurance = 158.60
    New final total due = 13486.60
    Refundable still 1900 Price 11586.60
    I am not responsible for spelling misstacks - just my PC
    www.hannoveranerzuechter.de
    Filly Londontime - Sandro Hit - Rouletto
    http://youtu.be/1O23BeiKpkY


    1 members found this post helpful.

  12. #12
    Join Date
    Aug. 14, 2000
    Location
    Clarksdale, MS--the golden buckle on the cotton belt
    Posts
    18,646

    Default

    Wait! Alexandra, are you paying commission on the price with VAT added? Why would you be paying commissions on taxes? The first system looks much fairer to me.

    Are you also insuring the VAT?
    "I'm a lumberjack, and I'm okay."
    Thread killer Extraordinaire



  13. #13
    Join Date
    Jan. 7, 2004
    Location
    Phoenix, Arizona
    Posts
    82

    Default

    How do you go about getting the VAT refunded? Who do you talk to?



  14. #14
    Join Date
    Sep. 20, 2002
    Location
    Hannover, Germany
    Posts
    3,728

    Default

    Quote Originally Posted by Crossroads Farm View Post
    How do you go about getting the VAT refunded? Who do you talk to?
    The seller, because he can already sell without VAT (and he will if he is sure horse is exported as he is the one liable for VAT). Or if seller does not know These things he/she should ask his taxagent. And if all does not work - it should be the same as with the tax refunds for other goods - ask at the Airport when you leave the Country (or better already when you come in, whom to adress for the tax refunds).
    I am not responsible for spelling misstacks - just my PC
    www.hannoveranerzuechter.de
    Filly Londontime - Sandro Hit - Rouletto
    http://youtu.be/1O23BeiKpkY



  15. #15
    Join Date
    Sep. 20, 2002
    Location
    Hannover, Germany
    Posts
    3,728

    Default

    Quote Originally Posted by vineyridge View Post
    Wait! Alexandra, are you paying commission on the price with VAT added? Why would you be paying commissions on taxes? The first system looks much fairer to me.
    That is the "issue" now you are not dealing with the Verband as a seller but as a Person doing a in German Kommissionsgeschäft. directly translated Kommission - Business. he gets a comission on the full amount that goes to seller. Which is in that case net plus VAT plus insurance (the latter including insurance tax).
    Do not ask me - I bet Mr. Wiechers of the Verband who does the accounting after the auction and gets the payments directly after the auction.

    As Aurum stated already the VAT on horses is not new. new since 2012 is the higher rate of 19% instead of 7% (exception farmers can still charge 7 or 10,7% depending under which law they fall)


    Quote Originally Posted by vineyridge View Post
    Are you also insuring the VAT?
    In Germany we deal mostly with Prices including VAT. if you go in a Supermarket you see the Prices including VAT.- you always know what you Need to pay in the end including VAT.
    And since you have to pay also VAT if you have to buy something back when you Need to replace it, insurance is on Price including VAT, but will also include VAT in the refunds. (some exceptions,. but that is to complicated and insurance Business...)
    I am not responsible for spelling misstacks - just my PC
    www.hannoveranerzuechter.de
    Filly Londontime - Sandro Hit - Rouletto
    http://youtu.be/1O23BeiKpkY



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