Hacker News Reader

Comment by rattlesnakedave | Hacker News Reader

When EU manufacturers sell products to other EU countries, they get their domestic VAT rebated, pay no tariffs, and then charge the destination country's VAT. When US manufacturers sell to EU countries, we have no VAT to get rebated, must pay significant tariffs (often 10%), and then charge the destination country's VAT. The end result is US products face a significantly higher total tax burden in EU markets compared to EU-made products, while EU products entering the US face much lower tariffs (often just 2.5%). You can explain the technical mechanics of VAT all day long, but it doesn't change this basic mathematical disadvantage for US exporters. Telling us we "just don't understand how VAT works" is condescending and deflects from addressing this real competitive imbalance.

View on HN

Just because someone explains something to you in a condescending way doesn't mean that that thing isn't still true, and doesn't mean you can dismiss it as condescending. Complaining that you don't have any VAT to be rebated is strong proof that you in fact don't understand how VAT works. I'll save you my presumably-condescending explanation and would recommend you find some other resource to learn about VAT…

Actually I can do whatever I want. This is an internet comments section, not a court of law.

Indeed this internet comment section is not a court of law, it is one of public opinion. As of my posting this, you are being judged wanting.

As for what you should or shouldn't do, please refer to https://news.ycombinator.com/newsguidelines.html - if you break these guidelines hard enough, that "shouldn't" will turn into a "can't" at some point.

Remember: freedom of speech guarantees only your talking, not anyone's listening or even amplification.

(And now we're entirely off-topic, so I'll take my leave.)

B2B sales from the US to the EU have no VAT. B2B sales between European countries have no VAT. If you sell to a consumer you pay the VAT where it is consumed.

Please stop spreading lies.

I agree with the tariff imbalance causing an unfair trade, but don’t see how VAT affects this?

A US->EU seller pays VAT, an EU->US seller pays sales taxes.

There’s no unfairness because an EU -> EU seller also pays VAT and a US -> US seller also pays sales taxes. So nobody’s put at a competitive disadvantage.

Yeah kinda. The article is right, core issue is no ability to reclaim production-side VAT costs like EU competitors can because of how taxes work in the US. My position is the EU should bend a little and help the US out here by either lowering their tariffs to match ours (2.5%) or creating a special mechanism for US companies to reclaim production costs similar to how EU companies can reclaim VAT. It's unreasonable to expect the US to completely restructure its entire tax system just to get 'equal' treatment, especially when we're supposed to be close trading partners. The current system effectively punishes us for having a different tax structure than the EU prefers.

That would be 100% true. Were it not that VAT is not a "European" thing, but more of a "world economy" thing.

Check out the distribution map on Wikipedia :

   https://en.m.wikipedia.org/wiki/Value-added_tax

This discussion is a perfect example of everything that is going wrong in the world at the moment.

So what?

The money goes to USA government. Why should I as EU consumer pay taxes to USA regime? The thing about VAT is that USA consumer do not pay it when they buy from EU. So why would I be expect to pay USA sale tax that they failed refund to their exporters?

Yeah then lower your tariffs I guess.

The EU's tariffs are perfectly legitimate according to world trade law. If the US wants to push for advances in world trade law so that tariffs and non tariff barriers come down, then it would do well to start by ending its war on the WTO appellate body and world trade law more generally. What are the chances of that happening under Trump? You can't say you love tariffs and it is your favourite word and then say "sorry your tariffs are too high, what happened to free trade???"

This is hilarious. The US and Trump can continue down this path and force the EU to the table, and there’s precisely 0 anything anyone can do about it. No need to bother with any international bodies.

You can only reclaim VAT from the previous piece of the chain that paid vat. For US company there is nothing to reclaim, as nothing was paid in the first place. At the end of the day, customer still pays the full amount at the point of sale.

EU companies can't reclaim production costs. They reclaim VAT on production costs. US producers don't pay VAT on production costs so why would they be able to reclaim it?

If US exporters want to claim back the sales taxes they pay on their imports they should be talking to their governments not complaining about the EU. VAT is paid by consumers. EU consumers pay VAT exactly the same way when they buy domestic or imported goods.

The current system in the EU does not "punish" US exporters, it "punishes" EU consumers for consuming (in the same sense that income taxes "punish" you for earning income). The US tax system "punishes" you by imposing sales taxes on you that you can't claim back if you use the products as inputs to goods or services that you sell. The EU plays no role in this whatsoever.

The US has identical treatment to everyone else, including EU domestic businesses. It is crucial to understand this. US exporters do not pay VAT on their inputs, so they have nothing to claim back from the EU. It makes no sense to say they are disadvantaged.

You just don't understand how VAT works, and you are not interested in understanding how VAT works, so... You're just wrong, and no amount of babysitting your bruised ego is going to change that.

What taxes are you referring to that US manufacturers have to pay in the US that EU manufacturers do not have to pay in the EU?

The only thing you have shown is that things are more expensive in the EU.

Reply on news.ycombinator.com