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Comment by OrvalWintermute | Hacker News Reader

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Fact: European VAT (20-25% depending on country) is same for all companies; domestic, EU, US and Asians alike, added to end customers.

It's not EU's fault US manufacturers can't keep manufacturing costs down.

Neither is it EU's fault Trump believes slapping tariffs hurting US consumers will improve US standing in the world.

The imbalance comes from how VAT and US taxes work differently. A European car comes to the show floor free of VAT. A US car likely has sales tax still embedded into the costs, and tariffs get multiplied on top of it. I'm not saying that it's anyone's "fault", but it is an advantage for countries that have VAT.

Actually the european car comes to the show floor with VAT already paid by the store selling the car. VAT is end user tax, it's paid by last one in the chain. So it's only after the shop sells the car when they get the VAT back from the sale (and they get back only what VAT they paid before).

I was referring to European cars sold in the US compared to US cars sold in Europe.

If the US feels practices are unfair they can go to the Dispute Settlement Body of the World Trade Organisation, or they could do whatever this madness is

And you could say the same about the tariffs mentioned in the article.

Did any of the taxes came to fruition? Weren't they cancelled by the US high courts?

EU is protecting American business and especially big tech with it’s anti-circumvention laws that US lobbied for. Abolishing those would be more affecting than tarrifs and would allow a de-enchittification movement to start chipping off profits from US companies.

Applying extra tariffs on the US is still the correct path forward.

> because their extremely high VAT taxes and non-tariff trade barriers always hurt the US worse, and the EU rebates VAT on its own exports

Your post is yet another example of how USians don't understand how VAT works.

There is no VAT rebate on exports, there is a 100% reimbursement of VAT on any export. There is also a 100% reimbursement of VAT on any B2B sale. That way VAT is a tax only on goods that are sold to consumers in the EU, no matter where they came from and no matter where they were manufactured/processed/...

How this works as an example: You mine iron ore, sell a ton for 1000€. Buyer pays 20% VAT. But since it's B2B, buyer can get those 20% back immediately in his monthly VAT declaration. Buyer makes 500kg steel from that iron ore, sells it for 2000€. Buyer of the steel can get those 20% back, since it's B2B. Let's say the buyer makes paperclips from that steel and sells those. Now the buyer of those paperclips is the interesting thing here, because the buyer pays 20% VAT on those paperclips. He might be their end-user (either business or customer) in which case he won't get 20% VAT back. He might be a reseller, in which case he will get the VAT back. End-users don't get their 20% VAT, resellers and processing industry do. It's always only the last step in the chain who really pay VAT, everyone else doesn't.

And any border-crossing is treated as a sale, so the you get the VAT rate (different EU contries have different rates) from the country that the goods are leaving paid out, and you have to pay the VAT rate of the country you are entering on those goods. If you are exporting to non-EU, and there is no VAT in the destination country, you don't pay any, you just get the VAT back from the country you are exporting from. So it is totally symmetrical, totally fair, and totally neutral, independent from whether it is US, EU, Chinese or whatever the origin might be.

And if you think it's complicated, you might be right. But then again, look at the complete and utter mess that US sales taxes are. Every other town might have a different tax rate, system, catalogue of goods every other week. USians shouldn't complain about trade barriers as long as that mess is still in place.

> The EU enabled the Dutch Sandwich and Irish offshoring trade scams which has become a tax haven

That's a fault of Ireland and the Netherlands, the EU is just powerless to stop those practices. Same as the US is powerless to get rid of their own tax haven states like Delaware, Nevada or Wyoming. Just to cite Wikipedia, "Andrew Penney from Rothschild & Co described the US as "effectively the biggest tax haven in the world" and Trident Trust Co., one of the world's biggest providers of offshore trusts, moved dozens of accounts out of Switzerland and Grand Cayman, and into Sioux Falls" https://en.wikipedia.org/wiki/United_States_as_a_tax_haven

> He might be their end-user (either business or customer) in which case he won't get 20% VAT back.

My understanding, dealing with VAT/GST in another country, is that a business customer still gets the VAT back even if they're the end user. If my company (which comprises of 1 person) buys paperclips, or a laptop or whatever for business use, I claim the VAT back. It's only the consumer who pays VAT. If I want to transfer an asset from my business to myself then I have to pay the VAT.

Yes, what I told is a slight simplification. Since any company is usually not an end user and does something with its inventory that will sell to some end user, you can always get your VAT back. The way this works is that you as a company just never pay any VAT in the first place if you have a special VAT tax ID that you have to apply for and give to all your business partners. But that usually only works when not exporting or importing.

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