Comment on RoadTest Terms & Conditions: Tax Liability

I've been thinking about past RoadTest and Design Competitions. Is it possible that e14 was paying the sales tax on the items and then legally gifting the products? I know the 'prize' clause has always been there, just wondering how it was circumvented in the past.

Hendrik Lipka wrote:

 

AFAIK its not about how the item is declared.

I don't think that's correct - but, then, I am not a tax/customs/excise specialist.

AIUI, it is important for stuff to be properly declared & documented along the lines of "sample only - no commercial value"

Obviously, you can't just use the words - you do have to abide by the rules behind them!

https://www.gov.uk/government/publications/notice-372-importing-commercial-samples-free-of-duty-and-vat/notice-372-impor…

AFAIK its not about how the item is declared. For taxes and customs fees its doesn't really matter whether its a gift, a sample or sold. What matters who is declared as being responsible for paying it. E14 sends their road test items as "DDP - delivery and duty paid" (this is called 'IncoTerms'). This means they are responsible for all this stuff. When its declared otherwise, you are responsible for it, and the UPS or FedEx come to you with the invoice.

I've had similar things happen here in Belgium, though for review units sent via normal post.

The package is then held in customs and I get a letter asking me for the invoice, so they can calculate the duty/tax etc ...

I then mail the supplier for a $0 invoice that I can then send to customs. The package then gets released, no duty/taxes required.

On other occasions though, the supplier wouldn't send an invoice or respond to my query. I then tell customs I refuse the package, and they send it back.

Same thing here, except I get problems from the shipping companies, when sponsors forget to write that it is a sample. When someone asks me to test a product "for free", they normally send me a gift, or a sample. One person grabbed the first box he had, and the top-most piece of paper said "Thanks for buying our product!". After seeing that, there was nothing I could say to the tax office. I ended up paying to test a product. Good thing it was worth it :-)

As someone who has done some "professional" reviews, this bugs me. From time to time, people send me an email, and ask me to test something. More often than not, it comes from the US. I live in France, and I've seen some pretty heavy taxes. The problem is that people send me "sellable" objects, not samples. When I test a product, I receive it "for free", I write about it, and then, depending on the object, I send it back. When I receive an object with a piece of paper inside saying "Thanks for buying our product!", I can't go to the tax office and credibly say "I didn't buy this". One example was a RISC-V board, the original price was printed at about 50 USD, plus 20 for shipping. In an argument with UPS, I ended up paying close to 50 EUR just to actually get the board and test. The supplier was nice about it, we discussed several options, and I ended up keeping the board. The same argument is currently ongoing with another supplier, who wanted me to test a product. I didn't pay it, but now FedEx are knocking on my door asking for money, since the shipping document didn't say anything about samples. I understand the reasons; you have 50 boxes ready to go, you grab one and send it to the testers, without thinking about the contents. On the other hand, when I tested the NVIDIA Jetson TK1, they sent that out with a little gift for my time, (a GTX 970), clearly stating that the Jetson was a sample, and the GTX 970 was a gift, and that arrived the next day without any additional surprises.

As far as I know, in Latvia, if it is defined as prize or gift, it is not taxable income. There is another issue with EU though, if E14 ships prize from US, on import into EU, receiver of the goods is supposed to pay value added tax, unless that is paid by sender, E14 in this case. VAT rates in different EU countries are different, but generally they are 20% and up, so assuming a $1000 RoadTest item, one would have to pay $200 or more on import into EU.

RR

Update: the legal department can answer one questions, but the others have been forwarded to the Tax department. (We're a big company!)

Randall

I've contacted our legal department about this issue, including questions this discussion has generated. I'm waiting for a response.

Randall Scasny

RoadTest Program Manager

In Germany you would need to declare this on your yearly tax declaration, as additional income. Probably you need to also hand in the invoice you get from E14 / Farnell as prove.