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VAT, GST and sales tax

Most countries and many states and regions impose a sales tax on goods and services housed within that country. In some countries, it’s called VAT (Value Added Tax). In others, it’s GST (Goods and Services Tax). There are various local acronyms for it.

Regardless of where it is or what it’s called, Weta Workshop does not profit in any way from these taxes. We also don’t subsidise them. Our policy is to provide the same base cost (pre sales tax) to all customers, regardless of where they live in the world.

In all cases, it’s a sales tax applied as a percentage and collected by the tax authorities of that country, state or region. In the EU the rate is set by the country in which the warehouse or store is located. That rate is then applied to all customers, regardless of where in the EU they live. Our warehouse, for example, is in the Netherlands, so all EU customers pay the Netherlands rate of 21%. If our warehouse were in Sweden, all EU customers would pay the Swedish rate of 25%.

When Weta Workshop imports a product into Europe, we declare VAT on the production and freight cost of the product at the border. Say that’s $100, then we owe the Dutch government $21 (VAT of 21%).

We then list the product online at a price that includes our retail markup (or profit). In this case, let’s say that’s $25. So the product now costs $125.

When we sell that product to an EU customer, we charge an additional 21% at checkout. 21% of $125 is $26.25. This gets us to the final (VAT inclusive) price of $151.25.

When we receive the payment, we combine the tax on the retail markup (21% of $25) with the previously declared import tax ($21). This amount ($26.25) is then paid to the Dutch Tax Authority. Weta Workshop only ever retains the initial universal retail price of $125. Take out the initial cost of production and shipping (production facility to warehouse), and we make $25 profit on the sale.

Note that VAT is also payable on shipping costs from the warehouse to the customer.

For some of the more common Weta Workshop price points, the additional amount we charge EU customers and then pass on to the Dutch Tax Authority is:

  • $249 = $52.29
  • $399 = $83.79
  • $499 = $104.79
  • $799 = $167.79

Not used to seeing VAT? Usually, when you purchase something in a shop on the high street, VAT is included on the price tag as everybody pays the same tax for that item. You may find it’s displayed on the till receipt in most countries. 

Because our online shop is global we can’t simply display the VAT-inclusive price, because it doesn’t apply to everybody, everywhere. For example, items shipped from our New Zealand warehouse to New Zealanders attract a different sales tax charge of 15%.

We don’t know for sure where you’re from and what you’re buying until checkout, which is why we add regional sales tax at that point.

So what about items shipped from our New Zealand warehouse to customers in the EU? Good question. They won’t attract a VAT charge from our side, as we haven’t declared anything to bring them across the border into our EU warehouse. Instead, the transaction is between the local Tax Authority and the customer. Effectively, the customer becomes the importer and will be charged by the local Tax Authority when the goods pass through customs. In the same way we pay the Dutch tax authority when we import into our warehouse in The Netherlands.

Whether it’s coming from an offshore warehouse or a warehouse in your region, the tax will be paid one way or another.

If you have any further questions about sales tax, please get in touch with your local customs office who will be able to explain any local variance to this generic description of sales tax.

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