VAT Exemption: Germany grants a VAT exemption for export sales under Section 4 No. 1a and Section 6 of the VAT Act (UStG) if the car is destined for a non-EU country (third country).
Conditions for Exemption:
The car must leave the EU, and VW (or the dealer) must provide proof of export, like an Export Accompanying Document (EAD) stamped by customs at the EU exit point.
The buyer is typically a non-EU entity, or the dealer explicitly declares the car is for export.
Title Transfer:
If VW sells directly to a non-EU buyer: Title might pass at the factory (e.g., under EXW terms) or when the car crosses the EU border, depending on the contract. For exports, title often transfers when the goods are handed to the carrier or clear customs, but this is negotiable.
If VW sells to a German dealer for export: Title passes to the dealer domestically (as above), but the dealer then exports it. The dealer pays VW the net price (no VAT) or gets a VAT refund later, contingent on export proof.
Short version, the tax is already levied and would normally already be paid. The Volkswagen factory must fill out a separate request showing the car is to be exported to get an exemption. In some cases it must get a refund because the tax has already been paid.
This is not a case of “Volkswagen never di anything taxable in the first place.” This is a case of a Euro country carving out a special tax exemption to thwart free trade and dump goods onto the US at an artificially low price.
Same car, (Volkswagen Golf R)
$59,000 in Germany
$48,000 after shipping in the US
No, the final sale is when the final purchaser of a new product purchases it. And at that point - in that physical region - the appropriate tax is applied. Why would a US firm pay a VAT to Germany? The VAT is paid in the US (or in the US, a final-sales tax is applied since we don;'t tax intermediates).
The
That’s in large part because there’s no final-sale VAT in the US price. That’s the whole point.
If I buy a Tesla in Germany should I have to pay Texas or CA sales tax? Of course not. The VAT is imbedded in European and Canadian prices.
International trade has never worked that way.
since teh days of tea an pattriotsm heck since teh days of Romans and wheat the buyer has always wanted the be able to show up at the harbor, point to the cargo and say 'That belongs tio me. it is mine."
He has never wanted to say 'That will be mine soon it will be mine after some paperwork arrives."
Insurability is a complex question but ownership passes before the ship is loaded.
Recognizing that widely known fact
the German law and the other laws wrote an exemption. for exports.
NOTE: by definition, an EXEMPTION means “if the normal procedures were followed the tax would apply we must take special action and carve out a special case.”
If you truly support free trade you will be on my side on this issue.
There is still plenty of room to say “Trump is going about it all wrong. He is being a total jerk and this might backfire.”
But an exemption is just what the name implies.
And this tax exemption is an exemption it is a non-tariff barrier to free trade.
No. I live in a VAT country that is part of a trade union with a harmonized VAT. Every country in that union has an “exemption” but it doesn’t mean that VAT is not paid. It means the VAT is paid at final sale. We don’t tax exports because it’s taxed at the destination. We don’t tax imports because those goods pay VAT upon sale.
Which occurs when the truck drops off the shipment at the harbor.
Always has always will.
Tht when when the ship arrives the buyer is already the owner.
(that means the sale ahs already taken place.)
That’s what the customer wants.
That’s what the customer gets.
The customer is always right.
It was that way when I lived on Taiwan and worked for a contractor to Monster Cable
It Predates Marco Polo.
Fair enough.
My statement should have been
The sale that takes place at the harbor is exempted from the tax.
You sell something to John and Mary and bill all of those are sales all of those are taxed.
John produces a piece of paper saying “I’m exporting these” and the tax, which would normally apply is now exempted from the normal procedure.
NOTE: You don’t get an “exemption” if the tax never applied in the first place, right?
(That is the definition of exemption. It is functionally no different than if Ford and its employees are exempt from paying normal FICA taxes etc. when they produce a piece of saying “these cars are for export.”)
Yup, back in the days of woofers and tweeters and really cool stereo equipment I was on Taiwan, as a liaison and English teacher at a contractor for Monster Cable.
They needed some help understanding contracts, and Taiwan was getting expensive, they wanted to move the fab and were considering S Africa and Thailand. Eventually Thailand one (better whores)
Saving the other conversation for when we have more time:
Not quite an audiophile but when I was younger (and earned less but had more disposable income) I spent a lot of money convincing myself I could hear the difference between “cheap” audio paraphernalia and Monster’s stuff.
Trump says a lot of things. Lets see if this gets traction.
Costing $10b a year is going to be a tough sell but on the face of it I like the idea.
My Tucson is only 50% made in the US so doubt I would qualify. For me personally a tax break on interest payments would not sway me on buying 100% manufactured in the US.
Funny thing is as the kids left home we downsized our car and now have to upsize again cos of increasing number of grandkids .
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