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Subject: international shipping -- customs rss

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Jon Ruland
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could you tell me the proper forum to post this question? we are a small hobby publishing company (Spider-Goat Games) and international shipping has bit us twice now with the two games we have published.

for our second game, Martial Art, we did manage to price the international shipping fairly close to what it actually cost us as we had learned about shipping problems the hard way from our first game, Gangster Dice. however, for Martial Art many of our backers were hit with customs fees and were understandably unhappy about it.

so my question is if there is a good way to avoid customs fees for our international backers? for Martial Art we shipped about 350 packages so a fulfillment company probably isn't feasible until we reach the 500 mark or so.

any suggestions?
 
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Emanuele Buffagni
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Unfortunately you cannot avoid customs
One of your backer may be lucky enough to avoid custom officers check, but that's all.

Are you sure that a fulfillment company is not good?

I contacted some of them for a project I'm working on and most does not have a minimum order quantity. I suggest to contact them and ask for more information.
Maybe you'll be surprised



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Yaron Davidson
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There are a few things you could try, a few more if (as I assume from a quick look at your games) these are shipments as a result of crowdfunding (e.g. a KS campaign) rather than direct sales.
But as mentioned there isn't a clear cut way to just avoid it, if a country charges VAT for imported goods, and you import goods, then legally you need to pay VAT.

So a few things, which may be relevant for you:

1. Just to start off, DO NOT try the obvious thing of just listing the value as nothing/gift or or $1 when your packages are clearly not just an envelope with a short letter. And not just because it's illegal. In some countries/times these could attract extra scrutiny rather than less, especially if you ship multiple packages at the same time (which for a KS you may), and in some countries if they do check and decide the content has value this could cost your customers/backers more (some can charge extra if they suspect attempts for cheating. Others would just require customers to provide an invoice and for a few this would carry a surcharge for the work done, regardless of the values and if the end result still shows no VAT is due, that could be higher than the original tax).

2. When you do list the value on the packages/envelopes, list both the item/goods cost, and the shipping cost, but list them separately.
Listing both is important since it's a legal requirement and if VAT is due then in most (all?) cases it's for both goods and shipping.
Listing separately is important because in plenty of countries the decision whether VAT is due (minimum trigger value) is based on the value of the goods themselves, not including shipping, even though if VAT has to be paid then it will be paid also on shipping.

3. VAT on a shipped package is only paid for what is actually shipped in the package. Which feels obvious (if there is an order for two items worth $20 each, but only one is shipped in the package, it's obvious the package doesn't have a value of $40 even though that was the entire invoice), but has some implications that can be relevant depending on the situation:

3.1. KS projects have, or can have, parts of the pledge which aren't actually shipped. KS themselves are very clear that they're not a pre-order system, they're a crowdfunding system, and if you just use them for pre-orders (which admittedly some companies do) then you're violating their TOS. So semantically the pledge ($20 reward for a game) isn't an order for the rewards, it's an "order" for the rewards, but also for helping something happen that wouldn't have otherwise. Any value you, as the project runner, gain from a KS pledge that you wouldn't from a later purchase in retail ("why would you want me to back your KS instead of wait to buy later?") is something that the backers paid for. Whether it's to help make the game happen, to let you grow the company, to help make the game better (actual use of SG) rather than just get a copy of what it would be otherwise, or other, these all aren't shipped in the envelope. Neither is the ability to influence the game (if you do listen to feedback during the campaign and not just running a finished game) entirely worthless, I'd suspect.
So (provided, of course, that you do take advantage of the crowdfunding and not just using it as a pre-order system) listing them in the value of the shipped package is wrong. What exactly is the value of these, compared to the value of what is actually shipped as a part of the "transaction" is hard to define, and really depend on your situation (assuming, again, you want to be both legal and honest/ethical). Some companies do consider it a pre-order and listing anything than the pledge level won't be ethical/legal for them. Others do feel justified in listing at least cheaper bulk purchase prices, because essentially it's a mass sale (if you had one investor wanting 350 copies wouldn't you give them an even lower cost? ), others who do take advantage of the funds for all the support cases feel comfortable listing the value as at-cost/materials, because for them this is true.
You need to consider what is your situation and how you'll handle the funds, and you'll need to make a decision that is true enough that you'll feel comfortable issuing proper invoices for if needed.

3.2. Related, you can also create explicit non-shipped (possible even with non-crowdfunding campaigns, but easier with). Do you have a starting $1 pledge just to get updates? So then the $20 game pledge includes this too, and this is clearly priced by you at $1, so even as pure pre-order it's fine to list that you only ship $19. Do you maybe have a $5 pledge to be listed on a "thank you" list in the manual or on your website, and the $20 game pledge includes it also? Same thing. Just explicitly list in the pledge level something like "including all previous pledges" or "+ receive updates + get credits on ... + ..." or "+ pledge level 'Credit Me' + pledge level 'Whatever'" , just so if the KS pledge/payment itself is used as an invoice it will clearly show that these are a part of the transaction rather than later excuses.

3.3. And from a different angle, depending on the components of your game and the shipping costs for small envelopes/packages, is it possible for you to split the game into different parts, and ship them separately? So have a pledge for "just the cards", one for "just the dice", one for "the empty box with our glorious cover picture", and one for "the complete game bundle deal". And even for the "bundle" ship each part separately, and with at least 3-4 days distance (legally in many countries different orders shipped from the same sender to the same recipient within a few days are considered one shipment for the purpose of estimating value for taxes).
To have this really be legal and ethical it needs to be real, though. If someone for whatever reason really does want just the box, or just the dice (or whatever) they should be able to.
And then you just need to figure out the pricing so that each of the individual costs is below the VAT threshold everywhere, and the "full game bundle" with 3-times shipping (which may be less since maybe you really can just use smallest padded envelopes?) doesn't become too expensive.
[As a more straight-forward example, Looking at your Martial Art KS page, the 1 game pledge should already be below VAT threshold pretty much everywhere, as long as you listed the value separate from shipping. So if you had VAT I assume it was with the 2 copies bundle. If you had a 2 copies in two shipments option, this would have cost extra in advance to interested backers, but should have removed VAT from most/all of Europe with staggered shipping. Not necessarily worth it, paying extra $9 to save $5-8, but with the possible delays/hassle or other surcharges, and the added certainty, maybe helpful)
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Jon Ruland
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ChaosGate wrote:
Unfortunately you cannot avoid customs
One of your backer may be lucky enough to avoid custom officers check, but that's all.

Are you sure that a fulfillment company is not good?

I contacted some of them for a project I'm working on and most does not have a minimum order quantity. I suggest to contact them and ask for more information.
Maybe you'll be surprised


hm, i only contacted ShipNaked and their MOQ for initial "burst" shipment is 500 so i thought that was the standard but maybe i'm wrong. i'll check out some more. do you have any suggestions? which did you contact?
 
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Jon Ruland
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yarondav wrote:

2. When you do list the value on the packages/envelopes, list both the item/goods cost, and the shipping cost, but list them separately.
Listing both is important since it's a legal requirement and if VAT is due then in most (all?) cases it's for both goods and shipping.
Listing separately is important because in plenty of countries the decision whether VAT is due (minimum trigger value) is based on the value of the goods themselves, not including shipping, even though if VAT has to be paid then it will be paid also on shipping.


thanks for the very in-depth and thought-out reply yaron.

regarding the shipping cost, are you referring to the cost to ship the reward to the backer or the cost to ship the games from the printer to myself?
 
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Jon Ruland
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yarondav wrote:

[As a more straight-forward example, Looking at your Martial Art KS page, the 1 game pledge should already be below VAT threshold pretty much everywhere, as long as you listed the value separate from shipping. So if you had VAT I assume it was with the 2 copies bundle. If you had a 2 copies in two shipments option, this would have cost extra in advance to interested backers, but should have removed VAT from most/all of Europe with staggered shipping. Not necessarily worth it, paying extra $9 to save $5-8, but with the possible delays/hassle or other surcharges, and the added certainty, maybe helpful)


i have heard that you can list the cost to produce the item rather than the retail or pledge "price" of it. for example, if it costs $3 to print a deck then we could list its value as $3 on the customs form. i am told the Tiny Epic people do it this way and it's perfectly legal. is this true? this would allow us to avoid the VAT just about everywhere.
 
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Yaron Davidson
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jruland wrote:
regarding the shipping cost, are you referring to the cost to ship the reward to the backer or the cost to ship the games from the printer to myself?

I was talking about shipping to the backer of course, I think that was what your question was about. If you had backers that had to pay VAT for games shipped to them, this is based on the value listed on the package sent to them.

If I misunderstood and the question was about the total increased cost for everyone because you yourself had to pay additional import taxes for the delivery from the printer, well, nothing really you can do about that beyond checking how much it would cost in advance and factoring it into the pledge levels and funding goal as another expense.

[q="jruland"i have heard that you can list the cost to produce the item rather than the retail or pledge "price" of it. for example, if it costs $3 to print a deck then we could list its value as $3 on the customs form. i am told the Tiny Epic people do it this way and it's perfectly legal. is this true? this would allow us to avoid the VAT just about everywhere.[/q]
Please read my point 3.1 again, it was mostly about that (what could make listing of at-cost/materials be potentially correct, and acceptable, when shipping crowdfunding rewards and not direct sales).
 
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Jon Ruland
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got it. thanks yaron.
 
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Emanuele Buffagni
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jruland wrote:
ChaosGate wrote:
Unfortunately you cannot avoid customs
One of your backer may be lucky enough to avoid custom officers check, but that's all.

Are you sure that a fulfillment company is not good?

I contacted some of them for a project I'm working on and most does not have a minimum order quantity. I suggest to contact them and ask for more information.
Maybe you'll be surprised


hm, i only contacted ShipNaked and their MOQ for initial "burst" shipment is 500 so i thought that was the standard but maybe i'm wrong. i'll check out some more. do you have any suggestions? which did you contact?



Well, first of all, I asked some users a feedback on Shipnaked since I wanted to use them. The thread is here, maybe it can give you some usefull information

The company I contacted are:
- Spiral Galaxy (Europe)
- Funagain Games (US)
- Starlit Citadel (Canada)
- Aetherworks (Australia and New Zealand)
(I'm still missing one for Asia and South America)

You can easily have more information about them with google.

They all told me they don't have a minimum order quantity (hope they were not lying )

Please consider that I have not personally used any one of them yet, so I cannot provide quality information. I got only some good feedbacks of them from different people. For example if you check Stonemaier Games blog you can read a lot of reviews of different companies. In particular check this article:

http://stonemaiergames.com/insights-from-fulfilling-scythe-p...

I contacted also Fulfillrite (I got some very good feedbacks also on this company) but they said they ship all the goods from their US fulfillment center, so I don't know if they can do a "Friendly Shipping" to other regions.

I really suggest you to contact them, they were very kind and answered all my boring questions!


Also please note that you don't avoid customs with a fulfillment company. The company pays the customs for you and you refund them later. The final backer does not pay any additional fees.
The good thing is that if you send the games directly to them from your game manufacturer you pay customs based on the manufacturer cost not the final cost the backer paid. thumbsup

If something is not clear feel free to ask again, sorry but my English is terrible!
Also if I said something wrong and other users with more experience have something to say, feel free to correct me!
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Jon Ruland
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that was great, thanks a bunch!

the main thing a fulfillment company would do for us is ship the rewards within the region (e.g. EU) thereby avoiding customs import fees (i think?).

i'll look into your other suggestions. you have been very helpful!
 
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Emanuele Buffagni
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Quote:
the main thing a fulfillment company would do for us is ship the rewards within the region (e.g. EU) thereby avoiding customs import fees (i think?).


Yes, if the company ships within the region, the final backer does not need to pay any custom fees because the company already paid for them when they received your games (and you will refund them later).

So, basically, you are the one who pays the customs and your backer is happy!



 
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Jon Ruland
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i see, cool. very nice.
 
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