The Trump administration is confused about European VAT taxes. Right here is how they work

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It is going to be attention-grabbing to see what the Trump administration at the moment says about European VAT taxes, which appear to be a spotlight of a number of administration officers together with Peter Navarro.

That pondering is inflicting confusion as a result of these are primarily consumption taxes.

In any case, the Tax Basis is out with a worthwhile learn explaining how European VAT taxes work compared to US gross sales taxes.

Two eventualities as an example.

US export to Germany:

  • Ford manufactures a automobile within the USA and exports it to Germany.
  • When the automobile arrives in Germany, German VAT (e.g., 19%) is utilized at importation.
  • A German shopper buys the automobile and pays the 19% VAT, identical to they might for a German-made automobile.

German automobile bought in Germany:

  • BMW manufactures a automobile in Germany and sells it domestically.
  • The buyer pays German VAT (19%) on the BMW.

That is well-understood however for some purpose the Trump administration sees it as a tariff, although it may all be posturing to arrange a transfer to tax German automobile exports.

This text was written by Adam Button at www.ubaidahsan.com.



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