Smal Rant re. eBay Managed payments for international sales. Fees on fees on fees!

vacheron

Hi All.

I really need to get this off my chest. I am also questioning the legality of this practice by eBay.

Yesterday I was made an offer from a buyer of £600 for some old test equipment I no longer need which I had had listed as a "buy it now" for £695.

After accepting the offer I noticed that the buyer was in the USA. No problem I thought, the Global shipping program takes care of this for me so I don't need to worry myself with anything (as eBay keeps on telling me). 

This morning I check my earnings to find that the payment is "pending", but that the fees for the £600 sale come to £99.11 (over 16.5% of the actual sale price!).

Drilling into eBays fees breakdown I discovered that the FVFs have been charged on a sale price of £660.50 which includes the £600 sale price, my £20 UK shipping cost (fair enough... well, not fair but at least explained)...... plus £40.50 "Sales Tax". 

They then add a 1.8% "international fee" on this whole £660.50 total and then VAT on top of everything.

So eBay are:

• Charging me a final value fee on a total which includes a USA "Sales Tax" on a second hand item sold from my personal eBay account which that I had no idea was payable and which it is the USA buyers responsibility to pay.

• eBay are then adding a 1.8% "international fee" on the item including the USA "Sales Tax", but ALSO on the (entirely UK based) postage element to the Global Shipping Warehouse.

• They then add 20% UK VAT on the £40.50 USA "Sales Tax" AND on the Sales Tax Final Value Fee AND on the Sales Tax International Fee AND on the "International" Fee I paid on the UK POSTAGE element of the shipping! 

I have often defended eBays charges on this forum, but I really think that this is a grossly unfair stacking of charges on top of a vague and undefined international tax which I (as the seller) was neither responsible for or aware of.

Also, and how is it fair to add UK VAT to a foreign tax while simultaneously charging an "International Fee" on the UK shipping element of the transaction to the eBay GSP warehouse (which I am ENTIRELY responsible for both arranging and paying for)??? 

Does anyone have any thoughts about the legality (or at the very least the morality) of this practice?

Spoonie_Turtle

On the one hand, it's not your fault the buyer is international, paying sales tax, and using a different currency.

On the other hand, without eBay's platform you likely wouldn't have reached that international buyer.  And that % is less than most auction houses charge.

Charging fees for the US sales tax feels wrong, you don't see a penny of that - but they can't charge the buyer a fee for processing it (just like they don't charge us a separate fee for processing VAT when we buy from abroad) and it is an extra cost they wouldn't have if it wasn't sold internationally.  But including it in the FVF feels wrong.

VAT, I don't understand unless you're a business.  I suspect the way that's charged is to do with HMRC's rules rather than eBay's.

But overall, yikes.  Personally I think charging all those fees is a major deterrent to trying to sell internationally.

the_lunatic_is_in_my_head

For some reason eBay only do this with Sales Tax in the US and yes it is a swindle. 

I asked eBay about this and was told:

As a competitive online marketplace, all charges are subject to fees to minimize inflation of shipping costs and/or sales tax/VAT added by the seller. This creates a fair experience across the eBay site for both buyers and sellers. 

Of course it's perfectly fine for eBay to inflate those aspects.... 

Spoonie_Turtle

How the … ?!  Sellers don't add the sales taxes, or VAT!  What an absolute cheek to say that as their justification.

tightauldgit

Quite a lot to dig into there.... 

1. Are ebay right to collect the US sales tax? Presumably yes if it needs to be paid
2. Are they right to add it to the FVF calculation? Slighty iffy I think but I suppose the FVF are stated as inclusive of any taxes, I presume a business seller also gets charged FVF on the VAT element of any sales and you'd expect that so overall I'm probably coming down on the side of it being OK although annoying. 
3. Charging international fees on the domestic postage - I think that's fine to be honest, it's a percentage of the total sale value for an international transaction. 
4. Charging VAT on top of everything - yes i'm afraid that's the law. The VAT is on the Ebay fees and fees are VATable in the UK so Ebay need to charge VAT on any fees that they charge you. It's not charging VAT on the foreign tax, it's VAT on the fees Ebay charged you to process the foreign tax.   

So overall I guess I'm saying that it's probably right but I understand how annoying it would be. I think probably Ebay should have done a better job of being transparent about the fees in this case but how much extra are we talking about 10 or 15 quid? Which isn't a huge amount to pay in the scheme of things for the benefit of being able to access a global market with your listing. If you'd been made aware of them before hand more clearly though you would have been in a better informed position to decide whether to sell or not at the offer price to a foreign seller. 

se2020

On one hand, although you may have been unaware of the total fees, they are actually listed on the ebay site and you do have to agree to them when signing up to use the gsp option.

What's annoying is there is no warning of having to pay extra fees when you get an offer to review (as you could then take the extra fees into account when deciding to accept or not.

For example,  I've previously listed some popular items for £200, received several offers for £175 from a uk buyer and £185 from a international buyer, accepted the £185 but would have ended up better off taking the £175

When you look at the total the buyer has paid though they also seem to be paying a high level of fees/taxes/extra postage so you may well loose international sales if you don't accept the lower offers?

It wouldn't take much for ebay to add some sort of info into the "review offer" section to tell you the actual total you will get if you accept but people have been asking for that for years and it's never happened..

Apparently they were going to do something about being able to have different postage prices to remote uk locations as well but still waiting foe that as well...

the_lunatic_is_in_my_head

tightauldgit said: I presume a business seller also gets charged FVF on the VAT element of any sales and you'd expect that so overall I'm probably coming down on the side of it being OK although annoying. 

VAT that is included in the BIN price (or auction end price) obviously attracts FVFs but AFAIK Market Facilitator VAT doesn’t, neither does import tax on orders to Australia.

IIRC US Sales Tax was the first tax eBay had to collect, then Australia, then Norway, then UK and the EU. eBay often has different policies for different sites and it may simply be a US policy which is why it doesn’t apply to the other countries.

the_lunatic_is_in_my_head

Spoonie_Turtle said:

How the … ?!  Sellers don't add the sales taxes, or VAT!  What an absolute cheek to say that as their justification.

I think that was the best they could offer to a question they didn’t know the answer to.

vacheron

Thanks everyone for all the feedback. 

To summarise, I don't have any problem with the international fees (appreciate there are currency spreads etc. to take into account). Nor do I mind paying eBay fees in general to present my item to an audience of the size that only eBay can realistically provide. 

My main issues I feel are still remaining after reading the thread are:

1. Why do I have to pay a 1.8% "International Fee" on the UK element of the postage? I can understand paying FVF's on postage to prevent the previous abuse that was rife (sellers offering almost free items with huge postage charges), but if the FVF alone is considered sufficient do discourage this abuse, why do I have to pay 1.8% more just because my item is going overseas when I myself am still sending the parcel to a UK address and paying the charges out of my own pocket (i.e. not doing anything different than I would have done had the buyer been in the UK ).
   
   
2. If there are occurences where the sale will trigger some obscure "Sales Tax" to which eBay will add associated fees, this should be disclosed by eBay, (who clearly already knew that this would be payable) at the time the offer is presented so that the total cost of the sale can be considered.
   I have sold on eBay for 23 years and have never seen this before, so it is either a "managed payments" related change, or I have just never noticed this before.
   Even more concerningly.... what if the country happened to charge a 700% sales tax? In this case the fees eBay would charge me would exceed the entire value of the item! 
   
   
3. I appreciate that I am not paying the Sales Tax, just eBay FVF fees on the Sales Tax, and international fees on the sales tax...... and then VAT on top of both of these fees, but if I offered to pay the whole Sales Tax directly to the buyer using my overseas credit card, I wouldn't be charged any fee, nor would I have to then pay VAT on those fees, hence my irritation.
   
   EDIT: I've just checked the invoice to the buyer and eBay have charged them £79.54 Postage (of which £20 went to me (minus their fees of course). Bur most interestingly, they have charged the buyer £45.87 Sales Tax when they state on my fees breakdown that this was £40.50. So it seems like they are double collecting extra from both me and the buyer and pocketing it! 

Thanks for the input so far. I certainly found it an interesting discussion.

the_lunatic_is_in_my_head

vacheron said:

1. Why do I have to pay a 1.8% "International Fee" on the UK element of the postage? I can understand paying FVF's on postage to prevent the previous abuse that was rife (sellers offering almost free items with huge postage charges), but if the FVF alone is considered sufficient do discourage this abuse, why do I have to pay 1.8% more just because my item is going overseas when I myself am still sending the parcel to a UK address and paying the charges out of my own pocket (i.e. not doing anything different than I would have done had the buyer been in the UK ).
   

The international fee is payable on the whole transaction, FVFs on postage are not to stop excessive P&P (postage caps would cover that), it was simply a growth area for eBay without them having to increase the headline fee rate. 

Before managed payments you had cross-border fees with Paypal working in the same way. It's simply to make money (not for you of course). 

vacheron said:

1. 
   
   
2. If there are occurences where the sale will trigger some obscure "Sales Tax" to which eBay will add associated fees, this should be disclosed by eBay, (who clearly already knew that this would be payable) at the time the offer is presented so that the total cost of the sale can be considered.
   I have sold on eBay for 23 years and have never seen this before, so it is either a "managed payments" related change, or I have just never noticed this before.
   Even more concerningly.... what if the country happened to charge a 700% sales tax? In this case the fees eBay would charge me would exceed the entire value of the item! 

They do say the fees apply to everything including taxes, I think it's just not expected you will pay the FVF on the taxes eBay have to collect. 

When eBay first had to collect this Sales Tax (which is a specific term for the US) there wasn't managed payments, if you sold an item for £10 total to a US buyer in a state imposing the tax at 10% (example) you'd pay FVF on the £10 IIRC however your Paypal account would receive £10 plus £1 and that £1 would then be taken out again and Paypal charged their fees on the full £11. There was complaints at the time but like everything else eBay don't have much interest in what the selling community think and do as they wish.

vacheron said

I appreciate that I am not paying the Sales Tax, just eBay FVF fees on the Sales Tax, and international fees on the sales tax...... and then VAT on top of both of these fees, but if I offered to pay the whole Sales Tax directly to the buyer using my overseas credit card, I wouldn't be charged any fee, nor would I have to then pay VAT on those fees, hence my irritation.

You'd have to pay the State the buyer lived in in USD and you card company would likely charge an international fee for this, they'd also stiff you on the exchange rate. 

Paypal use the current exchange rate plus 4.5% which must a nice earner for financial institutions.

The same will happen with eBay, your buyer probably had a funding source in USD although I'm not sure if the currency exchange rate benefits eBay or Adyen (their payment provider).  

eBay do have a 2.5% mark up on exchanges if you run up fees in other currencies and then pay in GBP. 

vacheron said:

1. 
   EDIT: I've just checked the invoice to the buyer and eBay have charged them £79.54 Postage (of which £20 went to me (minus their fees of course). Bur most interestingly, they have charged the buyer £45.87 Sales Tax when they state on my fees breakdown that this was £40.50. So it seems like they are double collecting extra from both me and the buyer and pocketing it! 

Thanks for the input so far. I certainly found it an interesting discussion.

Not sure what you mean by the invoice? Checking the last sale from the start of June the view order details page and the transaction summary in the Payments tab both match.

All in all the FVF on the sales tax are typically a few pennies (steal a million pounds and you'll be in trouble, filter pennies from millions to yourself and you'll get away with it), assuming you are a private seller it cost you an extra £5.95 in fees on this occasion as the item price was expensive, which is bad luck really  

Overall the FVF on the sale tax probably doesn't outweigh the benefits of selling to the US.  

vacheron

vacheron said:

1. 
   EDIT: I've just checked the invoice to the buyer and eBay have charged them £79.54 Postage (of which £20 went to me (minus their fees of course). Bur most interestingly, they have charged the buyer £45.87 Sales Tax when they state on my fees breakdown that this was £40.50. So it seems like they are double collecting extra from both me and the buyer and pocketing it! 

Thanks for the input so far. I certainly found it an interesting discussion.

Not sure what you mean by the invoice? Checking the last sale from the start of June the view order details page and the transaction summary in the Payments tab both match.

All in all the FVF on the sales tax are typically a few pennies (steal a million pounds and you'll be in trouble, filter pennies from millions to yourself and you'll get away with it), assuming you are a private seller it cost you an extra £5.95 in fees on this occasion as the item price was expensive, which is bad luck really  

Overall the FVF on the sale tax probably doesn't outweigh the benefits of selling to the US.  

Thanks for all the feedback. 

To clarify your question above, whenever I print a postage label I also print the packing slip and fold it in with the postage lable in a clear document envelope.

This packing slip shows all the fees the buyer has paid. 

The buyers packing slip (bottom image) includes the sales tax ebay have charged the buyer for and it states "Sales tax £45.87",  but in my fees breakdown (top image) it shows sales tax as £40.50?

EDIT (AGAIN): The fees breakdown (top image) states that there is an international fee because the buyer is in the united states. But the buyer and their postal address are both in Calgary, Canada which is not in the United States! 

WHY do you make things so confusing eBay!