Orders and subscriptions to EU / Belgium: IOSS and custom taxes

[Senonu]

Here's to getting this fixed before the Dark Archive special edition ships out!

@Brian: As one software architect to another, thank you for doing this. This clearly isn't part of your job, so I'm stoked that you're picking it up.

With some guilt, I'd like to add a little something extra: you guys have the wrong tax rate for the Netherlands (and likely other EU countries as well), as books tends to fall under a lower tax percentage. It tends to be a significant difference.

[tomeric]

Thanks for the update Brian, I just e-mailed my PostNL receipts to the customer service e-mail. Store credit is a fine solution for me.

[Brian Bauman]

Clarifications and updates:

Eledriel Darkfire wrote:

While this sounds like a nice thing from Paizo to do in the way you phrase and post it, I'm sure you and Paizo are aware that you're legally obliged to pay back any VAT that you collect but that is never received by the federal tax offices where the VAT is due?

Correct. To the best of our understanding, we both charge and remit VAT fees correctly. The issue at hand is with how we do our real-time reporting. So the VAT we collect is being remitted to various governments as appropriate, but customs officials aren't aware of that and are charging again.

We're committing to not only reimburse you for the redundant VAT charges levied by your local customs offices, but also for any additional penalties, fees, and other assessments from your customs office caused by this issue as well.

Eledriel Darkfire wrote:

To be honest, when I see how long it takes for customer service to work on IOSS issues they are sent, I could only guess that I will receive store credit roundabout 9 to 15 months after Paizo collected the VAT? (I've not yet received any feedback on some mails to customer service from beginning of the year)

We are currently trying to improve our ticket handling workflow such that tickets involving financial issues are handled in a more expedited fashion. This very thread is evidence of how much more complicated issues like this become when they're not handled quickly.

Quote:

Additionally, store credit is not the same as a refund - it can't be used on subscriptions, and I only can use it to generate more revenue for Paizo. And to be honest, with how it currently goes with IOSS and how long there was no improvement at all for months, and how hard it currently is to get any support from Paizo, I'm not that positive that Paizo will fix the IOSS issue any time soon, and if it is not fixed in the near future, I will simply stop ordering at Paizo.

So, in this case, future store credit would not be of any use for me. It is money I paid to Paizo and not received anything for it.

This is not really acceptable. At least there has to be a guarantee that the store credit will be in the account within days (not even weeks!) after sending the receipts to Paizo.

These are entirely reasonable concerns and objections. A few notes:

• Store credit can be used on subscriptions. To control this, visit your subscription management page and ensure it's set to use store credit if available.
  
• Sometimes store credit doesn't apply to orders properly, and this bug can affect subscription orders. In such cases, you should be able to contact CS to refund and manually re-process your order to correctly incorporate store credit.
  
• As mentioned above, Paizo is technically not refunding the VAT it has (correctly) charged and remitted. Rather, it is reimbursing you for the extra fees charged by your customs offices, which in many cases will exceed the original VAT we charged. This distinction may seem pedantic, but it's an important distinction to maintain accurate accounting records.
  
• I recognize that store credit is both "friendlier" to Paizo's accounts and has less marginal utility to you than cash. Hopefully my points above alleviate at least some of your concerns regarding not being able to use store credit for your normal Paizo activity.
  
• I recognize that it's frustrating (or at the very least, skepticism-inducing) to ask you to rely on opening tickets with Customer Service given the origins of this thread. Hopefully the continued existence of this thread and my commitment to updating it daily will ensure that such tickets will not become lost in the ether.
  

Locotomo wrote:

Not a tax problem, but I tried to cancel an order (accidentally ordered the physical book instead the PDF).

Can you please look into this before you send the book?

Hi, Locotomo. CS got to your ticket before I looked into it - you should have a response in your inbox from this morning.

Zaister wrote:

I've looked through my orders in the online history, and it looks to me that Paizo has started collecting VAT at the beginning of 2022, so in my case all my subscription orders this year would be affected. I'll see if I can find all the UPS receipts.

Hello, Zaister! That timeframe matches our records, as well.

Senonu wrote:

With some guilt, I'd like to add a little something extra: you guys have the wrong tax rate for the Netherlands (and likely other EU countries as well), as books tends to fall under a lower tax percentage. It tends to be a significant difference.

Hello, Senonu!

I looked into a few of your recent orders, and we appeared to be charging the (lower) Netherlands rate of 9% for both our books and the shipping and handling on said books. Additionally, I checked the tax classification (used to determine the tax rate) for the products we shipped you, and they appear to be correctly set. If you feel we have overcharged you VAT on an order, please email [e-mail] with the order information in question so they can look into it further.

[The Raven Black]

Brian Bauman is Mythic. Paizo needs more people like him, especially at the top.

Here's hoping the whole top management team shares Brian's insights and values.

[Senonu]

Brian Bauman wrote:

Hello, Senonu!

I looked into a few of your recent orders, and we appeared to be charging the (lower) Netherlands rate of 9% for both our books and the shipping and handling on said books. Additionally, I checked the tax classification (used to determine the tax rate) for the products we shipped you, and they appear to be correctly set. If you feel we have overcharged you VAT on an order, please email [e-mail] with the order information in question so they can look into it further

Thanks for your reply! I stand corrected - the order still lists

Paizo Order wrote:

VAT rate at destination: 21.00%

but the actual VAT is 9% of the cost.

[Locotomo]

Thank you very much, all sorted

[Brian Bauman]

General update: early tomorrow morning I'm meeting with overseas representatives of our tax service to review our reporting practices and figure out our next steps.

Senonu wrote:

Thanks for your reply! I stand corrected - the order still lists

Paizo Order wrote:

VAT rate at destination: 21.00%

but the actual VAT is 9% of the cost.

Hi, Senonu - with the additional information you provided, I was able to track down the bug you're encountering. Though we're calculating and charging VAT correctly, the "VAT rate at destination" we display in user order history and on packing slips appears to be generic for a given address and time. For the Dutch, this would indicate a rate of 21% on all orders, which is obviously incorrect. I've opened a ticket to change how those reports are generated - to either use the actual effective rate of the order (which may be a mixture of rates across multiple product classes), or to remove the "VAT rate at destination" entirely, as a generic rate without the context of what was purchased is largely irrelevant and potentially confusing.

This problem is limited to the generation and display of the order history and packing slips. It does not affect how we actually calculate and charge VAT.

Thanks for bringing it to my attention!

[Lordlorien]

Thank you Brian for working this out and communicating the progress. Under these circumstances it is time to renew my canceled subscriptions!
Thank you very much.
For me the double payments are lost though since I through all documents into the trash .
Anyways …. I am glad I can jump onboard again.

[Brian Bauman]

Unfortunately, I don't have a real update today. I do know that CS has granted some reimbursements already, though I don't have statistics.

[tomeric]

Unfortunately, the luck I had last month has ended and this month I had to pay VAT+ for my shipment from June (Netherlands) again. I have forwarded the invoice to customer support, but thought I would keep everyone in the loop here as well.

[Brian Bauman]

We're currently waiting on information from our tax service, which hopefully will arrive on Monday.

[Brian Bauman]

Update:

We had a very productive meeting with our tax service today, in which we identified several ways in which our international reporting may be deficient. We've distilled the contents of that meeting down to an internal list of improvements, which we'll begin working on over the following days and weeks.

[Dalvyn]

Thank you, once again, Brian, for your continued involvement in this issue!

Know that it, and your daily updates, are very appreciated!

(And thank you as well to the CS employees who, in my experience, deal very efficiently and very kindly with the mails sent to the get the additional taxes reimbursed as store credit!)

[Brian Bauman]

Update: the issues are in development currently.

[Brian Bauman]

Update: We released fixes for a number of pressing bugs today, but work on the expanded requirements for VAT orders continues.

[Brian Bauman]

Update: Nothing new to report today.

[Brian Bauman]

Sorry about the late update today. Nothing new to report.

[Terevalis Unctio of House Mysti]

I guess my question is why these protocols weren't already in place. CS keeps getting worse and worse.

[Brian Bauman]

Update: No new information today.

[Brian Bauman]

Update: Today we finalized changes to how we model product and tax data for overseas shipping. These changes form the foundation upon which adjustments to our EU shipping strategy will rest.

[Franz Lunzer]

Brian Bauman wrote:

If Paizo has already assessed and collected VAT for orders from Europe, we will reimburse any fees assessed by your local customs office due to this issue. We will also continue to reimburse such fees until this issue is resolved. This reimbursement will be in the form of store credit added to your Paizo account. To receive this reimbursement, please send an email to [e-mail] with a copy of your receipt(s) from your local customs office and their associated order number(s).

Thank you Mr. Bauman, and Paizo for this. Too bad I did not keep a copy of those receipts.

I too did reach out to Paizo and never got more than an automated response [157212 ticked ID].

Could you please also send out an email to all likely affected EU subscribers so they too know about this solution? I suspect that most (like me) don't regularly check in on the boards all to often.

[Brian Bauman]

Update: We're currently working on several different issues the build off the model changes I discussed yesterday.

Franz Lunzer wrote:

I too did reach out to Paizo and never got more than an automated response [157212 ticked ID].

Could you please also send out an email to all likely affected EU subscribers so they too know about this solution? I suspect that most (like me) don't regularly check in on the boards all to often.

Hi, Franz,

It appears that we resolved that ticket three days after you filed it, but no response was sent informing you that we'd done so. I'm so sorry about that. Hopefully you've found that the changes you requested were completed to your satisfaction. If not, please let me know and I'll light any necessary fires.

I agree that this forum thread should not be the extent of our outreach on this issue. We're still determining the exact criteria that cause someone to run afoul of this issue - while it affects only customers who pay VAT, it does not affect all customers who pay VAT. I'll relay your request up the chain.

[Franz Lunzer]

Hello Mr. Bauman,

Sorry, that was actually the wrong ticket ID, that was the cancellation where I did get a confirmation, although not in reference to the ID.

The right ticket ID regarding the VAT / IOSS situation was 152488. (We can take this to PM or email, if you want)

Regarding your solution and reaching out to customers:
I get that even for you it might be hard to find out, who is affected and who isn't.
Still, it'd be great to see you informing your customers that they might be affected and to collect those receipts and not throw them away (like I did).

I feel a little screwed over by Paizo right now.

I get that you didn't do this to your customers on purpose. I know that changing the way you do business because of changing circumstances isn't easy, and sometimes you make mistakes, and your promise to reimburse not only the VAT collected, but also the fees your customers had to pay in addition is reassuring that you did not in fact want to screw your customers.

It's just that, I saw this promise more by accident than being informed by you directly. I didn't collect my receipts from the local customs office. Will I now get any reimbursement at all? Just getting the VAT charged by you would be enough for me.

I know that we are living in ... interesting times. I know that you doing business in these times is hard on various fronts, internally and externally, with suppliers and customers, that all have their own problems.
I see that you want to treat us customers right and want to have lasting relationships with us.
That is the Paizo I know and care about.
That and your fantastic Pathfinder second ruleset and wonderful Lost Omens setting is the reason I still buy your books, albeit more digitally than ever before.

I really hope you can sort out those CS Issues you seem to have right now.

Take care,
Franz

(I'm glad I saved my reply before hitting that [Submit Post] button. Damn server goblins)

[Brian Bauman]

Today's update: Nothing new to report. GenCon looms, so progress on this issue will be slowed.

Franz Lunzer wrote:

Sorry, that was actually the wrong ticket ID, that was the cancellation where I did get a confirmation, although not in reference to the ID.

The right ticket ID regarding the VAT / IOSS situation was 152488. (We can take this to PM or email, if you want)

...

Hello again, Franz

Thanks for the correction on your ticket ID. I'll email you.

I also very much appreciate your candid reply, and I completely understand your legitimate frustration and disappointment in Paizo's recent performance with your orders. Unfortunately, I am not in a position where I can make unilateral policy decisions regarding customer reimbursement or customer correspondence. As such, I will continue to do what I can - advocate on behalf of those affected by this issue and reporting back here regularly until either the issue is resolved or I am told to stop.

[H2Osw]

Brian Bauman wrote:

Today's update: Nothing new to report. GenCon looms, so progress on this issue will be slowed.

Franz Lunzer wrote:

Sorry, that was actually the wrong ticket ID, that was the cancellation where I did get a confirmation, although not in reference to the ID.

The right ticket ID regarding the VAT / IOSS situation was 152488. (We can take this to PM or email, if you want)

...

Hello again, Franz

Thanks for the correction on your ticket ID. I'll email you.

I also very much appreciate your candid reply, and I completely understand your legitimate frustration and disappointment in Paizo's recent performance with your orders. Unfortunately, I am not in a position where I can make unilateral policy decisions regarding customer reimbursement or customer correspondence. As such, I will continue to do what I can - advocate on behalf of those affected by this issue and reporting back here regularly until either the issue is resolved or I am told to stop.

I hope the time never comes that you are told to stop.

[Terevalis Unctio of House Mysti]

This 8s a failure of leadership.

[Zaister]

From my perspective, this seems to be working now for shipments to Germany. Last month, and again just now this month, I didn't have to pay any additional import tax to get my shipment.

Brian, could you perhaps check if the tax rates are set correctly for Germany? My invoice states, "VAT rate at destination: 19.00%". This is correct; however, Germany has a reduced tax rates for books at only 7%. I hope your system can handle that.

[Brian Bauman]

Zaister wrote:

From my perspective, this seems to be working now for shipments to Germany. Last month, and again just now this month, I didn't have to pay any additional import tax to get my shipment.

Hey, Zaister. Interesting - I don't see a clear distinguishing factor with your recent orders. That's good to know, however.

Zaister wrote:

Brian, could you perhaps check if the tax rates are set correctly for Germany? My invoice states, "VAT rate at destination: 19.00%". This is correct; however, Germany has a reduced tax rates for books at only 7%. I hope your system can handle that.

You're almost certainly seeing the display bug I explain here. I took a brief look through your orders, and nothing jumped out at me as erroneous in the amount of tax we've actually charged you. If you see something that looks amiss with how much we charged you, please contact customer service.

[Zaister]

Brian Bauman wrote:

Zaister wrote:

Brian, could you perhaps check if the tax rates are set correctly for Germany? My invoice states, "VAT rate at destination: 19.00%". This is correct; however, Germany has a reduced tax rates for books at only 7%. I hope your system can handle that.

You're almost certainly seeing the display bug I explain here. I took a brief look through your orders, and nothing jumped out at me as erroneous in the amount of tax we've actually charged you. If you see something that looks amiss with how much we charged you, please contact customer service.

Thanks for looking this up, Brian. I don't see anything wrong with the amount. And actually, I'm now saving money because I don't have to pay UPS's 10 € fee for doing the customs calculations.

[Brian Bauman]

Today's update: investigation continues, but nothing new of significance to report.

[Brian Bauman]

Update: investigation of one of the potential reporting deficiencies appears unlikely to be causing or contributing to the customs issues in the EU.

[Brian Bauman]

Wednesday update: we're down to the last few days before a bunch of us ship off to Indy for GenCon. We'll still have tech staff working on this issue, but I won't be able to commit to further updates until the 9th.

[Senonu]

Thank you for keeping us up to date, Brian. Have fun at GenCon.

[Dalvyn]

Thank you for everything you've done up to now, Brian!

Hoping that you can resume the very much appreciated efforts once you are back from GenCon (and have taken time to recuperate from it).

Have fun!

[Brian Bauman]

Friday update: Starting tomorrow, July 30th, orders that we ship to Europe via UPS (including Mail Innovations) will have improved e-filing that may resolve this issue. We will continue to work on additional improvements to our overseas shipping procedures, but we wanted to let you all know to be on the lookout for future shipments, and to let us know if you experience any changes on your end.

[Oliver von Spreckelsen]

Yesterday my first Paizo shipment without extra import tax arrived (after the new regulations were implemented by the EU). Good job!

[Eledriel Darkfire]

Hello all, hi Brian,
also feedback from me:
I received the store credit for the orders where I had to pay extra VAT a while ago.
Additionally, the last two shipments (sent July 29th and August 1st) both arrived after exactly 14 days each, and directly to my place instead of the customs office, and without anything needed to be paid extra.
So, I can feedback that it looks good at the moment for Germany.
I hope it will stay like that, and thanks Brian for taking care of this!

[Brian Bauman]

I appreciate everyone's patience through last week without additional updates. I spent some of it in transit from GenCon, some of it recovering from GenCon, and some of it catching up on the nearly two weeks I was out.

The improvement announced on Friday, July 29th should start having an effect - please let us know if your customs issues have been resolved for orders shipped after that date. We also intend to shortly release an update removing the misleading "VAT rate at destination" line currently visible on your order history pages and shipping labels.

In the meantime, we're working on the following:

• Improving how we track and handle Harmonized System (HS) codes to be country-specific
  
• Looking into improved handling of tariffs/duties for jurisdictions where that matters
  
• Ensuring our shipping labels and customs forms comply with requirements for commercial invoices for international shipping
  
• Adding additional cross-references between our e-filings, commercial invoices, and other documents to make the relationships more obvious for customs officials.
  

While these additional items are important, most of them are of one of two natures - either "quadruple-check that we did, in fact, build this right the first time", or "improve further something already working". They will likely be given a de-escalated priority if the UPS e-filing improvements resolve the issues reported in this thread.

As always, the most difficult part of this process is gathering the information about which efforts bear fruit, so please keep us updated if your shipments start being processed by customs differently (or if they are treated the same).

And once again - thank you all for your patience and continued patronage.

[Zhengy]

Hi Brian,
I can confirm what Eledriel said. Living in Germany I received the July shipment directly to my place. First shipment this year without extra costs!
Thank you for looking into this matter and your improvements to the process!

[Senonu]

I can confirm that my latest Paizo package (Dark Archive) also came directly without a new invoice for taxes.

I'll wait for the next shipment to be sure, but the issue seems to be resolved for The Netherlands.

Time to gather all those old receipts and drop them off at Customer Service.

Thanks for you and your team's efforts, Brian.

[Cyria]

The subscription package (July) arrived without extra tax for the first time this year (germany) !

[tomeric]

My Dark Archive shipment also arrived (in The Netherlands) without having to pay extra VAT.

[Ed Reppert]

Shut up, you guys. :-)

[Zephirion]

Yeay, my first shipment arrived in my mailbox without having to pay extra VAT! For years, I had to collect the package at the local post office.

Thank you for improving the international shipping situation! I'm really tempted to renew my old subscriptions for the module and campaign setting line ;)

[Totally Not Gorbacz]

So.

No VAT on my package! I didn't have to pay the usual 3-4 PLN (0.75 EUR).

But.

Polish post still charged me 8 PLN for "administrative fees related to handling the package" anyway because the best stealth taxes are ones you cannot dodge.

:D

[Dalvyn]

Same for my July subscription package. I got it without having to pay extra taxes this time. Let's hope the same goes for this month's package and the following!

Many thanks to Brian for taking the matter into his hands and paving the way for a solution that, I hope, will be confirmed to work in the following months!

[Brian Bauman]

Hello, everyone!

I'm so glad that everyone who has responded so far since the update is reporting no issues with their latest orders! The response is strong enough that we can be reasonably sure that the underlying issue lay with our predominant carrier for Euro-bound packages not including all the data they should have in the e-filings they transmit on our behalf.

From a technical perspective, Paizo will consider this issue tentatively closed until we have reason to believe there are additional problems with VAT reporting for overseas shipping. I'll continue monitoring this thread and responding when needed, but I won't be keeping to a strict update schedule going forward. I also intend to reduce the priority of the other VAT-related issues I outlined above, as they appear to be either non-issues or issues of vastly lower customer impact.

Our increased certainty of the root cause of this issue is enough that we can comfortably contact every customer in a VAT-paying country who received a shipment via the aforementioned carrier during the 2022 calendar year. We will be sending out an email to all such customers who may have been affected by this issue, explaining what happened and offering them the same reimbursement opportunity offered to folks in this thread.

I understand that several of you did not keep receipts or would prefer alternate forms of reimbursement, but regrettably I have been unable to secure additional reimbursement opportunities for you at this time.

Please feel free to continue to post status updates in this thread indicating whether your parcels are arriving to your residence stress-free (or not) until you feel personally confident that the issue is fully resolved. If I see an uptick in problems, we'll track down and resolve those issues as well.

Once again, please accept my sincere apology on behalf of Paizo for this inconvenience. You may live halfway around the world from us, but you all matter, and your continued support means a lot to me, personally. Y'all are lovely, and I hope we can interact again soon, under more pleasant circumstances!

[Totally Not Gorbacz]

Sure Brian, thanks a lot! My issue is ultimately unfixable - while you've managed to whisk VAT away, the post office will still have me pay for the trouble it took them to establish that VAT was handled on your side.

[Brian Bauman]

Totally Not Gorbacz wrote:

Sure Brian, thanks a lot! My issue is ultimately unfixable - while you've managed to whisk VAT away, the post office will still have me pay for the trouble it took them to establish that VAT was handled on your side.

That sounds absurd to me - isn't the entire point of having companies collect the VAT upfront so that the post office doesn't have to waste a bunch of time and effort nickel-and-diming everyone receiving shipments?

Just to clarify, you're saying there's nothing that Paizo could be doing more correctly with your shipment to prevent the post office from charging you at all?

[Totally Not Gorbacz]

Brian Bauman wrote:

Totally Not Gorbacz wrote:

Sure Brian, thanks a lot! My issue is ultimately unfixable - while you've managed to whisk VAT away, the post office will still have me pay for the trouble it took them to establish that VAT was handled on your side.

That sounds absurd to me - isn't the entire point of having companies collect the VAT upfront so that the post office doesn't have to waste a bunch of time and effort nickel-and-diming everyone receiving shipments?

Just to clarify, you're saying there's nothing that Paizo could be doing more correctly with your shipment to prevent the post office from charging you at all?

It is absurd, yes. I'm essentially charged for what the post office should be doing anyway, which is checking whether a package from outside the EU should be VATed/tariffed.

But unfortunately, our government is doing whatever it can to milk some extra $ out of you without being honest and just bumping the taxes up...