VAT (Value Added Tax) – Frequently Asked Questions

What is VAT?

VAT or Value Added Tax is a consumption tax paid on goods from overseas that are shipped to customers in the European Union.

Why does Proper Cloth charge VAT?

Proper Cloth is registered in the European Union (in France) with a VAT identification number. We are required to collect and pay a flat 20% on all products shipped to addresses in the EU. Our shipping provider, FedEx requires that we report the price of goods and collect VAT upfront in order to deliver our products direct to customers, hassle-free.

How do we charge VAT?

Proper Cloth applies a 20% VAT to all orders shipped to EU addresses at checkout. VAT on imported goods is essentially a tax that you, the customer, must pay on the total cost for you to buy the goods and get them into the EU. Thus, VAT tax is applied to the combined value of the goods purchased and their associated shipping fee.

Other companies don’t charge VAT, why is that?

Typically larger ecommerce companies will specially adjust the prices that show on each product page based on the viewer’s location to include the 20% VAT. Even though you may not see VAT added on to your total price as a separate line item, you can be sure that it is built into the base price of the goods.

Our ecommerce platform does not yet have this capability so we cannot do it this way. All prices across the Proper Cloth website look the same no matter where you are shopping from. They are shown in USD without any VAT accounted for. So for EU customers, we have to add the VAT on to the order total at the final step in checkout.

Occasionally, other companies will falsely write on the commercial invoice that the products being sent are “samples” or have value of $0, or a value low enough to be considered “negligible” by the customs office. In these cases you may receive the goods directly to your home without having to pay any VAT. Misrepresenting this information is of course illegal and we are unable to do this.

More Information on VAT

Here are a few more resources we found that explain VAT simply and thoroughly.