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  • Writer's pictureAnnie

Import duties and the hidden inequalities behind shopping online

How much does the same product cost someone on the other side of the world? This post looks at how much it truly costs to buy makeup and brushes online.


I'm keenly aware that I spend more money on makeup and brushes than the average person. I live a very comfortable middle class lifestyle so I'm quite privileged in being able to spend on a portion of my income on luxury goods in maintaining an expensive hobby. I include my total costs in my reviews, give updates about how much value I got out of my products in a yearly empties post and I frequently talk about money on this blog. Recently, I started thinking about whether I'd be able to maintain the same level of consumption if I lived elsewhere. Today I want to look at how much the same makeup product or brush would cost for someone on the other side of the world.


I have access to quite a lot of information about my readers via my analytics section. Unless you're all using VPNs and data blockers, I can see where you're from and how long you spend reading my posts.


Americans make up the overwhelming majority of my readers but spend the least amount of time on a page. It may potentially be skewed by how many readers leave a page within the first thirty seconds, but on average, USA residents spend 3 minutes and 20 seconds on my pages. Australians and Canadians are casual readers hitting average read times of 5 and 6 minutes respectively. Europeans spend the most time reading my posts by a significant margin and many of those same unique readers repeatedly visit the same page. All of my long review posts show that Europeans tend to mull over the information for an average of 16 minutes accounting for readers across the entire continent. Some of my US based readers do seem to be using my review posts for research but the 15 minute plus time spends are very uncommon.


Extrapolating from this information, I can only speculate that there's a lot of 'umming' and 'ahhing' going on. In a globalised capitalist consumer market, companies are able to reach customers in nearly every part of the world through the wonders of online shopping. But aside from buying power and exchange rates, there are other factors to consider. A shopper may be constrained by strict returns policies and import duties. A brush that has good reviews online may suddenly not be 'worth it' if it costs 20% more.



The United States of America


The overwhelming majority of my readers are Americans who just happen to be the luckiest when it comes to avoiding import duties. Customers in the US receiving goods purchased from overseas are not subject to any import taxes unless the order is more than USD$800. Of course, US customers could just choose to buy from a US based retailer to avoid the hassle of importing products. Sephora, Ulta, Nordstrom, Macy's, Saks Fifth Avenue, Beautylish, Visage USA and Hakuhodo USA are just a few stores that I can name. On top of that brands with their own websites sell directly to their domestic market or within the North American region.


As an objective (and in no way envious but very much so) outside observer, the USA seems to be the land of never-ending sales where bargains are to be had. Every holiday seems to be paired with some kind of sale. The Fourth of July, Halloween, Thanksgiving, Black Friday and Christmas come with huge mark downs and if you somehow miss one of these, just wait for the season to change because you could score some great beauty deals with a spring, summer, fall or winter sale too.


Returns also are very easy so there seems to be zero risk in buying a beauty product in America. Again, as an outside observer, the returns thing is crazy. Like most other parts of the world, if I buy something, open it up and use it, I don't get to return it and get a full refund on the basis that I didn't like it. Brush returns were unheard of in the fude market unless there was a manufacturing defect. When it comes to buying an expensive item like a luxury artisan crafted natural haired brush, Americans are privileged in being able to push all the risk of a mistake, a lack of research or a change of mind onto the retailer. With American based retailers serving Americans, returns are the norm so it is definitely a buyers' market in the United States where the customer is always right – even if they're wrong.



Australia


I'm Australian so when I write my reviews, I factor in my total cost which is plus 10% in a Goods and Services Tax (GST). The Australian government requires all foreign businesses that sell over AUD$75 000 worth of goods to Australians in one year to register with our taxation office. Overseas business will charge us 10% on top of our purchase price and remit the tax to the federal government. In the rare event we find a retailer who isn't registered to collect additional taxes, we get a AUD$1000 limit on imported items before we must pay the 10% tax ourselves.


All fude retailers charge the 10% GST on top of listed price except for Rephr which includes it in their pricing. CDJapan charges the 10% in Yen, Beautylish charges it in USD however, UK retailers take off their VAT when shipping overseas. I'm almost exclusively doing my makeup shopping at places such as Space NK and Cult Beauty now. There are some mathematical disrepancies in the pricing breakdown with some UK based retailers. Space NK seems to be in the middle of tweaking their website to exclude VAT for non-UK customers and add on any additional customs charges. Also, between the time I began writing this draft and publishing it, Cult Beauty has been revamped. It is now under the control of The Hut who run Look Fantastic. They're claiming to take off the VAT for Australian purchasers and add the 10% GST back on but it's currently not processing at the checkout. If they do not rectify it, I will cease shopping with them. Look Fantastic does not deduct VAT for overseas purchases. But that being said, when the UK retailers who do deduct the VAT have 20% sales or 25% off coupons, Australians can save some big amounts given that one of our local beauty retailers Mecca never offers Sephora styled 20-30% off store wide sales.

Here's a copy of my receipt from Cult Beauty. I purchased two Charlotte Tilbury items during the 20% off sale. I stacked on an additional 15% off code and paid AUD$90.64 after converting £46.75 with my bank. I count this as a bargain. If I were to walk into a physical store in Australia to buy these two products, I would have paid AUD$149. By shopping around and sucking up a bad exchange rate, I saved 39%.


I've put conversions to USD and Euros. Would you consider buying these two items at these prices a good deal?




The United Kingdom


Post-Brexit customers in the UK have it tough. Prior to January 1, 2021 UK residents could buy from any European Union country and not pay any import duties. Now, they are subject to a 20% Value Added Tax (VAT) charge applied to all purchases up to £135. Ideally the retailer already collects the 20% tax at time of purchase to be remitted to UK Revenue and Customs but if they do not, then the mail deliverer may in essence hold the package hostage until the tax is paid. It seems to be a similar taxation structure to Australia in that online retailers outside of Britain will collect the taxation and then pass it on to the UK Government.


It gets worse for British buyers though. Purchases above £135 incur an extra import duty that ranges between 0% and 25%. Cosmetics purchased from outside of the UK incurs the normal 20% VAT but listed under 'Cosmetic Brushes' and 'Brushes for the application of cosmetics' the UK Integrated Online Tariff shows that a UK resident importing fude would attract a 20% VAT and an additional 2% Third Country Duty. Just when you thought the Brits hadn't suffered enough, couriers are allowed to add an administration charge to deal with the customs headache and call these 'handling fees'. These delivery companies will collect the VAT plus any applicable customs duties and pass them onto the UK taxation department. Royal Mail charges £8 for this service while DHL is charging 2.5% of the amount paid with a minimum charge of £11. UPS appears to be charging a £11.50 handling fee with numerous additions in all the fine print. This feels like legalised extortion at this point.



Europe


From July 2021 onwards, all imports to EU countries must have VAT collected at the point of sale as part of its cross-border strategy to try and level the playing field for local businesses. European Union nations scrapped the import tax threshold and collectively, the EU mandated that the minimum VAT be set at 15% but each individual country is allowed to set its own VAT and import duties accordingly.


Luxembourg boasts the lowest VAT of all the EU nations at 17%. Just above that is Malta at 18% while Germany, Cyprus and Romania imposes a tax of 19%. France sits at 20% along with Austria, Bulgaria, Estonia and Slovakia. Belgium, Czech Republic, Latvia, Lituania, Netherlands and Spain charge 21%. Italy and Slovenia are at 22%, Ireland, Poland and Portugal 23%, Greece and Finland 24% while Croatia, Sweden and Denmark all have a 25% VAT. Topping the list of EU nations with the highest VAT is Hungary at 27%. Some countries also impose duties for cosmetics and brushes on top at a rate of their own choosing.


All taxes must be added on and declared but the value of the goods must not exceed the threshold of €150 otherwise additional duties will be charged. This appears to have been decided upon because EU nations needed to ensure that taxation was being sent to the corresponding EU Member State. Non-EU based sellers must add on VAT to their customers' orders and are supposed to register taxation via an electronic portal called the 'Import One Stop Shop' (IOSS). The idea behind this is to force the seller to collect the taxes from their customer and all but eliminate the need for customs or the courier to demand extra payment before delivery. If the non-EU store is not registered with this taxation system, then the customer will be slugged with a hefty customs clearance fee before the regular VAT is imposed on top.


Europeans tell me that Rephr, having warehouses in Europe, are already part of the system so they do not pay additional taxes after their purchase. Additionally, Beautylish calculates the VAT and any additional duties for each country and integrates that into the total amount the purchaser pays so there are no nasty surprises upon delivery.


Congratuations for making it this far. Most readers abandoned the post long ago so the secret code word for discussion among us is 'Midas' because you'd need to have the ability to turn everything you touch to gold to afford fude imports into some of these countries.



Who is better off because of global trade?


Let's go shopping, add brushes to a virtual cart and see if any particular countries are better off. I already discussed it but Australians are potentially better off buying from UK based retailers. Even if they put back the 10% GST, they deduct the larger 20% VAT first. Run don't walk if they give you a 20% or 25% off discount and always check to see if other codes stack on top using extensions like Honey or Karma. Our New Zealand neighbours impose a 15% import tax but again, it's still worth it for them to chase a 20% off VAT reduction and take advantage of British sales.


Taking sales tax off the purchase price works the other way around too. Australian businesses which are GST registered (mandatory for all making over AUD$75 000) can take off the 10% tax when selling both goods and services to people outside of Australia.


In the Asia-Pacific region, countries which also benefit from VAT deductions from European retailers include Malaysia which imposes a 10% Sales and Services Tax (SST) and additional duties around 6% however imports are exempt from duties so long as they are under the RM500 (USD$119) threshold. Singapore also benefits since their import taxes stand at 7%. Hong Kong is a haven for importing foreign goods because it is a free port with zero tariffs except for alcohol spirits, tobacco, hydrocarbon oil and methyl alcohol. Hong Kongers can shop the sales to their heart's content.



Case study 1: Surratt Brushes


Let's look at an example of what my Surratt brushes cost me to buy from Space NK. They're Japanese-made grey squirrel fude with Chikuhodo rumoured to be the OEM but they sit at what a price point which most people would consider exhorbitant. I would go as far as to suggest they are obscenely priced. That being said, I bought some of them but as you can see, I didn't pay anywhere close to full price. Even with a steep discount, they were still expensive.

The Surratt Face Brush cost me £127.51 (AUD$242) which is interesting because its closest equivalent in Chikuhodo's Z1 now costs ¥17 000 + ¥1700 GST (AUD$232.05) on CDJapan. The Z1 is more expensive on Beautylish at USD$178 + $17.80 (AUD$272.70) so having the 20% VAT removed by a UK retailer and then adding on additional discounts, sales and rewards points brings it down to a competitive level for Australian and Asian purchasers. If I walked into store and bought the Surratt Face Brush, it would cost me a whopping AUD$328. I will put a big caveat on the hypothetical CDJapan purchase though. They often send out ¥1000 coupons for purchases over ¥10 000 and there's a reward program where you can redeem your points for money off the total. If you waited for a coupon and had no pre-existing rewards points, an Australian would pay ¥17 700 (AUD$220) for the Chikuhodo Z1 with free international shipping. Counting the mammoth discount I received, it's still AUD$22 more expensive than a Z1. To put that difference into context, I could buy easily enjoy a classic millennial-styled Instagram worthy brunch at a local cafe with that money.


The Cheek Brush came in at AUD$122 (USD$89) and I paid AUD$117 (USD$85) each for the highlight brush and the sculpting brush. I will point out that I had VAT taken off (although some amounts were not 20%), I applied a personalised 25% off coupon code and by sheer luck there was a 15% off coupon that managed to stack on top.


The Surratt website only ships to Americans but they offer 25% off periodically. Taking this into account, an American could buy the Face Brush (RRP$250) for USD$187.50, the Cheek Brush and Highlight Brush (RRP $125) for USD$93.75 each and the Sculpting Brush (RRP$120) for USD$90. Assuming that the British are offered 20% sitewide discounts at the very least, the same brushes at a discount which cost me AUD$600 to import and an American USD$465 to buy domestically would still be 30% more expensive than their global counterparts.



Case Study 2: Wayne Goss The Air Brush

To answer the question of whether a brush is 'worth the money', I think you need to balance function, cost and aesthetics. Of course it's always a subjective matter and some people may be willing to pay a little more to facilitate the ease of purchasing online versus someone wanting to save the difference.


For me, the clear example where something is now not worth its sale price is the Wayne Goss Air Brush. It is at its cut off point for function, cost and aesthetics. The blue squirrel brush originally launched at an extremely affordable price of USD$35 on Beautylish but in 2021 it has come back at a new elevated price of USD$45. If you're unfamiliar with the matter, raw material prices have jumped in recent years and squirrel has been particularly impacted.


The Air Brush is a nice brush but it's limited in its functionality. It works best for targeted powdering and can also be used for blush. You have to be a patter, not a swirler in your application technique. You might be able to stretch it to use it to apply very subtle highlighter and contour but you'd be hard pressed to find other uses. Squirrel hair also limits the usage to powder products only. The Wayne Goss Air Brush is also small, thin and airy so its name is apropos.


If I wanted to buy it again, it would cost me USD$49.50 and at that price point, I would pass on it. For me, the 'worth it' price maxes out at USD$45 inclusive of all taxes. The squirrel quality on Wayne Goss and Hakuhodo brushes isn't as nice as that coming out of Chikuhodo. It's difficult to quantify why five bucks tips it over the edge. Potentially, it's just too high of a percentage increase that it takes away from how much of the original Air Brush's overall value actually lay in it being a good bargain.


The chart below looks at how much the Wayne Goss Air Brush would cost accounting for GST/VAT costs and in some cases, an additional import duties.

This doesn't even take into account that some countries have much higher shipping thresholds on Beautylish. Some countries have very reasonable purchase benchmarks to qualify for complimentary shipping. Malaysians only need to spend USD$25 to get free shipping on Beautylish. Americans, Australians and the French enjoy free shipping with a USD$35 spend. Canadians which at time of writing have a currency conversion rate pretty much par with Aussie dollars get to pay in their local currency but must spend CAD$40 for free shipping. The Danes and Poles need to spend USD$50 while Germans need to spend USD$70.


Singaporeans and Israelis need to spend USD$100 on Beautylish to reach the shipping threshold or else pay USD$15 and $20 respectively. Israelis are subject to a 18% VAT like many European countries but on top of that, they're hit with an additional 12% import duty on cosmetics. I’m reliably informed that the Sonia G Fusion Set which retails for USD$225 ended up costing around USD$290 to bring into Israel. I can categorically state that I would not have been willing to make such a purchase myself. In fact, I wouldn't buy two-thirds of the Sonia G brushes in my collection if I had to pay anything close to a 20% VAT.


This post originally started out as a side note in my 'budget brush guide' (which is coming up) but it quickly evolved once I went down the rabbit hole. There are so many countries I couldn't cover in this post. Leave a comment to share your experiences. As a content creator, this exercise has really opened my eyes in forcing me to assess what I'm recommending to others. There are suddenly a number of items that I don't think are worth paying an extra 20% for. What do you think? Are there any items in your collection that you wouldn't purchase if you had to add an extra 10, 15, 20 or 25% onto?




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