What is your stand on Customs Duty levied for Pre Owned watches?

iddaka said:

This thought came from a response in another thread. Given the wide spread of countries I have recognised from the forum members here, it would be interesting to see how this feeling is.
Countries have their own rules (not strictly followed) for Customs Duty. I have also seen this varies depending on the mode of shipping - EMS v/s FedEx / DHL. We can ignore that detail maybe.

But if you are buying a watch that is pre-owned, do you thing it is valid to have it taxed at Customs? The watch already had tax paid in the first sale, the seller will pay tax on the second sale income (maybe), the buyer has already paid income tax on the money which is being used to buy the watch.
Is this why there is rampant declaration of lower value that happens? What do you usually do? Factor in the Duties amount into your watch budget? Or find ways to save on it?

Personally, I prefer shipping to Singapore (where I travel regularly) since they have 7% GST on value over SGD 500 coming in from abroad. This is reasonable. Second option is US where it is almost free.

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Bradjhomes said:

Whether I think it's right or not is not really important. It's the law.

Encouraging or discussing illegal activities doesn't seem sensible.

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CFR said:

I always pay Customs duties, but I definitely want to make sure I'm paying the fair amount and am not overpaying. Specifically, when importing a watch into the US, Customs duties (from Chapter 91 of the Harmonized Tariff Schedule) are based upon (a) the type of watch (automatic, handwind, etc.) and (b) the value of each individual component (case, movement depending upon number of jewels, strap/bracelet, and battery). Very different formulas are used to calculate duties for each component, and movements are often taxed a very low, flat rate while the cases and bracelets are taxed at a higher rate that's based upon a percentage of their value.

Let's take a $4000 vintage 14K gold Omega with 10 jewels on a generic leather strap with a relatively rare, well-finished mechanical movement. On such a watch, the overwhelming majority of the value is in the movement -- not the case -- and it's okay to reflect that in the Customs paperwork and in the duties that you pay. Here's an example of what a shipper might put on the Customs paperwork for such a watch:

9101.29.5010 (watch, precious metal, non-automatic winding, 10 jewels - movement) - $3790
9101.29.5020 (watch, precious metal, non-automatic winding, 10 jewels - case) - $200
9101.29.5030 (watch, precious metal, non-automatic winding, 10 jewels - leather strap) - $10
TOTAL DECLARED VALUE - $4000 USD

If you look at duties for 9101.29.50 in the Harmonized Tariff Code, you'll see that duties are 90 cents on the movement + 4.4% on the case and strap/bracelet, so our total Customs duties in this example are $10.14. But if the shipper doesn't provide the breakdown on the Customs paperwork, then the Customs people may use 4.4% of the total declared value ($4000), leading to duties of $176.00. That's a lot more than the (more accurate) $10.14 value!

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caktaylor said:

Aside from that, the federal rule for customs is pretty straightforward (for watches). If it is valued at less than $800, there is no duty. If it is $800 or more, the duty is equal to 8 percent of the watches value (not just the value above $800).

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mikemargolis said:

Hi Everybody, I am Mike Margolis, and I own a USA company that imports and distributes wristwatches, so I guess I know a bit about paying duty.

CFR's numbers are much more accurate than caktaylor's, although I am not a fan of CFR's breakdown. A $4000 gold watch would normally break down at more like $1900 case, $1900 movement and $200 strap. Still, that gold watch would be taxed at $0 for the case, $0 for the movement and 3.1% for the strap, so about $6 before the customs clearing agent's fees.

The other thing to know is that non-precious metal watches are taxed at a MUCH higher rate: case 4.8%, movement flat $1.75 and strap 9.8%. So same watch but in steel and you're in for about $110 before fedex' fees.

In my world, a $20,000 gold watch can cost basically nothing to bring in, and a $20,000 steel watch can be $500 or more.

Perhaps the 8% flat fee caktaylor was referring to was how much he got charged going through an airport, but I have never heard of nor seen 8%.

Please note that if you ask the seller to undervalue the watch, they also have to under-insure it, and you run the risk of loss. You can't declare a box has a value of $1000 and at the same time insure it for $10,000. Uncle Sam is not that stupid. And you'll find customs agents have google like the rest of us, and you can't tell them your new Richard Mille chronograph was $1000 or $10,000, they know you're lying. And please believe me, lying to a customs agent is never a good idea. You get fined big time, and lose PreCheck and Global Entry forever.

Nevermind a crocodile strap with a CITES. Fedex charges me $201 fee to clear a shipment with a crocodile strap, same fee whether it's one strap or 50, plus the duty on the value of the straps, which can be 11.2%

Anyway, happy to answer specific questions if anyone has them.

Not going to get into whether a used watch should be subject to taxes. A used house is, a used car is, a second hand watch from a jewelry store is taxable too.

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K. Bosch said:

Usually, it means taxed when it was bought new and then taxed again when it was bought used.

But in this case, the new item wasn't taxed when new as it wasn't in the country when it was new. So that definition doesn't make sense, so I'm not sure what "taxed twice" means in this context.

What about to raise revenues for government services? I guess they could raise other taxes, and not charge duties.... but I don't think there's anything insidious about it, despite not liking to pay it.

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MisterV said:

I see it as something completely different from normal taxes. I pay a certain tax rate because I live in an area with great infrastructure etc etc, and I'm happy to pay it if it continues to support all those services.

Customs tax in itself, however, is a relict from feudal times when people had to pay the lord to pass through their property. Taxes on production? Sure. On income? Naturally. But on something that is already used, on which taxes have already been levied - in some cases, multiple times... it is nothing more than an unjustified source of income for the state, and that in some states it might be an important source of income simply shows once again that the system is outdated.

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