From Iceland — Customs Is Cracking Down

Customs Is Cracking Down

Published September 14, 2011

Customs Is Cracking Down

Bring up the Directorate of Customs in Iceland and you’re liable to unleash a host of emotions ranging from frustration to anger. This government entity, which is responsible for, among other things, making sure that items entering the country are appropriately taxed, is perhaps the bureaucratic equivalent to the DMV in the States.

“Even thinking about the ‘kilt for my wedding incident’ I had with Tollstjóri [Directorate of Customs] still sends me in near apocalyptic clouds of rage and….. AAARGH!” Bob Cluness wrote on The Grapevine’s Facebook page. He purchased a kilt from Scotland for 100.000 ISK, and when it arrived, he was surprised to learn that he owed Customs 50.000 ISK in duties (15% tax, 25,5% VAT, 550 ISK Post Office processing free). “His kilt ended up costing five times more than my dress,” his wife Sigríður Harpa Halldórsdóttir tells me.

As Chief Superintendent of Customs Hörður Davíð Harðarson points out, the duty can be overbearing when it comes to smaller purchases. For instance, when someone buys a DVD for 1.000 ISK, it winds up costing 70 to 80% more by the time it’s in the recipient’s hands. If the purchaser hasn’t already accounted for this mark-up, the letter from Customs informing them that they have actually purchased one DVD for the price of two is an unwelcome surprise.

Unfortunately, however painful it is, this is part of the reality of living on a small island that manufactures little apart from fish, lamb, and computer games. Still, Customs does not have the right to tax everything that comes into the country, and it has come to The Grapevine’s attention that the entity is perhaps overstepping its boundaries.

Taxing birthday gifts? WTF!
A gift, for instance, is exempt from taxes if its value is less than 10.000 ISK, it is for a special occasion, such as Christmas, a birthday, confirmation, or wedding, and the sender has an address abroad. Wedding gifts can exceed 10.000 ISK, though.

Nonetheless, that didn’t stop Customs from holding a package addressed to Ásta Sól Kristjánsdóttir, which contained a birthday gift for her infant son. “I got a letter from Customs saying they needed permission to open it. When I called them, they said the package had not been marked ‘gift,’ and that it was obviously not my birthday any time soon, strongly implying that I was trying to cheat the system because the package was addressed to me and not my son,” Ásta tells me. “Finally the package arrived, but it was the week after my son’s birthday.”

What was most irksome about the situation was the fact that the people at Customs told her that the package had not been marked ‘gift,’ but when she retrieved it, she saw that it had in fact been marked ‘gift’. Others have reported similar experiences. They are legion.

Echoing this frustration, Antón Ameneiro suggested jokingly (we think, jokingly) on the Grapevine’s Facebook page: “Since reasoning and confronting the issue rationally doesn’t help, I’m going to start asking my beloved friends and family to include insulting notes in their packages, something like, “merry Christmas you greedy pirates at Tóllhúsið, hope you choke on your hangikjöt, gleðileg jól!” :)”

Cracking down on phony gifts
Hörður explains that, unfortunately, because people have been trying to cheat the system by falsely marking their packages as gifts, Customs has had to step up their watch, thereby inconveniencing honest people.

“We noticed, if you look at, for instance,, that there were lots of people—Icelanders living in Germany, Norway, Sweden—advertising that if someone put 10.000 ISK in their bank account that they would purchase clothes at H&M or something, and send the stuff to Iceland marked as gift,” Hörður tells me. “We were stopping many, many packages per day; there were all kinds of things in packages marked gift,” he says.

Hörður says Customs opens less than 1% of packages that come through the Post Office. He couldn’t reveal exactly how they were targeting phony gifts, but he did say that they have been following things closely, and have had to inconvenience honest people by asking them to go to the Post Office to verify their gifts.
“For birthday gifts, we look at people’s kennitala [ID number, including birthday]; we’re paying attention to these things. We’re seeing people sending Christmas gifts as early as July. People are trying to trick us.

We stopped a wedding gift the other day. We asked the couple to bring proof that they were getting married and then it turned out that they had been married for four years,” Hörður tells me. “Icelanders like to cheat—we don’t want to pay.”

At the same time, he says it’s unfortunate that regular, honest people have to be bothered by the increased surveillance. “But when people come and explain that this is a gift for their son’s first birthday, we of course let the package go as a gift.”

Taxing used stuff? WTF!
In addition to gifts, “used articles constituting an inheritance from abroad, excluding however vehicles or other motorised means of transport” and items sent for repair under warranty are also supposed to be exempt from tax.

Yet, as Malcolm Kenneth Fraser points out, this can be difficult to prove. “Say you forget your camera at your parents’ house in the US, and they send it back to you, it is often impossible to justify that it is yours when Customs asks you to pay taxes on it.”

For instance, Jan Seven sent his Kindle to Germany for repair under warranty, where it was purchased for the equivalent of 22.000 ISK. When it came back to Iceland, Jan received a letter informing him that he owed 20.000 ISK in taxes. “I asked them if they could tell me how the tax was calculated, and I’ve been directed from one person to the other for two months now,” Jan says in frustration. “It’s a circle that never ends.”

Refusing to pay nearly 100% in taxes, Jan had the Kindle returned to sender and is still waiting for an answer about how the tax was calculated.

Cracking down on previously smuggled items
Though Hörður didn’t know for sure what had happened in Jan Seven’s case, he assumes that the Kindle was originally smuggled in without paying tax, and then when it went for repair, Jan couldn’t prove that he had already paid tax on it.

This is another scenario that Customs has been cracking down on. “A year and half ago, Customs stopped allowing people to register their expensive computers and cameras before leaving the country,” Hörður tells me. “What was happening was that people were going to America, buying an Apple computer for 300.000, getting back into the country without paying taxes, and then registering it in Iceland before their next trip to declare it legal. So, we’ve stopped letting people do this, and instead we ask people to show their receipt when they come back into the country.”

Since Customs posted an infomercial on their website about how goods purchased abroad are taxed, he says that there has been an increase in the number of people who buy expensive cameras or computers declaring and paying the tax when they arrive in Keflavík instead of smuggling the items into the country. “It’s much better to do it that way, so that the next time you go abroad, there’s no stress of being fined when re-entering the country or sending it off for repair.”

Is this REALLY necessary?
Many would naturally like the duties lowered, believing that it is unnecessary to hassle people like this about the purchase of personal items, but Hörður points out that it would be unfair to the stores in Iceland that are importing products from abroad, paying duties and VAT to sell them here. “If there are huge amounts being imported to Iceland every week without paying tax, that’s making things difficult for Icelandic stores,” he says.

But as all items are taxed regardless of whether or not they can be purchased in Iceland (like kilts), the philosophical underpinnings of the law are not about protecting domestic businesses. What it comes down to is simple. “The point of the tax is not to protect the stores in Iceland,” Hörður says. “It’s just money to the State. More than 30% of the State’s income comes through Customs—tax, VAT and fees.”

Will Customs relax? Probably not. So perhaps it’s just time for a change of attitude. Instead of getting all worked up in a fit of hate, you could take Virgile Collin-Lange’s approach of embracing Customs with love, which he extolled on our Facebook: “[I] love to pay taxes on the Xmas gifts I am receiving from abroad…Love the way they open the gift for me.print a price from amazon for me…Say good bye to the surprise effect…But what I love the most is to pay the chocolate tax…. Every time my brother sends me chocolate usually with other stuff..They disappear…Strange.”

In case you’re curious about the chocolates, they told him that “they sometimes get rid of suspicious food people send.” It was Leonidas chocolate [YUM!] and Virgile says it’s happened at least twice.

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