European Buyers Face New Tax on U.S. Imports

European horse buyers may be subject to an excise tax of at least 5% on horses they purchase and bring home from the United States as a result of trade sanctions imposed against the U.S. on March 1 by the European Union (EU).

Horses are included in the list of imported products being taxed, though breeding stock and horses destined for immediate slaughter are exempt. No specifics were provided to U.S. government officials by the EU whether or not filly and colt weanlings, yearlings, or 2-year-olds in training would be classified as breeding stock.

The tax is in retaliation for the U.S. not conforming to a ruling by the World Trade Organization (WTO). It will increase 1% a month to a maximum 17%. Federal tax legislation currently being considered would prompt the EU to lift the sanctions.

The measures are in reaction to the Foreign Sales Corporation federal law that gave tax advantages to U.S. exporters selling their goods in the EU. The WTO called the tax break an illegitimate export subsidy and gave the U.S. two extensions before imposing the tax.

Sen. Charles Grassley, an Iowa Republican, is pushing a bill passed unanimously last fall by the Senate Finance Committee that he chairs. A similar bill cleared the House Ways and Means Committee.

"When the legislation was passed by the Senate Finance Committee last year, it also included a provision to eliminate the 30% federal tax on winning bets made outside the U.S.," said Greg Avioli, chief operating officer of the National Thoroughbred Racing Association. The tax has been a roadblock to expansion of international simulcasting. 

About the Author

Ray Paulick

Ray Paulick is a former editor of The Blood-Horse magazine.

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