The Author of the Article
Table of contents
Does your company trade with non-European countries? This raises the question of the VAT treatment of these purchases/sales with third countries:
- Is VAT due on the import of goods into Europe?
- Who pays the import VAT?
- what is the custom value?
- How to recover import VAT?
- How to export VAT free?
These are the main VAT questions that businesses trading with non-European countries (third countries) ask themselves.
As soon as you trade with non-EU countries, you are either importing (for goods entering the EU) or exporting (for goods leaving the EU). In addition to customs formalities, your business also has to comply with a number of VAT rules.
Is VAT due on the import of goods into Europe?
Yes, imports of goods are subject to VAT, with taxation taking place when the goods clear through customs. VAT is therefore payable at the time the goods are considered to be imported.
There are methods of avoiding pre-financing of this tax: tax warehouses, temporary admission, external transit, deferred payment, etc. The conditions of application must be checked in each country.
Who pays import VAT?
VAT should normally be paid by the person designated as the actual recipient of the goods on the import declaration. However, some countries (e.g. Belgium) allow persons who are not the owners of the goods to act as consignees on importation and to be entered on the Single Administrative Document (SAD).
What is the customs value?
The customs value is, together with the item code and the origin of the goods, one of the three key elements for the calculation of import duties. Assessed at the first point of entry into the customs territory of the Union (TDU), the customs value is a free-at-frontier (Union) value. Its determination makes it possible to establish the real economic value of imported goods. It is based on precise and harmonised rules within the European Union, making it possible to calculate not only the basis of assessment for customs duties, but also for VAT and most other duties and taxes due on account of the import.
The tax base for VAT is thus the customs value, as defined by the Community regulations in force. Taxes, duties, levies and other charges due on account of the import, with the exception of VAT itself, are also to be included in the taxable amount, as are ancillary costs such as commission, packaging, transport and insurance costs incurred up to the first place of destination.
How to recover import VAT?
A business which is listed as the actual recipient of the goods on the import declaration may deduct the VAT it has paid on importation provided that it meets the formal and substantive conditions for exercising its deduction right. The application of the deduction system is the responsibility of the tax authorities.
How to export without VAT?
Supplies of goods dispatched or transported outside the territory of the European Union are exempt from VAT. In order for this exemption to apply, the business must be able to provide proof that the goods have actually left the territory of the European Union. Proof that the goods have actually left the territory of the European Union is established on the basis of a list of supporting documents.
Obtaining the certification of exit from the customs territory of the Union allows the tax authorities to prove the reality of the export operation and to benefit from the exemption from VAT on exports.
Beware of penalties!
A company trading with third countries (e.g. US, CHINA, UK, SWITZERLAND, etc.) must be extremely careful with the administrative documents used for customs clearance or export. These documents are generally considered to be purely administrative and of no interest... until a tax audit is announced. If these documents are incomplete or inaccurate, this can get your company into financial trouble: goods blocked at customs, VAT exemption for exports called into question, no refund of import VAT, etc.
Do you trade with third countries? Call on our VAT experts
Do you trade with non-European countries and want to avoid having your goods blocked at customs?
Our firm can help you find the best solution.
How does it work in practice?
It is very simple for you. It happens in two steps:
First of all, we give you the first VAT tips for successful imports/exports:
- Placing the goods under one of the suspensive customs procedures (tax warehouses, etc.)
- Determining the customs value of imported goods
- Deferred payment of VAT
- Optimisation options to avoid the actual disbursement of VAT at the time of import
If a VAT registration in a foreign country is necessary, we can take care of all your VAT obligations and other formalities:
- VAT registration
- Filing of VAT returns and other statements
- Coordination of VAT payments to the Treasury
- Assistance in the event of a tax audit or request for information
- Cancellation of foreign VAT number
By working with our firm, you can be sure that you will be able to trade with third countries in the most optimal way in terms of VAT