6 / 21 VAT related to export and import

Module 6

Duties, VAT and excise are taxes which, where applicable, must be correctly calculated in the customs declaration and paid.

• Import and export duties are EU taxes set out in EU regulations and the same rules apply in all EU Member States. Duties are an important part of EU annual budged, they make out more than 10% of it.
• The Value Added Tax (VAT) and excise duty are national taxes - though the main rules set out in EU directives are the same, the application of those taxes differs from state to state. For example, different VAT rates apply - Germany 19%, Lithuania 21%, Ireland 23%.

In this module, you will learn about VAT. It is a general, broadly based consumption tax assessed on the value added to goods and services. It applies more or less to all goods and services that are bought and sold for use or consumption in the European Union. Thus, goods which are sold for export or services which are sold to customers abroad are normally not subject to VAT. Conversely imports are taxed to keep the system fair for EU producers so that they can compete on equal terms on the European market with suppliers situated outside the Union.

There are several terms that you should note before starting the module: VAT debt, customs debt, debtor, customs value, and low value consignments.

• VAT debt (i.e. the obligation to pay VAT) usually occurs when customs debt occurs; therefore, it is important to know the definition of 'customs debt'.
• It is defined in Article 5 of the Union Customs Code that 'customs debt' means the obligation on a person to pay the amount of import or export duty which applies to specific goods under the customs legislation in force.
• 'Debtor' means any person liable for a customs debt.
• An important concept is customs value of the goods, which is a part of VAT taxable amount. You will learn the rules of determining customs value in Module 10/21 Value.
• Low value consignments are consignments which value does not exceed €150. Such consignments are subject to new VAT and customs e-commerce rules for the import as of 1 July 2021. E-commerce suppliers and platforms, where applicable, may use a simplified system, the IOSS, to declare and pay VAT for distance sales of goods imported from third countries in low value consignments.

The lessons of this module cover activities required of customs professionals to deal with the VAT in the context of import and export procedures. 

Lessons

The module consists of four lessons:

1. System, principles and tariffs
2. Import VAT
3. IOSS
4. Export VAT

After watching the videos, please do the task, which is provided in the Resources. You can check whether your answer is correct by comparing it to the answer provided in the Resources. 

Outcome

At the end of the module, you should know:

• The principles of VAT and VAT collection in the EU in the context of import and export procedures;
• How import VAT amount is calculated;
• The specifics of e-commerce.

Time

Please plan to dedicate around 2 hours to complete this module.

Know your customer. Customer control procedures, especially when applying 0% VAT in case of export, are a must. 

Monika Bielskienė