Did you know the European VAT Directive contains more than 100 “Member States may” stipulations? This means that Member States may choose to implement that particular stipulation. A Member State may for instance choose to implement a reverse charge for the domestic supply of goods by a non-established taxable person. Many countries did introduce such a reverse charge. But not all, such as Germany, Ireland and Luxembourg. The same applies for services which fall under the exceptions to the B2B main rule (article 44 VAT Directive). Several countries introduced VAT warehouses, others didn’t. The rates differ. The rules on VAT grouping, use & enjoyment and triangulation differ. Also the various EU countries introduced different rules with regard to the importation of goods. Below you will find a comparison of the VAT rules of only 4 countries with respect to the importation of goods.
The Netherlands
When goods are imported into the Netherlands and cleared for free circulation in the EU, Dutch import VAT is payable unless a deferment system can be applied for the import VAT. Depending on the type of goods this system is either obligatory (certain raw materials) or the importer can use a license. Dutch legal entities and fixed establishments can apply for a special deferment license to import goods from non-EU countries. With this license, importers avoid payment of VAT at the time of importation. Instead, with the deferment system the import VAT is shifted to the VAT return.
A taxable person not established in the Netherlands will not be able to shift the import VAT to the VAT return unless he appoints a fiscal representative. He can either appoint a limited fiscal representative or a general fiscal representative for the import of goods in the Netherlands. A limited representative can be used for the importation of the goods and the subsequent supply. This limited fiscal representative uses his own deferment code number and fulfills the VAT obligation under its own VAT ID number. If the foreign taxable person appoints a limited fiscal representative in the Netherlands, it does not need to be registered for VAT purposes itself. A foreign taxable person can have multiple limited fiscal representatives. However, he can only appoint one general fiscal representative in the Netherlands. When a fiscal representative with a general license is appointed, the foreign taxable person will be registered itself, can apply for its own license to defer the import VAT and all transactions are reported in its own VAT return. The advantage of appointing a general fiscal representative as opposed to a limited fiscal representative is that also intracommunity acquisitions and domestic purchases can be reported.
Germany
In Germany, import VAT is assessed at customs clearance. There is a possibility to postpone the payment until the 26th day of the second calendar month following the month of customs clearance. If so, security of payment (e.g. a bank guarantee) may be requested.
It is not possible to declare the import VAT in the VAT return in Germany. It is possible to apply an exemption on the importation of goods into Germany if the importation is followed by an intra-Community supply (customs procedure 4200). This applies in all EU Member States. However, some conditions must be met in order to apply the exemption. For example, the VAT identification number of both the supplier (or his fiscal representative) and the customer of the ongoing supplies must be submitted. It must also be proven that the goods are destined for transport to another EU Member State.
France
France did introduce a deferment for the VAT on the importation of goods. Businesses have to meet various conditions. Businesses established in the EU should have performed at least 4 imports in the EU in the past 12 months. The business must certify that it is in a position to consolidate the VAT information in order to properly file its VAT return (simple statement). It must also prove that there have been no serious or repeated infringements of customs and tax provisions during the 12 months preceding the application. Furthermore its financial situation during the 12 months preceding the application must be satisfactory. Businesses not established in the EU can only use the deferment if they appointed a customs representative holding an AEO authorization. A taxable person holding a AEO authorisation, whether or not established in the EU, may always benefit from the deferment of VAT on importation.
As from January 1, 2022 the VAT legislation will be changed and all businesses will be able to benefit from the deferment of VAT on importation.
Belgium
Belgian legal entities and Belgian fixed establishments can apply for a special license in cases of the importation of goods from non-EU countries. With this license, importers avoid payment of VAT at the time of importation. Instead, the importer must report the VAT due in its Belgian VAT return. If the importer is entitled to a full deduction, the VAT paid can be reclaimed in the same VAT return. If a taxable person is entitled to recover the VAT incurred on import, the VAT deferral can be advantageous for the taxable person.
Taxable persons that are not established in Belgium can use the VAT deferral license if they file periodical VAT returns (regardless of whether they appointed a fiscal representative or registered for VAT directly).
A foreign taxable person can also appoint a so-called global fiscal representative (under a BE796.5 VAT ID number) for the import of goods in Belgium, followed by a subsequent intra-Community supply. In that case it is also possible to apply for the VAT deferral license.
If you would like to know more about the differences in the various EU Member States, Norway, Switzerland and the UK, please order the European VAT Handbook 2021/2022 here.
Information received from Marja van den Oetelaar, The VAT Consultancy Firm
