Export of goods when the buyer is responsible for transport out of the EU, VAT

Date: 2021-12-10

Dnr: 8-1355876

1 Summary

The VAT Act (1994: 200), ML, contains provisions on the export of goods when the buyer is responsible for transport out of the EU. The provisions refer to two different situations.

Turnover of goods can be considered as export when the buyer hires an independent carrier for direct export of the goods out of the EU. This applies regardless of whether the buyer is a taxable person or not. In which country the buyer is established is irrelevant. A prerequisite is that the transport of the goods begins in connection with the goods being handed over to an independent carrier.

Turnover of goods can also be considered as export when the buyer himself takes the goods out of the EU. ML contains two provisions that set different conditions depending on whether the goods are included in the buyer’s personal luggage or not. In its position, the Swedish Tax Agency describes what is required for the sale of goods that the buyer brings with him out of the EU to be regarded as export.

This position replaces the positions “Export when the transport out of the EC takes place by the buyer or on behalf of the buyer”, 2007-11-19, dnr 131 586267-07 / 111 , and “Sale of goods to visitors from a country outside the EU – use of the goods before departure, VAT ”, 2020-10-26, dnr 8-528796 .

The position entails the following changes.

The provision in ch. 5 § 3 a first paragraph 8 ML covers only goods for private use. Sales of means of transport used by the buyer for transport out of the EU are not considered as exports under this provision. See section 4.2.1.
The provision of 146.1 (b) of Council Directive 2006/112 / EC on a common system of value added tax, the VAT Directive, may, under certain conditions, have direct effect. See section 4.2.2.

2 Question

With regard to legal developments, the Swedish Tax Agency has made a review of how the provisions on the export of goods are to be interpreted when the buyer is responsible for transport out of the EU.

This position does not deal with the export of goods when the seller is responsible for transport out of the EU. The position also does not deal with the special provisions on the sale of goods to natural persons who are resident or permanently resident in Norway or Åland and who bring the goods into Norway or Åland.

3 Applicable law etc.

3.1 The VAT Act

A turnover of a good is considered a turnover abroad, among other things

direct export of the goods to a place outside the EU is handled by a freight forwarder or carrier;
a foreign taxable person acquires the goods for his activities abroad and picks them up for direct export to a place outside the EU;
the product is a car or motorcycle which on delivery is temporarily registered in accordance with section 17, first paragraph 1 of the Vehicle Registration and Use Act (2019: 370), provided that the vehicle is delivered to a natural person who is resident or permanently residing in a country other than a EU country and the seller can show that the vehicle was permanently moved to a place outside the EU before the end of the sixth month following the month in which the vehicle was delivered, or
the product is delivered in this country to a natural person who is resident or permanently residing in a country other than an EU country, provided that the compensation is at least SEK 200 and the seller can show that the buyer has brought the product when traveling to a place outside the EU before the end of the third month after the month during which the delivery of the goods was made (Chapter 5, Section 3 a, first paragraph 2, 3, 7 and 8 ML).

3.2 Preparatory work

By prop. 1995/96: 58 p. 40 states that provisions corresponding to Article 15 (2) of the Sixth Council Directive 77/388 / EEC on the harmonization of the laws of the Member States relating to turnover taxes (now Article 147 of the VAT Directive) are to be found in Chapter 5. Section 9, first paragraph 9 ML (now Chapter 5, Section 3 a, first paragraph 8 ML) and Section 14 of the VAT Ordinance (1994: 223), MF.

3.3 The VAT Regulation

In the application of ch. 5 § 3 a first paragraph 8 ML, the seller shall, in the case of goods to be carried by the buyer in his personal luggage, have a certificate issued by a certifier approved by the Tax Agency and which shows that the buyer has brought the goods to a place outside the EU (export certificate), or an invoice or equivalent document stamped by the customs office where the goods left the EU to be taken to a place outside the EU. The seller must have the document in their accounts. When selling in a transit hall at an airport, or if for other reasons there are special reasons, the seller can be considered to have fulfilled his obligation without such documents (Section 14 MF).

3.4 The VAT Directive and the Implementing Regulation

Member States shall exempt from taxation the supply of goods sent or transported out of the Community by an acquirer not established in their respective territory or on his behalf, with the exception of goods carried by the acquirer himself for equipment, bunkering or provisioning of recreational craft and private aircraft. or other means of transport for private use (Article 146 (1) (b) of the VAT Directive).

If the delivery referred to in Article 146 (1) (b) concerns goods carried in travelers’ personal luggage, the exemption shall apply only if the following conditions are met:

The traveler is not established in the community.
The goods shall be transported out of the Community before the end of the third month following the month in which the delivery takes place.
The total value of the delivery, including VAT, exceeds EUR 175 or the equivalent in national currency, to be determined once a year on the basis of the conversion rate on the first working day of October and to apply from 1 January of the following year.

However, Member States may exempt a supply whose total value is less than the amount in the first subparagraph (c) (Article 147 (1) of the VAT Directive).

A traveler who is not established in the Community in Article 147 (1) means a traveler whose domicile or permanent residence is not located in the Community. In this case, domicile or permanent residence refers to the place indicated as such in a passport, identity card or other identity document that the Member State in which the supply takes place accepts as an identity document (Article 147 (2) of the VAT Directive).

The concept of private means of transport referred to in Article 146 (1) (b) of the VAT Directive shall include means of transport used for non-commercial purposes by persons other than natural persons, such as bodies governed by public law within the meaning of Article 13 of that Directive and associations (Article 47 of Council Implementing Regulation [EU] No 282/2011).

3.5 Case law

Exports are an exemption from tax which must be interpreted restrictively as they are an exception to the general principle according to which VAT is payable on all goods and services provided by a taxable person for consideration. The provisions on VAT exemptions for exports outside the Union, similar transactions and international transport are intended to comply with the principle that the goods and services in question should be taxed at the place of destination. Exports and similar transactions must therefore be exempt from VAT so that the transaction is not taxed elsewhere than at the place where the goods are consumed (including C-97/06 Navicon paragraph 29 and C-288/16 “L.Č.” IK paragraphs 18 and 22).

Article 146 (1) (b) of the VAT Directive does not stipulate that the goods intended for export must have left the territory of the Union within a certain period of time for the export exemption to apply. Such a time limit is provided for only as an exception in Article 147 (1) (b) in respect of goods carried in travelers’ personal luggage (C-563/12, BDV Hungary Trading, paragraph 26).

Article 147 (1) of the VAT Directive states that in the case of supplies referred to in Article 146 (1) (b) relating to goods carried in the luggage of travelers, the exemption shall apply only if the traveler is not established in the Union, if the goods are transported out of the Union before the third month after the month in which the delivery takes place and if the total value of the delivery including VAT exceeds the amount of EUR 175 or the equivalent in national currency (C-656/19, Bakati plus, paragraph 37).

The purpose of the tax exemption in Article 147 of the VAT Directive is to promote tourism, as illustrated by the possibility for Member States under the second subparagraph of paragraph 1 of the same Article to exempt the supply of goods the total value of which is less than the amount referred to in the first subparagraph. granting the export exemption for commercial purposes for the purpose of reselling the goods concerned to a non-EU country is, however, unrelated to the purpose of promoting tourism, which is closely linked to the acquirer’s non-economic activities (C-656/19, Bakati plus, paragraph 51).

The term “goods carried in travelers’ personal luggage” in Article 147 (1) of the VAT Directive refers in its normal meaning in ordinary language to goods, generally small or in small numbers, which a natural person brings with him during a journey and which he needs during this journey. travel and used for personal or family use. Goods that this person acquires during the trip can also be included in this category. These circumstances thus concern the potential person who enjoys the exemption provided for in this Article as a natural person and not as a trader, which precludes the exemption from being granted in favor of traders and thus precludes the exemption from being applicable to commercial exports. This means that the exemption from tax in Article 147.

4 Assessment

ML contains provisions on the export of goods when the buyer is responsible for transport out of the EU. This applies in the following situations.

The buyer hires an independent carrier.
The buyer himself takes the product out of the EU.

Depending on the mode of transport, the provisions differ with regard to the conditions that must be met for a turnover to be considered as export.

The provisions on the export of goods in ML have mainly been adapted to the provisions of the VAT Directive. The provisions in ML regulate when the relevant transactions are traded abroad. In the VAT Directive, corresponding transactions are instead exempt from tax. However, the provision in ML differs to some extent from the wording of the directive.

Whenever possible within the framework of the Swedish legal rule’s scope for interpretation, the Swedish Tax Agency considers that the provisions on export when the buyer is responsible for the transport should be interpreted in EU compliance with the corresponding provisions in the VAT Directive.

The provisions aim to exempt the sale of goods from taxation so that the goods are only taxed at the place outside the EU where they are to be consumed. In this context, consumption means that the product begins to be used for what it is intended for.

4.1 The buyer hires an independent carrier

A turnover of a good can be considered as export when the buyer hires an independent carrier for direct export of the good out of the EU. This applies regardless of whether the buyer is a taxable person or not. It also does not matter in which country the buyer is established.

A condition that follows from the text of the law is that there must be a “direct export” of the product out of the EU. However, what is meant by “direct export” is not clear from the legal text. The corresponding provision in the VAT Directive lacks such a condition. There is thus no stated time frame for when the product must last have been exported from the EU for it to be an export. It is clear from the case – law, however, that the provisions on exports are intended for the goods to be taxed at the place of destination, that is to say at the place where the goods are to be consumed.

In view of the purpose of the regulations, the Swedish Tax Agency considers that “direct export” should be interpreted in an EU-compliant manner, ie that consumption of the goods may not take place before transport out of the EU begins. This means that the transport of the goods must begin in connection with the goods being handed over to an independent carrier. The fact that a carrier uses different means of transport or reloads the goods does not mean that the goods are consumed. Nor does the fact that the goods are stored for a period of time for transport-technical reasons mean that consumption has begun, provided that the time required is normal for the type of goods in question.

4.2 The buyer brings the product out of the EU himself

A turnover of a product can be considered as export when the buyer himself takes the product out of the EU. ML contains two provisions that relate to such a situation but which set different conditions depending on whether the goods are included in the buyer’s personal luggage (section 4.2.1) or not (section 4.2.2).

4.2.1 Items carried in the personal luggage

ML contains the following conditions for a sale of a product to be considered to have been made abroad (Chapter 5, Section 3 a, first paragraph 8 ML).

The product is delivered in this country to a natural person who is resident or permanently residing in a country other than an EU country.
The compensation is at least SEK 200.
The seller can show that the buyer has brought the goods when traveling to a place outside the EU before the end of the third month following the month during which the delivery of the goods was made.

The provision in ch. 5 § 3 a first paragraph 8 ML shall be interpreted together with § 14 MF which regulates how the seller must show that the buyer has brought the goods out of the EU. The purpose has been to transpose the provisions of the VAT Directive into ML. In the Swedish Tax Agency’s view, this means that the provision only applies to goods that have been purchased by the traveler to be included in the personal luggage when traveling out of the EU.

The rules aim to promote tourism through a simplified procedure that facilitates for both sellers and buyers. In these cases, the sale of the product can be treated as an export afterwards, ie when it is clear that the product has been exported from the EU and that no consumption of the product has begun. This also ensures that the transaction is only taxed at the place where the goods are to be consumed.

Which buyers are covered?

The buyer must be a natural person who is resident or permanently resident in a country outside the EU. Natural persons who are resident or permanently residing in Sweden or in another EU country are thus not covered. Legal persons are also not covered regardless of the country in which they are established.

What is meant by goods that are carried in the personal luggage?

The Swedish Tax Agency considers that the provision in ch. § 3 a first paragraph 8 ML only covers goods for the buyer’s or his family’s private use. Goods that are to be used for commercial purposes, such as goods that are to be resold in a country outside the EU or goods that are to be used as equipment or consumables in a business, are not covered. Such sales can still, under certain conditions, be regarded as exports, see section 4.2.2.

The provision only applies to goods that are accommodated in the buyer’s personal luggage. Goods that the buyer acquires during the trip out of the EU must also be included.

The Swedish Tax Agency considers that personal luggage refers to all the luggage that the traveler takes with them on the trip out of the EU. The way in which the buyer takes the product with him is irrelevant. The product can be taken during a trip with a general means of communication such as air, boat, train or bus travel or in your own means of transport. An example is when the buyer takes the product with him in his car.

If the product itself is a means of transport that the buyer uses for transport out of the EU, it is not a question of a product being taken in the personal luggage. The turnover can still, under certain conditions, be regarded as export, see section 4.2.2.

However, goods carried by the buyer himself for equipment, bunkering or provisioning of recreational craft and private aircraft or other means of transport for private use are not covered by this provision. The corresponding provision of the VAT Directive, Article 147, shall be read in conjunction with Article 146 (1) (b) of the Directive which excludes such goods. An EU-compliant interpretation means that turnover cannot be considered as export.

What documentation should the seller have?

In view of the fact that the provision refers to such goods that can typically be consumed immediately after the acquisition, the seller must show that the buyer has brought the goods out of the EU. This is the reason why the rules can not be applied at the time of acquisition but only later and then in the form of a refund of VAT to the buyer. This ensures that the transaction is only taxed in the country where the goods are consumed.

In cases where the consumption of the product to some extent begins within the EU, the sale must remain taxed in Sweden even if the product is subsequently taken by the buyer on a trip out of the EU. In the opinion of the Swedish Tax Agency, to exempt such a sale from taxation afterwards would be contrary to the purpose of the provision.

When the sold item is to be taken on a trip out of the EU in the buyer’s personal luggage, it is regulated which documentation the seller must have in his accounts. The seller must normally have an export certificate issued by an approved certifier or an invoice or similar document stamped by the customs office where the goods left the EU to be taken to a place outside the EU. If the seller has such documentation, it must be assumed that the product has not been used in the EU after the sale.

In order for the seller to be able to obtain such documentation, the buyer must normally present the product for export control in direct connection with him having to take the product with him on a trip out of the EU.

When the buyer takes the product in his personal luggage on a trip out of the EU from Sweden, the export control is performed by an approved certifier or by the Swedish Customs. In such an inspection, the buyer must make it probable that the product has not been used after the acquisition. The buyer must therefore show the product in the condition it was in when it was purchased. An export certificate may not be issued if the product has been used after the acquisition.

4.2.2 Goods not included in personal luggage

Sales of goods that are not included in the personal luggage can also be considered to have been made abroad. This is the case if the following conditions are met (Chapter 5, Section 3 a, first paragraph 3 ML).

The buyer is a foreign taxable person who acquires a good for his business abroad.
The buyer picks up the product himself for direct export to a place outside the EU.

Which buyers are covered?

A prerequisite for the export of goods to be in question is that the buyer is not established in the country from which the goods are transported. If the product is transported from Sweden, the buyer must be established in another EU country or in a country outside the EU.

According to ML, the buyer must also be a taxable person who acquires the product for his business abroad. However, the corresponding provisions in the VAT Directive do not contain any conditions regarding the buyer’s status or the purpose of the acquisition. The Swedish Tax Agency considers that the wording of the VAT Directive in that respect is clear, precise and unconditional, which is why the provision in Article 146 (1) (b) of the VAT Directive, which must be read together with Article 147, can have direct effect if it is to the individual’s request. This applies regardless of whether the product is intended for private use or for a commercial purpose.

This means that sales can be regarded as exports even if the buyer is not a taxable person, for example a so-called passive holding company or a private person, provided that the goods are not included in the personal luggage. When the sale is made to a private person, the goods are in most cases taken with the personal luggage. In such a case, certain conditions must be met for the turnover to be considered an export, see section 4.2.1.

In order for it to be considered an export, it is also required that the buyer picks up the product for direct export to a place outside the EU, see section 4.1.

What kind of goods are covered?

Virtually all kinds of goods can be exported. One condition, however, is that consumption of the product has not started before the buyer takes the product out of the EU.

Transport of means of transport can be considered as export even if the buyer uses the means of transport within the EU to carry out the journey out of the EU. If the buyer is to use the means of transport in other ways than to carry out the journey out of the EU, it is not an export. Special rules apply when the product is a car or a motorcycle that is temporarily registered upon delivery in accordance with the Vehicle Registration and Use Act. ML has introduced a special rule that aims to facilitate the trade of such goods when the buyer is a natural person residing in a country outside the EU. Sales are considered exports if the seller can show that the buyer has taken the product out of the EU before the end of the sixth month following the month in which the product was delivered. In such cases, the seller does not need to charge VAT on the delivery of the vehicle.

Goods that the buyer himself transports out of the EU for equipment, bunkering or provisioning of recreational boats and private aircraft or other means of transport that are for private use are not covered by the provision. This is stated in the corresponding provision in the VAT Directive, Article 146 (1) (b). Such goods can also not be considered acquired for an activity, which is a condition under ML. Sales of such goods can therefore not be considered as exports

In order for a turnover of goods to be considered as export, the seller must have documentation from the buyer that shows that the goods have been transported out of the EU.

This position replaces the positions “Export when the transport out of the EC takes place by the buyer or on behalf of the buyer”, 2007-11-19, dnr 131 586267-07 / 111, and “Sale of goods to visitors from a country outside the EU – use of the goods before departure, VAT ”, 2020-10-26, dnr 8-528796.