Tax department

VAT aspects of import / export

Value Added Tax Act uses the notion of import and export. The term “import” means carriage goods from a third country (non-EU) to the European Union. “Export” means the shipment of goods from EU Member States to third countries. Both activities are subject to tax on goods and services.

IMPORT

Tax base

As a rule, in case of import, tax base is the customs value plus the customs duty. If the goods are subject to excise duty, the tax base also include the excise tax. It’ worth noting that the tax base also includes other costs – e.g. commissions, transportation fees and insurance costs. However, this applies to situations when such costs has been incurred or will be incurred before the cargo will go to its first destination on country territory. A similar solution is used when the destination in the European Union is different, but is known at the time of import (eg. shown in the transport document).

Moment of tax obligation

Tax is due simultaneously with customs debt arise.

Tax deduction

If the taxpayer settles import of goods on general principles, he is entitled to deduct VAT for the period in which he received customs document. However, if the taxpayer does not make the deduction of VAT within this period, he will be able to do it in one of the two subsequent accounting periods.

Payment of tax

As a rule, the taxpayer firstly must pay the tax to the competent customs office. Import VAT taxpayers pay within 10 days of receipt of the information on the amount of tax due. Only this allows the deduction of VAT calculated in return.

EXPORT

Tax base

The tax base is turnover. Turnover is considered to be the net amount due from the sale. Turnover is increased also by all kinds of received subsidies, as long as they have an impact on the price of the goods supplied or services provided.

Moment of tax obligation

The legislation does not specify precisely moment of arising of tax obligation. Therefore, the general rule is applied – obligation arises from delivery of goods or receipt of all or part of the payment. Delivery date determines the time of transferring to the buyer the right to dispose goods as owner.

Tax deduction

Current law provisions set out a zero rate of VAT on export of goods outside the European Union. The use of this preferential tax rate requires a confirmation from the customs authorities that the goods have actually left the EU territory. Such confirmation is an electronic message IE 599, generated from the Export Control System.

Payment of tax

VAT on exports is covered by a rate of 0%, but even so the taxpayers have to submit their VAT returns to the competent customs office.

CGO Legal Law Firm provides consulting services relating to VAT aspects of import and export of goods and services. If You want to learn more about VAT aspects of import / export, feel free to contact us.