European Commission
Taxation and Customs Union
The concept of centralised clearance
VAT aspects
Patrice PILLET
Value Added Tax Unit
Taxation and Customs Union DG
European Commission
The concept of centralised clearance and the VAT aspects
1
European Commission /
Taxation and Customs Union
The main features of the EU VAT system
Taxation in the "Member State of consumption".
– taxation of supplies of goods and services,
– taxation of imports and exemption of exports
– exemption of intra-community supplies and
taxation of intra-community acquisitions.
The concept of centralised clearance and the VAT aspects
2
European Commission /
Taxation and Customs Union
Import VAT procedure
Clear distinction between:
– the place where the import takes place (MS of
arrival of the goods)
– and the place of consumption (MS of destination
of the goods).
Art 60 of the VAT Directive (2006/112/EC) :
– "The place of importation shall be the Member
State within whose territory the goods are
located when they enter the Community."
The concept of centralised clearance and the VAT aspects
3
European Commission /
Taxation and Customs Union
Import VAT procedures
Different possible scenarios:
– Final destination is the MS where the import
takes place : VAT declared together with
customs duties, possible deferred payment.
– Final destination is another MS : VAT exemption
of import (art 143.d of VAT Directive) and
subsequent intracommunity supply, taxation of
intracommunity acquisition in the MS of
destination.
The concept of centralised clearance and the VAT aspects
4
European Commission /
Taxation and Customs Union
Import VAT procedures
Obligations in cases goods are supplied or
transferred to another MS:
– Conditions for the exemption are set by the MS
(art 131 of VAT directive),
– Different obligations, control mechanisms in
place,
- VAT declaration,
- VAT identification / possible tax
representative,
- Recapitulative statement (VIES)…
The concept of centralised clearance and the VAT aspects
5
European Commission /
Taxation and Customs Union
The concept of centralised clearance
• Art. 106 of the modernised Customs Code
• Possibility for importers to declare and pay all
their import duties in their MS of
establishment, wherever the goods are
supplied / transferred.
The concept of centralised clearance and the VAT aspects
6
European Commission /
Taxation and Customs Union
The concept of centralised clearance
• By 2013…
• Centralised clearance would apply to:
– goods that stay in the MS of physical
importation,
– Goods that are supplied / transferred to MS
of establishment,
– Goods that are supplied or transferred to a
third MS.
• Customs formalities complied with and
customs duties paid in MS of establishment.
The concept of centralised clearance and the VAT aspects
7
European Commission /
Taxation and Customs Union
VAT aspect of centralised clearance
• Need to comply with current VAT obligations in
the MS of physical importation (even if
customs obligations are complied with in the
MS of establishment).
• This is both valid in cases:
– Where goods stay in the MS of importation
(declaration, payment, possibly deferred…)
– Where goods leave the MS of importation
(declaration, exemption, intracommunity
statement…).
The concept of centralised clearance and the VAT aspects
8
European Commission /
Taxation and Customs Union
VAT aspects of centralised clearance
• Clear that the real benefit of centralised
clearance for economic operators (importers)
will only arise if the VAT dimension is fully
taken into account…
• Council statement stressed that "centralised
clearance might need adjustments in the area
of VAT”.
The concept of centralised clearance and the VAT aspects
9
European Commission /
Taxation and Customs Union
Possible ways forward (1)
• New VAT rules on the place of importation, so
that this place coincides with the place of
establishment of the importer ?
Impact on national VAT revenues ?
Consistency with EU VAT system ?
The concept of centralised clearance and the VAT aspects
10
European Commission /
Taxation and Customs Union
Possible ways forward (2)
• To include VAT compliance obligations in the
system put in place for centralised clearance ?
Integration of additional VAT information in
ICS/AIS ?
Impact on fraud / compliance ?
Issue of VAT identification ? VAT payment ?
Possible VAT refunds ?
The concept of centralised clearance and the VAT aspects
11
European Commission /
Taxation and Customs Union
Possible ways forward (3)
• A “VAT import one-stop-shop” for the users of customs
centralised clearance ?
– Option 3a: VAT paid in MS of arrival of the goods if
goosd stay there or exemption / recapitulative
statement if goods moved to other MS
– Option 3b : VAT paid in all cases using the OSS.
Similarities and differences with other OSS already
in force (e-commerce) or to be implemented (mini-OSS)
?
Impact on fraud / compliance ?
The concept of centralised clearance and the VAT aspects
12
European Commission /
Taxation and Customs Union
Possible ways forward
• Other solutions ?
• Open debate at this stage.
The concept of centralised clearance and the VAT aspects
13
European Commission /
Taxation and Customs Union
Ongoing work on the subject
• Previous discussion at the last customs
seminar on this issue (Helsinki, June 2005)
• Comprehensive stock-taking of information on
VAT import procedures in the context of the
Customs 2007 Project Group on single
authorisation for simplified procedures.
The concept of centralised clearance and the VAT aspects
14
European Commission /
Taxation and Customs Union
The way forward
• Discussions will continue at the present
seminar, in a devoted workshop.
• Based on the outcome, DG TAXUD will
continue its reflections, in cooperation with the
MS tax administrations, in view of finding the
best approach.
• Need to find the right balance between trade
facilitation and safeguard of tax revenues.
• Clearly no 'miracle solution'.
The concept of centralised clearance and the VAT aspects
15
European Commission /
Taxation and Customs Union
Questions for the workshop
• Review of present VAT import obligation and
their actual function.
• Reflection on the best way to solve the VAT
challenge of « centralised clearance » (3
possible ways forward f.ex)
• Need to keep in mind the balance between
trade facilitation and fight against fraud.
The concept of centralised clearance and the VAT aspects
16
European Commission /
Taxation and Customs Union
Thank you !
The concept of centralised clearance and the VAT aspects
17