VAT TREATMENT
IMPORTATION
Overview
• Definition
• Place of importation
• Exemptions
• Person liable to pay VAT
• Special topics
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DEFINITION
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Definition
DEFINITION
• “Importation of goods” means:
– The entry into Malta before 1 May 2004 of goods
transported from any other country;
– The entry into the Community on or after 1 May 2004 of
goods transported from a third territory.
Art. 6 (a) VAT Act
Item 19 Second Schedule
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Definition
DEFINITION
• A “third territory” means:
– The territory of a non-EU Member State; and
– The territory of an EU Member State, which for VAT
purposes is not considered being a part of the
Community.
Art. 2 (1) VAT Act
Fifteenth Schedule
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Definition
The following territories of Member States are for VAT
purposes NOT considered being a part of the Community:
Finland
Aland Islands
Federal Republic of
The Island of Heligoland
Germany
The territory of Busingen
French Republic
The overseas departments
Hellenic Republic
Mount Athos
Kingdom of Spain
Ceuta, Melilla and The Canary Islands
Republic of Italy
Livigno, Campione d’Italia
The Italian waters of Lake Lugano
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United Kingdom
Gibraltar and The Channel Islands
Definition
The following territories are for VAT purposes considered
being a part of the Community:
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United Kingdom
The Isle of Man
France
The Principality of Monaco
Definition
REMARKS
• Importation only applies to goods. Services cannot be
imported!
• Any person can act as importer for an importation
• The subsequent use of the imported goods does not matter
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Definition
REMARKS
• The territories of the Community for Customs purposes,
Excise purposes and VAT purposes are different:
CUSTOMS
EXCISE
VAT
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Definition
REMARKS
Terminology:
• Importation of Community goods: the entry into the
Community for VAT purposes of goods that, for customs
purposes, are already in free circulation
• Importation of non-Community goods: the entry into the
Community for VAT purposes of goods that, for customs
purposes, are not yet in free circulation
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Definition
REMARKS
• In some cases goods are physically entering the
Community, they are not put into free circulation, but placed
under a customs duty suspension regime
• In that case, there is also a (VAT exempt) importation of
goods and VAT on importation will only fall due when the
goods cease to be subject to that regime (unless at that
time another exemption of VAT upon importation is
applicable)
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Art. 9 VAT Act and item 2 (b), Part Four, Fifth Schedule
Art. 8 VAT Act and item 7 (1) and (4) Fourth Schedule
Definition
REMARKS
• The following customs duty suspension regimes exist:
– The temporary storage of goods;
– The placing of goods in a free zone or free warehouse;
– Customs warehousing or inward processing;
– The admittance into territorial waters of goods on drilling and production platforms;
– The temporary entry of goods into an EU Member State;
– External transit procedures;
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– Internal transit procedures
Item 7 (4) Fourth Schedule
Definition
REMARKS
With respect to goods placed under a
customs duty suspension regime before 1 May 2004
and released from that regime on or after 1 May 2004,
special transitional provisions are applicable
for determining the events that are considered to be an importation
Art. 87 (1) and (2) VAT Act
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PLACE OF IMPORTATION
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Place of importation
PRINCIPLE
• An importation of goods takes place where the goods are at
the time when the chargeable event takes place
Art. 7 VAT Act
Item 15 (1) Third Schedule
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Place of importation
PRINCIPLE
• The date of chargeable event in case of an importation of
goods is the following:
– As a general rule, when customs duties become chargeable (or
would have become chargeable if the goods were subject to those
duties)
Art. 8 VAT Act and item 7 (2) and (3) Fourth Schedule
– In case the goods are placed under a customs duty suspension
regime, the chargeable event takes place on the date when the
goods cease to be subject to that regime
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Art. 8 VAT Act and item 7 (1) Fourth Schedule
Place of importation
EXAMPLES
• When goods, transported from a third territory, are in Malta
at the moment customs duties fall due, the importation for
VAT purposes of the goods takes place in Malta
• When goods are transported from a third territory and on
entry on the Maltese territory they are placed under a
regime of customs warehousing, the importation for VAT
purposes of the goods takes place in Malta if the goods are
in Malta at the moment the goods cease to be subject to
that regime (and are not put under another customs duty
suspension regime)
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EXEMPTIONS
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Exemptions
EXAMPLES
• The importation of goods whose supply by a taxable person
is exempt from VAT (e.g. food, pharmaceutical products)
Art. 9 VAT Act and item 1 and 6, Part Four, Fifth Schedule
• The importation of goods that are intended to be placed
under a customs duty suspension regime
Art. 9 VAT Act and item 2 (b), Part Four, Fifth Schedule
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Exemptions
Art. 9 VAT Act and item 2 (a), Part Four, Fifth Schedule
Directive 83/181/EEC dated 28 March 1983
EXAMPLES
• The importation of goods exempt from customs duty
E.g. personal property belonging to individuals coming from countries situated outside the community;
goods imported on the occasion of a marriage; personal property acquired by inheritance; school outfits,
scholastic materials and other scholastic household effects under certain conditions; imports of
negligible value; capital goods and other equipment imported on the transfer of activities; importation of
certain agricultural products and products intended for agricultural use; therapeutic substances,
medicines, laboratory animals and biological or chemical substances; goods for charitable or
philanthropic organizations; importation in the context of certain aspects of international relations; goods
for the promotion of trade (e.g. goods used or consumed at a trade fair or similar event); goods imported
for examination, analysis or test purposes; tourist information literature; documents and publications of
foreign governments and publications of official international bodies; coffins, funerary urns and
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ornamental
funerary articles, etc.
Exemptions
EXAMPLES
• The importation of goods followed by an exempt intraCommunity supply of goods or an exempt deemed intraCommunity supply of goods to another EU Member State
(see later on under Special Topics)
Art. 9 VAT Act and item 3, Part Four, Fifth Schedule
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Exemptions
EXAMPLES
The re-importation by the person who exported them
outside the Community:
– of goods in the state in which they were exported
outside the Community
– of goods which have undergone outside the Community
repair, transformation or adaptation, or after having been
made-up or reworked abroad: provided that this
exemption is limited to the value of the goods at the time
they were exported outside the Community
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Art. 9 VAT Act and item 5, Part Four, Fifth Schedule
PERSON LIABLE
TO PAY IMPORT VAT
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Person liable to pay VAT
• The payment of the tax on a taxable importation is the
liability of the importer
Art. 20 (1) (c) VAT Act
• The importer is the person in whose name the goods are at
the time when tax on the importation becomes chargeable
Art. 2 (1) VAT Act
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Payment of VAT
• As a general rule, VAT upon importation is paid at the
Customs authorities
Art. 21 (5) VAT Act
• However the Commissioner can allow deferring the
payment of the import VAT to the VAT return
Art. 60 (1) (c) and (2) VAT Act
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VAT treatment importation
Example
A Maltese company A, registered under art. 11 VAT Act,
purchases office equipment from a Libyan company B. A
has the goods transported from B’s premises in Tripoli to its
office in Valetta. Goods are put into free circulation.
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VAT treatment importation
Example
Libya
Malta
Movement of goods
B
A
B supplies goods
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VAT treatment importation
Solution: B-A
1. Taxable person: YES
2. Operation in the scope of VAT: YES (supply of goods)
3. Place of supply: Libya (Item 1 (b) Third Schedule – where
transport begins)
4. Exemption: N/A
5. Person liable to pay VAT: N/A
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VAT treatment importation
Solution: A
1. Qualifying person (importer): YES
2. Operation in the scope of VAT: YES (importation of goods)
3. Place of importation: Malta (Item 15 Third Schedule and
item 7 Fourth Schedule)
4. Exemption: NO (assumption)
5. Person liable to pay VAT: the Maltese company A (art. 20
(1) (c) VAT Act)
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SPECIAL TOPICS
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Supplies of goods following an
importation of goods
PRINCIPLE
• As a general rule, supplies of goods that are transported
take place where the goods are at the time when the
transport of those goods begins
Art. 7 VAT Act and item 1 (b) Third Schedule
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Supplies of goods following an
importation of goods
EXCEPTION
• When it concerns supplies of goods whereby the transport
of goods begins outside the Community and ends in the
Community, the supplies of goods by the importer and any
subsequent supply up to the acquisition of those goods,
take place in the Member State where they are imported
Art. 7 VAT Act and item 1 (c) Third Schedule
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Supplies of goods following an
importation of goods
Example
A, a US company, supplies computers to B, a Maltese
company registered under art. 10 VAT Act. The computers
are put at the disposal of B in the USA.
B supplies the goods to C. In the frame of this sale, the
computers are transported by B from the USA into Malta (to
the premises of C). B acts as importer of the goods.
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Supplies of goods following an
importation of goods
USA
Malta
A supplies goods
A
B
B supplies goods
B acts as importer
B transports goods
C
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Supplies of goods following an
importation of goods
Solution: A-B
1. Taxable person: YES
2. Operation in the scope of VAT: YES (supply of goods)
3. Place of supply: USA (Item 1 (a) Third Schedule – where
goods are placed at the disposal of B)
4. Exemption: N/A
5. Person liable to pay VAT: N/A
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Supplies of goods following an
importation of goods
Solution: B
1. Qualifying person (importer): YES
2. Operation in the scope of VAT: YES (importation of goods)
3. Place of importation: Malta (Item 15 Third Schedule and
item 7 Fourth Schedule)
4. Exemption: NO
5. Person liable to pay VAT: the Maltese company B (art. 20
(1) (c) VAT Act)
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Supplies of goods following an
importation of goods
Solution: B-C
1. Taxable person: YES
2. Operation in the scope of VAT: YES (supply of goods)
3. Place of supply: Malta (Item 1 (c) Third Schedule – in MS
of importation)
4. Exemption: NO
5. Person liable to pay VAT: the Maltese company B (art. 20
(1) (a) VAT Act)
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In case item 1 (c) would not exist:
Place = USA
Supplies of goods following an
importation of goods
Example
A, a US company, supplies computers to B, a Maltese
company registered under art. 10 VAT Act. The computers
are put at the disposal of B in the USA.
B supplies the goods to C. In the frame of this sale, B takes
care of the transport of the computers from the USA into
Malta (to the premises of C). C acts as importer of the
goods.
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Supplies of goods following an
importation of goods
USA
Malta
A supplies goods
A
B
B supplies goods
C acts as importer
B takes care of the
transport to Malta
C
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Supplies of goods following an
importation of goods
Solution: A-B
1. Taxable person: YES
2. Operation in the scope of VAT: YES (supply of goods)
3. Place of supply: USA (Item 1 (a) Third Schedule – where
goods are placed at the disposal of B)
4. Exemption: N/A
5. Person liable to pay VAT: N/A
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Supplies of goods following an
importation of goods
Solution: B-C
1. Taxable person: YES
2. Operation in the scope of VAT: YES (supply of goods)
3. Place of supply: US (Item 1 (b) Third Schedule – where
transport begins)
4. Exemption: N/A
5. Person liable to pay VAT: N/A
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Supplies of goods following an
importation of goods
Solution: C
1. Qualifying person (importer): YES
2. Operation in the scope of VAT: YES (importation of goods)
3. Place of importation: Malta (Item 15 Third Schedule and
item 7 Fourth Schedule)
4. Exemption: NO
5. Person liable to pay VAT: the Maltese company C (art. 20
(1) (c) VAT Act)
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Importation followed by an exempt
IC supply of goods
PRINCIPLE
• An importation of goods into Malta, followed by an exempt
intra-Community supply of the same goods by the same
taxable person, registered under art. 10 VAT Act, is exempt
from VAT
Art. 9 VAT Act and item 3 , Part Four, Fifth Schedule
• The importer has to prove at the moment of importation that
there will be a subsequent exempt intra-Community supply
of the goods (i.e. proof of transport and VAT identification
number final recipient)
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Importation followed by an exempt
IC supply of goods
PRINCIPLE
• The subsequent exempt intra-Community supply can either
be:
– A (normal) exempt IC supply from Malta to another EU Member
State, whereby the customer is liable for the VAT on his ICA; or
Art. 9 VAT Act and item 3 (1) , Part One, Fifth Schedule
– A (deemed) exempt IC supply in the frame of a transfer by a taxable
person, registered under art. 10 VAT Act, of goods forming part of
his economic activity to another EU Member State
Art. 9 VAT Act and item 3 (4) , Part One, Fifth Schedule
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Importation followed by an exempt
IC supply of goods
Example
A Maltese company B, registered under art. 10 VAT Act,
purchases office equipment from a Libyan company A. B
has the goods transported from A’s premises in Tripoli to
Malta. B imports the goods into Malta.
At the moment of importation, the goods are destined to be
supplied to C, an Italian company that is VAT registered in
Italy, whereby the unaltered goods are transported from
Malta to Italy. C provides B with its Italian VAT identification
number.
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Importation followed by an exempt
IC supply of goods
Libya
Malta
B
A supplies goods
A
Movement of goods
Movement of goods
B supplies goods
Italy
C provides
IT VAT number
C
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Importation followed by an exempt
IC supply of goods
Solution: A-B
1. Taxable person: YES
2. Operation in the scope of VAT: YES (supply of goods)
3. Place of supply: Libya (Item 1 (b) Third Schedule – where
transport begins)
4. Exemption: N/A
5. Person liable to pay VAT: N/A
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Importation followed by an exempt
IC supply of goods
Solution: B
1. Qualifying person (importer): YES
2. Operation in the scope of VAT: YES (importation of goods)
3. Place of importation: Malta (Item 15 Third Schedule and
item 7 Fourth Schedule)
4. Exemption: YES (Item 3, Part Four, Fifth Schedule)
5. Person liable to pay VAT: N/A
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Importation followed by an exempt
IC supply of goods
Solution: B-C in the head of B
1. Taxable person: YES
2. Operation in the scope of VAT: YES (IC supply of goods)
3. Place of supply: Malta (Item 1 (c) Third Schedule – in MS
of importation)
4. Exemption: YES (Item 3 (1), Part One, Fifth Schedule)
5. Person liable to pay VAT: N/A
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Importation followed by an exempt
IC supply of goods
Solution: B-C in the head of C
1. Taxable person: YES
2. Operation in the scope of VAT: YES (IC acquisition of
goods)
3. Place of supply: Italy (Item 13 Third Schedule – where
transport ends)
4. Exemption: N/A
5. Person liable to pay VAT: N/A
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Import into a Member State other
than the Member State of arrival (1)
PRINCIPLE
• As a general rule, supplies of goods that are transported
take place where the goods are at the time when the
transport of those goods begins
Art. 7 VAT Act and item 1 (b) Third Schedule
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Import into a Member State other
than the Member State of arrival (1)
EXCEPTION 1
Sixth Directive
• Goods are deemed to be transported from the Member
State of importation if:
– goods are supplied to a member of the “Group of 4”
(“Group of 3” in Malta); and
– the transport is made from a third territory by or on
behalf of the supplier; and
– goods are imported by the supplier into a Member State
other than the Member State of arrival
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Based upon art. 7 VAT Act and item 1 (c) Third Schedule
Import into a Member State other
than the Member State of arrival (1)
EXCEPTION 1
• For these types of operations, it should be determined whether or not
distance sales rules or the rules on IC supplies/acquisitions are
applicable
• The move of goods as from the MS of importation into the MS of arrival
of the goods has to be taken in to account to determine whether:
– The threshold for IC acquisitions of the customers in the MS of
arrival has been exceeded
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– The threshold for applying the distance sales rules of the supplier
for supplies from the MS of importation towards the MS of arrival of
the goods has been exceeded
Import into a Member State other
than the Member State of arrival (1)
EXCEPTION 1
The exception does not apply to:
New means of transport
Goods to be installed or assembled
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Import into a Member State other
than the Member State of arrival (1)
Example
• A, an Libyan company, supplies computers to B (without
installation). B is a small undertaking established in another
Member State than Malta (Member State 2). Goods are
transported by A from Libya into Malta and subsequently A
transports the goods to the other Member State 2. A acts as
importer of the goods.
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Import into a Member State other
than the Member State of arrival (1)
Libya
Malta
A acts as importer
A
A’
Movement of goods
Movement of goods
A supplies goods
MS 2
B
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Import into a Member State other
than the Member State of arrival (1)
Solution: A
1. Qualifying person (importer): YES
2. Operation in the scope of VAT: YES (importation of goods)
3. Place of importation: Malta (Item 15 Third Schedule and
item 7 Fourth Schedule)
4. Exemption:
–
YES, in case the importation is followed by an exempt IC supply
–
NO, in case the importation is not followed by an exempt IC supply
5. Person liable to pay VAT: if no exemption, A (art. 20 (1) (c)
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VAT Act)
Import into a Member State other
than the Member State of arrival (1)
•
Hypothesis 1: B exceeded the threshold for IC acquisitions in MS
2 or opted to subject IC acquisitions to VAT in MS 2
Solution: A-B, in the head of A
• Taxable person: YES
• Operation in the scope of VAT: YES (IC supply of goods)
• Place of supply: Malta (Item 1 (b) Third Schedule – where
transport begins)
• Exemption: YES (Item 3 (1), Part One, Fifth Schedule)
• Person liable to pay VAT: N/A
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The importation by A will be exempt from VAT
Import into a Member State other
than the Member State of arrival (1)
• Hypothesis 2: B did not exceed the threshold for IC acquisitions in MS 2 nor
opted to subject IC acquisitions to VAT in MS 2 AND A did not exceed the
threshold for distance sales from Malta towards MS 2 nor opted to subject his
supplies from Malta to MS 2 to VAT in MS 2 under the distance sales rules
Solution: A-B
• Taxable person: YES
• Operation in the scope of VAT: YES (supply of goods)
• Place of supply: Malta (Item 1 (b) Third Schedule – where
transport begins)
• Exemption: NO
•59 Person liable to pay VAT: A (art. 20 (1) (a) VAT Act)
Import into a Member State other
than the Member State of arrival (1)
• Hypothesis 3: B did not exceed the threshold for IC acquisitions in MS 2 nor
opted to subject IC acquisitions to VAT in MS 2 BUT A exceeded the threshold
for distance sales from Malta towards MS 2 or opted to subject his supplies
from Malta to MS 2 to VAT in MS 2 under the distance sales rules
Solution: A-B
• Taxable person: YES
• Operation in the scope of VAT: YES (distance sale)
• Place of supply: MS 2 (Item 4 (2) (b) Third Schedule – where
transport ends)
• Exemption: N/A
•60 Person liable to pay VAT: N/A
Import into a Member State other
than the Member State of arrival (2)
EXCEPTION 2
• Goods shall be deemed to have been dispatched or
transported from the Member State of importation if they:
– are acquired by a non-taxable legal person;
– are dispatched or transported from a third territory; and
– imported by that non-taxable legal person into a Member
State other than the Member State of arrival of the
goods
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Import into a Member State other
than the Member State of arrival (2)
EXCEPTION 2
• The acquisition by the non-taxable legal person of the goods imported
by him in another Member State than the Member State of arrival and
subsequently transported to the Member State of arrival is considered to
be an intra-Community acquisition of goods
Art. 6 VAT Act and item 18 (1) (c) Second Schedule
• The supply of goods with the deemed transport as from Member State of
importation into the Member State of arrival of the goods has to be taken
into account to determine whether the threshold for intra-Community
acquisitions of the non-taxable legal person in the Member State of
arrival has been exceeded
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Import into a Member State other
than the Member State of arrival (2)
EXCEPTION 2
• If the acquisition by the non-taxable legal person is subject
to VAT in the Member State of arrival, the non-taxable legal
person may claim the refund of the import VAT in the
Member State of importation
In case Malta is the Member State of importation:
see art. 25 (4) VAT Act
63
Import into a Member State other
than the Member State of arrival (2)
Example
• A, an Libyan company, supplies computers to B (without
installation). B is a non-taxable legal person (e.g. a pure
holding company) established in another Member State
than Malta (Member State 2). Goods are transported from
Libya into Malta and subsequently transported from Malta to
the Member State 2. B acts as importer of the goods.
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Import into a Member State other
than the Member State of arrival (2)
Libya
Malta
B acts as importer
A
Movement of goods
Movement of goods
A supplies goods
MS 2
B
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Import into a Member State other
than the Member State of arrival (2)
Solution: A-B
1. Taxable person: YES
2. Operation in the scope of VAT: YES (supply of goods)
3. Place of supply: Libya (Item 1 (a) Third Schedule – where
the goods are placed at the disposal of B)
4. Exemption: N/A
5. Person liable to pay VAT: N/A
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Import into a Member State other
than the Member State of arrival (2)
Solution: B
1. Qualifying person (importer): YES
2. Operation in the scope of VAT: YES (importation of goods)
3. Place of importation: Malta (Item 15 Third Schedule and
item 7 Fourth Schedule)
4. Exemption: NO
5. Person liable to pay VAT: B (art. 20 (1) (c) VAT Act)
B can claim the refund of the Maltese VAT upon importation
if the acquisition of the goods by B is subject to VAT in MS 2
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Import into a Member State other
than the Member State of arrival (2)
Solution: B with respect to movement of goods to MS 2
Hypothesis 1: B exceeded the threshold for IC acquisitions in MS
2 or opted to subject IC acquisitions to VAT in MS 2
1. Qualifying person: YES
2. Operation in the scope of VAT: YES (IC acquisition)
3. Place of operation: MS 2 (Item 13 Third Schedule – where
transport ends)
4. Exemption: N/A
5. Person liable to pay VAT: N/A
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B can claim the refund of the Maltese VAT upon importation
Import into a Member State other
than the Member State of arrival (2)
Solution: B with respect to movement of goods to MS 2
Hypothesis 2: B did not exceed the threshold for IC acquisitions in
MS 2 nor opted to subject IC acquisitions to VAT in MS 2
1. Qualifying person: YES
2. Operation in the scope of VAT: NO
3. Place of operation: N/A
4. Exemption: N/A
5. Person liable to pay VAT: N/A
B cannot claim the refund of the Maltese VAT upon importation
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