European Union: VAT implications to customs agents on import

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The Court of Justice of the European Union clarifies Case C-714/20 issued on 12 May 2022. The legal issue that has been brought before the Court has a longstanding history. On joint cases C-226/14 and C-228/14, if customs charges are found to be payable because the items in question were illegally transported from customs warehousing to external transit, there is no import VAT paid since these items were not used in the EU’s economic system.

According to Article 201 of EU VAT Directive 2006/112/EC, VAT on import is payable by the person recognized as responsible by the EU member state. To declare import in EU, the applicant must be established within the EU. However, importation for VAT purposes does not always coincide with importation for customs purposes, and VAT for import is not always due when the customs duties become payable.

VAT Implications

The decisions have potential effects for forwarders. This means that their risks will be reduced, which would make the indirect representation less costly, especially for non-EU importers. The CJEU’s decision is a good thing for the importers since they do not use the imported products for their taxable output transactions, forwarders are not entitled to deduct the applicable import VAT.


Disclaimer: Reproduced/Adapted with permission from Global VAT Compliance.

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