VAT on Imports: How to Keep Records?

October 31, 2022

Importing is a pretty standard process for businesses and individuals. However, reporting important VAT can sometimes be confusing. Below, we explain the most frequent and crucial concepts for goods import.

VAT at imports
VAT is applicable during importing whenever goods are imported into the European Union or another third country. Standard import procedures do not apply for intra-Community purchases within the EU.

Documentation required
Those who have dealt with imports know that these procedures require quite a lot of paperwork. However, the types of documentation depend on what goods are imported, where they originate, and what rules apply in the destination country (importer’s destination).

Transaction participants
A normal import procedure includes three parties: the exporter (consignor or the supplier of goods), the declarant and the importer (consignee or the buyer). Normally, the consignee is responsible for completing the customs procedures and import documentation. However, in cases when different incoterms apply, these responsibilities, as well as paying the duties, can be transferred to other parties.
The declarant sometimes participates in the process on behalf of one of the other two parties. Typically, this role is taken by a transportation provider or a customs broker, or another direct or indirect representative.

Frequent mistakes
Even after a seemingly successful customs clearance, companies or individuals can face VAT reporting and recovery difficulties for imported goods. This frequently happens when faulty information is declared on the participants of the transaction, value of goods, codes or other identification details or whenever the consignee cannot be the importer of record or does not have a required customs representation.

Simplified VAT on imports
Some countries allow delaying import VAT and avoiding dealing with VAT at customs—this is called import VAT simplification. However, a VAT delay needs to be permitted and confirmed prior to the transaction. It is worth noting that normally foreign entities would have to appoint a representative in order to use the delay.

Navigating imports
Sometimes, import VAT can be overly complicated. Therefore, having a trusted partner helps to save time, money, and other essential resources. If you need help with your VAT reporting—let us know, and our expert team will consult you.