European Union Value Added Tax - Importation of Goods

Importation of Goods

Goods imported from non-member states are subject to VAT at the rate applicable in the member state into which the goods are imported, regardless of whether the goods are received for consideration and regardless of who imports the goods. VAT is generally charged at the border, at the same time as customs duty and using the price determined by customs. However as a result of the action of an EU administrative VAT relief an exception called Low Value Consignment Relief is allowed on shipments of a low value.

VAT paid on importation is treated as input VAT in the same way as VAT on domestic purchases.

Following changes introduced on 1 July 2003, non-EU businesses providing digital electronic commerce and entertainment products and services to EU countries are also required to register with the tax authorities in the relevant EU member state, and to collect VAT on their sales at the appropriate rate, according to the location of the purchaser. Alternatively, under a special scheme, non-EU businesses may register and account for VAT on only one EU member state. This produces distortions as the rate of VAT is that of the member state of registration, not where the customer is located, and an alternative approach is therefore under negotiation, whereby VAT is charged at the rate of the member state where the purchaser is located.