MINIMISING TRADE COSTS THROUGH IMPORT VAT

Who Pays Import VAT?

Supply chains are usually set up with Import VAT being payable by the company designated as the recipient of the goods on the import declaration. However, there are instances where this is not the case, such as shipping DDP (delivery duty paid) where the seller bears all costs in the destination country. Some countries also allow a company who is not the owner of the goods to act as consignee on importation, but it is important to note that in order to reclaim the Import VAT, you must be the owner of the goods in question. It is therefore always necessary to check requirements and respective country details before shipping, or to use a trusted company to manage this for you.

Common industries that incur Import VAT?

• Pharmaceuticals

• Automotive

• Engineering

• Telecommunications

• Electronics

• Manufacturing

• Mining

Do you need an EU VAT number or registration to import goods?

The short answer is yes. If you are importing goods into the EU, usually Customs will require either you or the customer to provide a valid EU VAT number. This is not always the case however, and speaking to a professional can help determine this.

How to optimise Import VAT recovery?

Import VAT and customs duties have made importing much more expensive. Fortunately, there are smart strategies that help you overcome this trade hurdle and minimise trade costs.

The most effective method is ensuring full compliance of documentation to make it possible for a fully automated post-clearance VAT reclamation submission.

Import VAT leakage is common when departments that don’t have knowledge or oversight on document requirements, handle the shipping invoices. Consequently, the Import VAT goes unnoticed, and companies lose out on the opportunity – often adding up to significant amounts of irrecoverable VAT.

For smaller businesses in particular, customs duties and import VAT can pose a serious cash flow challenge. Unless deferred, companies pay VAT and other customs charges upfront, which can put significant strain on working capital.

Advice and Support

For further advice on any of the above or support you require with exporting or importing, please email exportbritain@gmchamber.co.uk.

Events:

1. International Trade Forum – The Dos and Don’ts of Dealing with Import VAT in the EU – 20th September 2022 (10am-11:35am): To register, please see here.

2. Business Clinic – Focus on VAT – 20th September 2022 (2pm – 4pm): For businesses looking to have a more in-depth conversation about their own challenges. Please see here.