VAT (Value-added tax)
VAT is a type of consumption tax. It’s a tax on purchases of goods, services, and other ‘taxable supply.’ This tax is paid for by the consumer. It is levied in the purchase price that the customer fulfills.
VAT rates can vary for specific services and products. In the Netherlands, for example, the VAT rate is 21%. Import VAT may need to be paid when importing from non-EU jurisdictions. Import VAT is refundable by local tax authorities and can even be deferred under certain conditions.
Custom duties are charges levied on goods, when importing and exporting goods. The purpose is to protect local economies. If you import goods from outside the EU that exceeds 150 euros, custom duties need to be paid. A separate excise duty is levied. Import duties are often paid by the importer. The EU is a customs union, which means that a single import tariff is due at the place of entry where the import declaration is made, irrespective of the EU Member State. The product can then circulate in the EU market without further customs formalities.
EU requirements for products
Products need to comply with EU requirements at all times. Most products have to comply with certain technical, hygiene, or health requirements. This may require your product to go through different types of testing and certification. Technical requirements are often for industrial products, and health and hygiene requirements are usually for food and agricultural products.
The CE mark is a mark that indicates that the product is compliant with EU legislation. This mark is mandatory for certain product categories, such as:
- Medical devices;
- Electrical appliances;
- Construction products.
The CE mark does not apply to food, motor vehicles, chemicals, cosmetics, and pharmaceuticals. These products all have their own specific rules.
Member states of the EU often have (detailed) requirements considering the packaging and labeling of products. Some of these requirements are mandatory, others are voluntary. Mandatory marks and product labels are often related to public safety, health, and/or environmental concerns like the CE mark above.
Restrictions and prohibitions
There are specific categories of ‘’sensitive’’ products that often have restrictions tied to them.
The types of products that often face import restrictions are:
- Agricultural products;
- Medicinal products;
- Iron and steel products;
- Cultural assets;
- Textile products and clothing;
- Counterfeit or pirated goods;
Importing these goods may be restricted or prohibited. Additional permits and licenses might be needed.
License requirements differ per country. To see which import license you need for your product, please see the official website of the EU
Which documents to prepare for customs?
A customs declaration needs to be filed with the national customs authority. The EU utilizes a common import declaration form for all EU countries. This typically includes the following:
- Commercial invoice;
- Transport documents;
- Certificates of origin;
- Import licenses;
- Test results and other certificates;
- Inspection certificates (such as health, veterinary or plant-health certificates).
Businesses are advised to contract a specialized customs agency in order to take care of filing the declarations.
An EORI number is for a business that wants to import goods into the EU from non-EU countries. This number is used to exchange information with Customs authorities. It is mandatory to obtain an EORI number before importing goods into the EU. An EORI number can be requested through this link: https://www.doing-business-international.com/eu-eori-number-request/.
Advice on how to import/export goods within the EU
Companies generally have a couple of options when it comes to importing goods into the EU. We have listed these below:
- Set up a company in the EU and register for a VAT number and an EORI number. This way, the new company can import products into the EU and export within the EU;
- Arrange a fiscal representative in the EU. The fiscal representative will be responsible for VAT compliance. The fiscal representative will file VAT returns and determine how much VAT must be paid or refunded each period. Companies with a non-resident VAT number can still get an import VAT deferment license, by appointing a fiscal representative.
- Register a non-EU company for an EU VAT number and an EORI number. The (non-EU) company can apply for a (non-resident) VAT number, which it can then use for import/export within the EU. Please note that it is not possible to apply for a VAT-deferral permit with this method.
- A corporate service provider can take all these burdens off your hands, especially if you want or need to export to your EU customers at short notice. In addition, should you need help transporting your products within the EU, assistance can be provided as well.
All of the above would result in being able to import and export within the EU.
For more tailor-made advice, EORI numbers, VAT numbers, or fiscal representation, please contact us by sending an email to firstname.lastname@example.org or by clicking here.