The EU legislation relating to the importation of goods by businesses that are not established in the EU is very complex and varies considerably between the Member States. As an Importer, it is important to understand the roles and responsibilities of the carrier and other representatives that may be required. As a Carrier, it is a big commercial decision to make whether or not you want to offer the service of acting as a Declarant / Importer of Record. This article will discuss these factors.
Import Transaction Parties
From a customs perspective, it is important to distinguish between the following 3 parties in an import transaction:
1. Exporter
2. Consignee
3. Declarant / Importer of Record
The Exporter
The exporter is obviously the business that is responsible for shipping the goods from the non-EU jurisdiction to the EU. The consignee is the party who is taking ownership of the products once the goods are cleared for free circulation. This should be determined by the ‘incoterms’ agreed between the parties and is usually based on the decision of whether the exporter or the importer is responsible for paying the duties and taxes.
The Consignee
In the case of a standard import/export transaction – whoever is responsible for paying the import duties will be recorded as the consignee. In the case of a B2C sale, the consignee can be the private individual to whom you are delivering the goods. If a business is importing its own goods for storage, later distribution or internal use, then the importer and exporter is the same entity and therefore by definition it must also be the consignee.
In order to be recorded as the consignee on an import, a business must have an EORI number. From a VAT compliance perspective, if the consignee is subsequently making taxable transactions in the country of import, they are legally obligated to register for VAT in that country. The EORI and VAT number should be linked and these details should be input by your carrier in the customs documentation in the Consignee section.
The Declarant / Importer of Record
The third “party” to the transaction is the Declarant (also known as Importer of Record). This is a customs obligation and completely independent of VAT compliance considerations. Vatglobal can act as your tax and/or fiscal representative for VAT purposes in over 30 countries, but we do not act as the declarant, as this is a completely separate service.
The declarant is the person “responsible” for the import. He must ensure the goods are legitimate, correctly valued and declared upon import – this includes customs debt, the accuracy of the information given in the declaration, the authenticity of the documents presented and compliance with all obligations.
Different Countries, Different Requirements
The requirements/criteria for who is permitted to act as the declarant differs across the EU countries.
In many cases, a non-established business that is VAT registered may act as the declarant himself (if he is also the consignee), whilst in other cases, they must appoint a representative to act in this regard.
When a third-party declarant is required, the importer will have to engage the services of a representative to act on its behalf. Often the carrier/logistics agent will be able to act as the declarant, but some companies do not offer this because of the liability that arises from the import as mentioned above.
In these circumstances, the importer will have to find a local broker or agent to serve as the importer of record.
The rules around the importer of record differ depending on the jurisdiction and the nature of the import transaction. This is something that needs to be very carefully considered independently of your VAT compliance obligations because it can cause practical issues in the customs clearance process.
In conclusion, each case needs to be examined on an individual basis and it is important to consult an expert in this regard.
Apart from the VAT compliance services that Vatglobal offers, we also have a sister division called TecEx which offers Global Non-Resident Importer of Record services in over 200 countries. More information about our services can be found on www.vatglobal.com
Adam Seidle qualified as a chartered accountant at Grant Thornton in Johannesburg, South Africa. He now lives in London and runs the partners division of Vatglobal, a subsidiary of the VAT IT Group. He can be reached at +44 (0)203 870 6652 or via [email protected]
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