Tax & Legal

The EU Council today formally adopted new value added tax (VAT) rules for distance sales of imported goods. The new rules take the form of a directive which amends directive 2006/112/EC, known as the VAT directive.

The European Court of Justice (ECJ) had to deal with questions regarding the exemption from import VAT on the re-importation into the EU of goods exempt from customs duties. Specifically, whether the import VAT exemption is accessory to the exemption from customs duties for re-imported goods or if both exemptions are to be applied independently.

The Supreme Tax Court has asked the European Court of Justice (ECJ) for a preliminary ruling regarding the entry of a sailing boat into the economic network of the Union. One of the questions referred to the ECJ is whether a means of transport enters the economic cycle of the Union if it is not used as such in a Member State but rather a service (here: maintenance and repair work) is carried out at the boat.

The Council of the EU reached agreement on the position of member states (the so-called ‘general approach’) on the directive on value added tax (VAT) rules for distance sales of imported goods and import VAT.

Following a request for a preliminary ruling by the Hamburg Tax Court, the ECJ held that Article 215 (4) Customs Code, dealing with the determination of the place of origin of import VAT is not automatically applicable if goods were brought into the customs territory of the EU in breach of customs rules and if they are subsequently transported to another Member State.

In a Romanian case, the ECJ decided that a contract providing for the processing of the application for VAT refunds from the tax authorities of several Member States is to be a "supply of services" within the meaning of Article 57 TFEU. Furthermore, the ECJ stated that the tax exemption for transport services in connection with importation cannot be denied from the outset if other qualifying documents are presented to support the importation. The levy of withholding tax on handling fees paid to a foreign service provider was also dealt with by the ECJ.

Following up on a preliminary request from the Hamburg Tax Court the European Court of Justice (ECJ) had to decide on the place of importation for VAT purposes of a transportation vehicle purchased in Georgia which was brought into the EU in breach of customs legislation. The ECJ held the place of importation to be Germany, that is where the owner of the car resides and where the car is ultimately in use.

On 30 June 2021, the Federal Ministry of Finance published information on its homepage regarding the abolition of the small consignment exemption limit.

An ECJ advocate general has suggested that the customs duty due following an administrative offence should not be compounded with a charge to import VAT if, in the circumstances, release of the goods into free circulation within the EU can be excluded.