How NOT to pay VAT on your imports from China into Europe?

Brexit FAQ – Should I start increasing the inbound quantities that I am shipping to the other side of the border?
November 26, 2020
How LCL (Less than Container Load) shipping works?
December 3, 2020

How NOT to pay VAT on your imports from China into Europe?

Procedure 4200 involves import of the non-EU commodities to the territory of the EU with subsequent delivery of these commodities to some other EU country, also called the intra-Community supply with import VAT deferment.

Procedure 4200 is dedicated to the foreign businesses importing goods to the EU via the territory of other country.

The benefits are as follows:

  • on the release of the shipment for free circulation by the tax representative, the Client does not pay import VAT,
  • the VAT debt generated during the customs procedures is later settled by the Client in the country of final destination, which streamlines the goods turnover and improves the Client’s cash flow,
  • easier purchase procedures in the case of resale of the goods,
  • opposite to the transit procedure, the Client’s customer is released from any customs obligations, acquires cleared shipment, ready for immediate use.

What you need to do:

  • appoint a fiscal tax representative in a business friendly country of the EU, where your company is not registered for VAT and you can ship your cargo to and clear the customs there – 3 the most popular onces are the Netherlands, Germany or Belgium
  • once the cargo arrives to Germany/Belgium/Netherlands, your fiscal tax representative (there are several customs agencies who offer that service) will clear the customs for you and once the goods are realised, they export and take care of transporting the cargo to another country – e.g. to FBA PREP in Poland (it can be a road transport or intermodal – they ship it by sea to a port in Poland + road transport within Poland)
  • you pay VAT only once the final sale is made – e.g. in DE/NL/PL and pay VAT only after that
  • no VAT on import into the EU, no need to claim the VAT back from the tax office
  • it works for FCL and LCL shipments
  • the only document from the customs agency to release the goods fiscaly, is a signed CMR form from a truck driver and a receiver

Prices for the service in Germany/Belgium/Netherlands are at the following level:

:: Fiscal customs clearance – customs clearance in Germany (in procedure 4200, no VAT charged on import), it contains one tariff line. The cost of clearance for reporting to the office statistical (Intrastat) and to the tax office in Germany along with the monthly one briefings summaries, supplementing data on the purchaser, e.g. tax identification number EU and customer registration with EORI and NIP EU verification.
95 EUR

:: Additional tariff line in the customs declaration – for goods with different customs codes.

:: Additional container in one customs declaration – maximum number of containers in one customs declaration.
EUR 15

:: T2L document – includes 3 items in the price. Document issued when the goods are cleared leaves the German area by sea.
35 EUR

:: T2L document – additional tariff lines (from 4th)
EUR 2.50

:: B-Number at T2L – for an additional report on Feeder after check-in in e.g. Hamburg.
20 EUR

Please contact your tax advisor to confirm and discuss all the details involved. The procedure require several formal preparations and are not suitable for start-up businesses. Always take several scenarios into consideration especially when it comes to taxes.

Comments are closed.