Import

What it means

Import is the entry of goods from outside the European Union into the Union. In customs and in tax it is a different situation from buying in another member state, which is an intra-EU acquisition and involves no customs procedure.

Import triggers a customs declaration and payment of duty plus VAT on importation. The taxable amount is the customs value increased by duty and by transport and insurance costs to the place of destination in the Union.

Goods physically reaching the border are not yet an import in the tax sense. While they are in transit or in a customs warehouse, neither duty nor VAT is paid; the liability arises only on release for free circulation. A company can thus store goods inside the Union and pay the tax only when it actually puts them on the market.

How it works in practice

The right to deduct import VAT attaches to the customs decision, not to the supplier’s invoice - so the commercial invoice, the customs declaration and proof of payment are matched in the books. Without the customs document there is no deduction.

Duty, freight and insurance form part of the acquisition cost of inventory and are allocated across the items. The foreign-currency amount is translated under the rules, creating an FX difference against the payment.

With courier shipments the courier acts as customs representative, pays duty and VAT on the company’s behalf and then recharges them. Its invoice is not enough, though: we ask the courier for the customs declaration or decision naming the company as importer. Without it the import VAT paid cannot be deducted.

What to watch out for

The Incoterms delivery term governs: it decides who is the importer, who pays duty and from when risk passes. The wrong term means the tax is paid by someone who then cannot deduct it.

Without an EORI number a company cannot clear goods through customs. The shipment sits at the customs office, storage charges accrue, and with goods on a fixed delivery date a customer order can be lost. Registration is therefore sorted out before the first order from outside the Union, not once the goods arrive.