1. VAT TREATMENT IMPORTATION

2. Overview Definition Place of importation Exemptions
Person liable to pay VAT
Special topics 2

3. DEFINITION 3

4. Definition DEFINITION “Importation of goods” means:
The entry into Malta before 1 May 2004 of goods transported from any other country;
The entry into the Community on or after 1 May 2004 of goods transported from a third territory.
Art. 6 (a) VAT Act
Item 19 Second Schedule 4

5. Definition DEFINITION A “third territory” means:
The territory of a non-EU Member State; and
The territory of an EU Member State, which for VAT purposes is not considered being a part of the Community.
Art. 2 (1) VAT Act
Fifteenth Schedule 5

6. Definition
The following territories of Member States are for VAT purposes NOT considered being a part of the Community:
Finland
Aland Islands
Federal Republic of Germany
The Island of Heligoland The territory of Busingen
French Republic
The overseas departments
Hellenic Republic
Mount Athos
Kingdom of Spain
Ceuta, Melilla and The Canary Islands
Republic of Italy
Livigno, Campione d’Italia The Italian waters of Lake Lugano
United Kingdom
Gibraltar and The Channel Islands 6

7. Definition
The following territories are for VAT purposes considered being a part of the Community:
United Kingdom
The Isle of Man
France
The Principality of Monaco 7

8. Definition
REMARKS
Importation only applies to goods. Services cannot be imported!
Any person can act as importer for an importation
The subsequent use of the imported goods does not matter 8

9. Definition
REMARKS
The territories of the Community for Customs purposes, Excise purposes and VAT purposes are different:
CUSTOMS
EXCISE
VAT 9

10. Definition REMARKS Terminology:
Importation of Community goods: the entry into the Community for VAT purposes of goods that, for customs purposes, are already in free circulation
Importation of non-Community goods: the entry into the Community for VAT purposes of goods that, for customs purposes, are not yet in free circulation 10

11. Definition
REMARKS
In some cases goods are physically entering the Community, they are not put into free circulation, but placed under a customs duty suspension regime
In that case, there is also a (VAT exempt) importation of goods and VAT on importation will only fall due when the goods cease to be subject to that regime (unless at that time another exemption of VAT upon importation is applicable)
Art. 9 VAT Act and item 2 (b), Part Four, Fifth Schedule
Art. 8 VAT Act and item 7 (1) and (4) Fourth Schedule 11

12. Item 7 (4) Fourth Schedule
Definition
REMARKS
The following customs duty suspension regimes exist:
The temporary storage of goods;
The placing of goods in a free zone or free warehouse;
Customs warehousing or inward processing;
The admittance into territorial waters of goods on drilling and production platforms;
The temporary entry of goods into an EU Member State;
External transit procedures;
Internal transit procedures
Item 7 (4) Fourth Schedule 12

13. Definition REMARKS With respect to goods placed under a
customs duty suspension regime before 1 May 2004
and released from that regime on or after 1 May 2004,
special transitional provisions are applicable
for determining the events that are considered to be an importation
Art. 87 (1) and (2) VAT Act 13

14. PLACE OF IMPORTATION 14

15. Place of importation PRINCIPLE
An importation of goods takes place where the goods are at the time when the chargeable event takes place
Art. 7 VAT Act
Item 15 (1) Third Schedule 15

16. Place of importation PRINCIPLE
The date of chargeable event in case of an importation of goods is the following:
As a general rule, when customs duties become chargeable (or would have become chargeable if the goods were subject to those duties)
In case the goods are placed under a customs duty suspension regime, the chargeable event takes place on the date when the goods cease to be subject to that regime
Art. 8 VAT Act and item 7 (2) and (3) Fourth Schedule 16
Art. 8 VAT Act and item 7 (1) Fourth Schedule

17. Place of importation EXAMPLES
When goods, transported from a third territory, are in Malta at the moment customs duties fall due, the importation for VAT purposes of the goods takes place in Malta
When goods are transported from a third territory and on entry on the Maltese territory they are placed under a regime of customs warehousing, the importation for VAT purposes of the goods takes place in Malta if the goods are in Malta at the moment the goods cease to be subject to that regime (and are not put under another customs duty suspension regime) 17

18. EXEMPTIONS 18

19. Exemptions
EXAMPLES
The importation of goods whose supply by a taxable person is exempt from VAT (e.g. food, pharmaceutical products)
The importation of goods that are intended to be placed under a customs duty suspension regime
Art. 9 VAT Act and item 1 and 6, Part Four, Fifth Schedule
Art. 9 VAT Act and item 2 (b), Part Four, Fifth Schedule 19

20. Exemptions Art. 9 VAT Act and item 2 (a), Part Four, Fifth Schedule
Directive 83/181/EEC dated 28 March 1983
EXAMPLES
The importation of goods exempt from customs duty
E.g. personal property belonging to individuals coming from countries situated outside the community; goods imported on the occasion of a marriage; personal property acquired by inheritance; school outfits, scholastic materials and other scholastic household effects under certain conditions; imports of negligible value; capital goods and other equipment imported on the transfer of activities; importation of certain agricultural products and products intended for agricultural use; therapeutic substances, medicines, laboratory animals and biological or chemical substances; goods for charitable or philanthropic organizations; importation in the context of certain aspects of international relations; goods for the promotion of trade (e.g. goods used or consumed at a trade fair or similar event); goods imported for examination, analysis or test purposes; tourist information literature; documents and publications of foreign governments and publications of official international bodies; coffins, funerary urns and ornamental funerary articles, etc. 20

21. Art. 9 VAT Act and item 3, Part Four, Fifth Schedule
Exemptions
EXAMPLES
The importation of goods followed by an exempt intra- Community supply of goods or an exempt deemed intra- Community supply of goods to another EU Member State (see later on under Special Topics)
Art. 9 VAT Act and item 3, Part Four, Fifth Schedule 21

22. Art. 9 VAT Act and item 5, Part Four, Fifth Schedule
Exemptions
EXAMPLES
The re-importation by the person who exported them outside the Community:
of goods in the state in which they were exported outside the Community
of goods which have undergone outside the Community repair, transformation or adaptation, or after having been made-up or reworked abroad: provided that this exemption is limited to the value of the goods at the time they were exported outside the Community
Art. 9 VAT Act and item 5, Part Four, Fifth Schedule 22

23. PERSON LIABLE TO PAY IMPORT VAT23

24. Person liable to pay VAT
The payment of the tax on a taxable importation is the liability of the importer
The importer is the person in whose name the goods are at the time when tax on the importation becomes chargeable
Art. 20 (1) (c) VAT Act
Art. 2 (1) VAT Act 24

25. Payment of VAT
As a general rule, VAT upon importation is paid at the Customs authorities
However the Commissioner can allow deferring the payment of the import VAT to the VAT return
Art. 21 (5) VAT Act
Art. 60 (1) (c) and (2) VAT Act 25

26. VAT treatment importation
Example
A Maltese company A, registered under art. 11 VAT Act, purchases office equipment from a Libyan company B. A has the goods transported from B’s premises in Tripoli to its office in Valetta. Goods are put into free circulation. 26

27. VAT treatment importation
Example
Libya
Malta
Movement of goods B A
B supplies goods 27

28. VAT treatment importation
Solution: B-A
Taxable person: YES
Operation in the scope of VAT: YES (supply of goods)
Place of supply: Libya (Item 1 (b) Third Schedule – where transport begins)
Exemption: N/A
Person liable to pay VAT: N/A 28

29. VAT treatment importation
Solution: A
Qualifying person (importer): YES
Operation in the scope of VAT: YES (importation of goods)
Place of importation: Malta (Item 15 Third Schedule and item 7 Fourth Schedule)
Exemption: NO (assumption)
Person liable to pay VAT: the Maltese company A (art. 20 (1) (c) VAT Act) 29

30. SPECIAL TOPICS 30

31. Supplies of goods following an importation of goods
PRINCIPLE
As a general rule, supplies of goods that are transported take place where the goods are at the time when the transport of those goods begins
Art. 7 VAT Act and item 1 (b) Third Schedule 31

32. Supplies of goods following an importation of goods
EXCEPTION
When it concerns supplies of goods whereby the transport of goods begins outside the Community and ends in the Community, the supplies of goods by the importer and any subsequent supply up to the acquisition of those goods, take place in the Member State where they are imported
Art. 7 VAT Act and item 1 (c) Third Schedule 32

33. Supplies of goods following an importation of goods
Example
A, a US company, supplies computers to B, a Maltese company registered under art. 10 VAT Act. The computers are put at the disposal of B in the USA.
B supplies the goods to C. In the frame of this sale, the computers are transported by B from the USA into Malta (to the premises of C). B acts as importer of the goods. 33

34. Supplies of goods following an importation of goods
USA
Malta
A supplies goods A B
B supplies goods
B acts as importer
B transports goods C 34

35. Supplies of goods following an importation of goods
Solution: A-B
Taxable person: YES
Operation in the scope of VAT: YES (supply of goods)
Place of supply: USA (Item 1 (a) Third Schedule – where goods are placed at the disposal of B)
Exemption: N/A
Person liable to pay VAT: N/A 35

36. Supplies of goods following an importation of goods
Solution: B
Qualifying person (importer): YES
Operation in the scope of VAT: YES (importation of goods)
Place of importation: Malta (Item 15 Third Schedule and item 7 Fourth Schedule)
Exemption: NO
Person liable to pay VAT: the Maltese company B (art. 20 (1) (c) VAT Act) 36

37. Supplies of goods following an importation of goods
Solution: B-C
Taxable person: YES
Operation in the scope of VAT: YES (supply of goods)
Place of supply: Malta (Item 1 (c) Third Schedule – in MS of importation)
Exemption: NO
Person liable to pay VAT: the Maltese company B (art. 20 (1) (a) VAT Act)
In case item 1 (c) would not exist:
Place = USA 37

38. Supplies of goods following an importation of goods
Example
A, a US company, supplies computers to B, a Maltese company registered under art. 10 VAT Act. The computers are put at the disposal of B in the USA.
B supplies the goods to C. In the frame of this sale, B takes care of the transport of the computers from the USA into Malta (to the premises of C). C acts as importer of the goods. 38

39. Supplies of goods following an importation of goods
USA
Malta
A supplies goods A B
B supplies goods
C acts as importer
B takes care of the
transport to Malta C 39

40. Supplies of goods following an importation of goods
Solution: A-B
Taxable person: YES
Operation in the scope of VAT: YES (supply of goods)
Place of supply: USA (Item 1 (a) Third Schedule – where goods are placed at the disposal of B)
Exemption: N/A
Person liable to pay VAT: N/A 40

41. Supplies of goods following an importation of goods
Solution: B-C
Taxable person: YES
Operation in the scope of VAT: YES (supply of goods)
Place of supply: US (Item 1 (b) Third Schedule – where transport begins)
Exemption: N/A
Person liable to pay VAT: N/A 41

42. Supplies of goods following an importation of goods
Solution: C
Qualifying person (importer): YES
Operation in the scope of VAT: YES (importation of goods)
Place of importation: Malta (Item 15 Third Schedule and item 7 Fourth Schedule)
Exemption: NO
Person liable to pay VAT: the Maltese company C (art. 20 (1) (c) VAT Act) 42

43. Importation followed by an exempt IC supply of goods
PRINCIPLE
An importation of goods into Malta, followed by an exempt intra-Community supply of the same goods by the same taxable person, registered under art. 10 VAT Act, is exempt from VAT
The importer has to prove at the moment of importation that there will be a subsequent exempt intra-Community supply of the goods (i.e. proof of transport and VAT identification number final recipient)
Art. 9 VAT Act and item 3 , Part Four, Fifth Schedule 43

44. Importation followed by an exempt IC supply of goods
PRINCIPLE
The subsequent exempt intra-Community supply can either be:
A (normal) exempt IC supply from Malta to another EU Member State, whereby the customer is liable for the VAT on his ICA; or
A (deemed) exempt IC supply in the frame of a transfer by a taxable person, registered under art. 10 VAT Act, of goods forming part of his economic activity to another EU Member State
Art. 9 VAT Act and item 3 (1) , Part One, Fifth Schedule
Art. 9 VAT Act and item 3 (4) , Part One, Fifth Schedule 44

45. Importation followed by an exempt IC supply of goods
Example
A Maltese company B, registered under art. 10 VAT Act, purchases office equipment from a Libyan company A. B has the goods transported from A’s premises in Tripoli to Malta. B imports the goods into Malta.
At the moment of importation, the goods are destined to be supplied to C, an Italian company that is VAT registered in Italy, whereby the unaltered goods are transported from Malta to Italy. C provides B with its Italian VAT identification number. 45

46. Importation followed by an exempt IC supply of goods
Libya
Malta
Movement of goods B
A supplies goods A
Movement of goods
B supplies goods
Italy
C provides
IT VAT number C 46

47. Importation followed by an exempt IC supply of goods
Solution: A-B
Taxable person: YES
Operation in the scope of VAT: YES (supply of goods)
Place of supply: Libya (Item 1 (b) Third Schedule – where transport begins)
Exemption: N/A
Person liable to pay VAT: N/A 47

48. Importation followed by an exempt IC supply of goods
Solution: B
Qualifying person (importer): YES
Operation in the scope of VAT: YES (importation of goods)
Place of importation: Malta (Item 15 Third Schedule and item 7 Fourth Schedule)
Exemption: YES (Item 3, Part Four, Fifth Schedule)
Person liable to pay VAT: N/A 48

49. Importation followed by an exempt IC supply of goods
Solution: B-C in the head of B
Taxable person: YES
Operation in the scope of VAT: YES (IC supply of goods)
Place of supply: Malta (Item 1 (c) Third Schedule – in MS of importation)
Exemption: YES (Item 3 (1), Part One, Fifth Schedule)
Person liable to pay VAT: N/A 49

50. Importation followed by an exempt IC supply of goods
Solution: B-C in the head of C
Taxable person: YES
Operation in the scope of VAT: YES (IC acquisition of goods)
Place of supply: Italy (Item 13 Third Schedule – where transport ends)
Exemption: N/A
Person liable to pay VAT: N/A 50

51. Import into a Member State other than the Member State of arrival (1)
PRINCIPLE
As a general rule, supplies of goods that are transported take place where the goods are at the time when the transport of those goods begins
Art. 7 VAT Act and item 1 (b) Third Schedule 51

52. Import into a Member State other than the Member State of arrival (1)
Sixth Directive
EXCEPTION 1
Goods are deemed to be transported from the Member State of importation if:
goods are supplied to a member of the “Group of 4” (“Group of 3” in Malta); and
the transport is made from a third territory by or on behalf of the supplier; and
goods are imported by the supplier into a Member State other than the Member State of arrival
Based upon art. 7 VAT Act and item 1 (c) Third Schedule 52

53. Import into a Member State other than the Member State of arrival (1)
EXCEPTION 1
For these types of operations, it should be determined whether or not distance sales rules or the rules on IC supplies/acquisitions are applicable
The move of goods as from the MS of importation into the MS of arrival of the goods has to be taken in to account to determine whether:
The threshold for IC acquisitions of the customers in the MS of arrival has been exceeded
The threshold for applying the distance sales rules of the supplier for supplies from the MS of importation towards the MS of arrival of the goods has been exceeded 53

54. Import into a Member State other than the Member State of arrival (1)
EXCEPTION 1
The exception does not apply to:
New means of transport
Goods to be installed or assembled 54

55. Import into a Member State other than the Member State of arrival (1)
Example
A, an Libyan company, supplies computers to B (without installation). B is a small undertaking established in another Member State than Malta (Member State 2). Goods are transported by A from Libya into Malta and subsequently A transports the goods to the other Member State 2. A acts as importer of the goods. 55

56. Import into a Member State other than the Member State of arrival (1)
Libya
Malta
A acts as importer A’
Movement of goods A
Movement of goods
MS 2
A supplies goods B 56

57. Import into a Member State other than the Member State of arrival (1)
Solution: A
Qualifying person (importer): YES
Operation in the scope of VAT: YES (importation of goods)
Place of importation: Malta (Item 15 Third Schedule and item 7 Fourth Schedule)
Exemption:
YES, in case the importation is followed by an exempt IC supply
NO, in case the importation is not followed by an exempt IC supply
Person liable to pay VAT: if no exemption, A (art. 20 (1) (c) VAT Act) 57

58. Import into a Member State other than the Member State of arrival (1)
Hypothesis 1: B exceeded the threshold for IC acquisitions in MS 2 or opted to subject IC acquisitions to VAT in MS 2
Solution: A-B, in the head of A
Taxable person: YES
Operation in the scope of VAT: YES (IC supply of goods)
Place of supply: Malta (Item 1 (b) Third Schedule – where transport begins)
Exemption: YES (Item 3 (1), Part One, Fifth Schedule)
Person liable to pay VAT: N/A 58
The importation by A will be exempt from VAT

59. Import into a Member State other than the Member State of arrival (1)
Hypothesis 2: B did not exceed the threshold for IC acquisitions in MS 2 nor opted to subject IC acquisitions to VAT in MS 2 AND A did not exceed the threshold for distance sales from Malta towards MS 2 nor opted to subject his supplies from Malta to MS 2 to VAT in MS 2 under the distance sales rules
Solution: A-B
Taxable person: YES
Operation in the scope of VAT: YES (supply of goods)
Place of supply: Malta (Item 1 (b) Third Schedule – where transport begins)
Exemption: NO
Person liable to pay VAT: A (art. 20 (1) (a) VAT Act) 59

60. Import into a Member State other than the Member State of arrival (1)
Hypothesis 3: B did not exceed the threshold for IC acquisitions in MS 2 nor opted to subject IC acquisitions to VAT in MS 2 BUT A exceeded the threshold for distance sales from Malta towards MS 2 or opted to subject his supplies from Malta to MS 2 to VAT in MS 2 under the distance sales rules
Solution: A-B
Taxable person: YES
Operation in the scope of VAT: YES (distance sale)
Place of supply: MS 2 (Item 4 (2) (b) Third Schedule – where transport ends)
Exemption: N/A
Person liable to pay VAT: N/A 60

61. Import into a Member State other than the Member State of arrival (2)
EXCEPTION 2
Goods shall be deemed to have been dispatched or transported from the Member State of importation if they:
are acquired by a non-taxable legal person;
are dispatched or transported from a third territory; and
imported by that non-taxable legal person into a Member State other than the Member State of arrival of the goods 61

62. Import into a Member State other than the Member State of arrival (2)
EXCEPTION 2
The acquisition by the non-taxable legal person of the goods imported by him in another Member State than the Member State of arrival and subsequently transported to the Member State of arrival is considered to be an intra-Community acquisition of goods
The supply of goods with the deemed transport as from Member State of importation into the Member State of arrival of the goods has to be taken into account to determine whether the threshold for intra-Community acquisitions of the non-taxable legal person in the Member State of arrival has been exceeded
Art. 6 VAT Act and item 18 (1) (c) Second Schedule 62

63. Import into a Member State other than the Member State of arrival (2)
EXCEPTION 2
If the acquisition by the non-taxable legal person is subject to VAT in the Member State of arrival, the non-taxable legal person may claim the refund of the import VAT in the Member State of importation
In case Malta is the Member State of importation:
see art. 25 (4) VAT Act 63

64. Import into a Member State other than the Member State of arrival (2)
Example
A, an Libyan company, supplies computers to B (without installation). B is a non-taxable legal person (e.g. a pure holding company) established in another Member State than Malta (Member State 2). Goods are transported from Libya into Malta and subsequently transported from Malta to the Member State 2. B acts as importer of the goods. 64

65. Import into a Member State other than the Member State of arrival (2)
Libya
Malta
B acts as importer
Movement of goods A
Movement of goods
MS 2
A supplies goods B 65

66. Import into a Member State other than the Member State of arrival (2)
Solution: A-B
Taxable person: YES
Operation in the scope of VAT: YES (supply of goods)
Place of supply: Libya (Item 1 (a) Third Schedule – where the goods are placed at the disposal of B)
Exemption: N/A
Person liable to pay VAT: N/A 66

67. Import into a Member State other than the Member State of arrival (2)
Solution: B
Qualifying person (importer): YES
Operation in the scope of VAT: YES (importation of goods)
Place of importation: Malta (Item 15 Third Schedule and item 7 Fourth Schedule)
Exemption: NO
Person liable to pay VAT: B (art. 20 (1) (c) VAT Act)
B can claim the refund of the Maltese VAT upon importation
if the acquisition of the goods by B is subject to VAT in MS 2 67

68. Import into a Member State other than the Member State of arrival (2)
Solution: B with respect to movement of goods to MS 2
Hypothesis 1: B exceeded the threshold for IC acquisitions in MS 2 or opted to subject IC acquisitions to VAT in MS 2
Qualifying person: YES
Operation in the scope of VAT: YES (IC acquisition)
Place of operation: MS 2 (Item 13 Third Schedule – where transport ends)
Exemption: N/A
Person liable to pay VAT: N/A
B can claim the refund of the Maltese VAT upon importation 68

69. Import into a Member State other than the Member State of arrival (2)
Solution: B with respect to movement of goods to MS 2
Hypothesis 2: B did not exceed the threshold for IC acquisitions in MS 2 nor opted to subject IC acquisitions to VAT in MS 2
Qualifying person: YES
Operation in the scope of VAT: NO
Place of operation: N/A
Exemption: N/A
Person liable to pay VAT: N/A
B cannot claim the refund of the Maltese VAT upon importation 69