1. European Commission Taxation and Customs Union The concept of centralised clearance and the VAT aspects1 The concept of centralised clearance VAT aspects Patrice PILLET Value Added Tax Unit Taxation and Customs Union DG European Commission

2. European Commission / Taxation and Customs Union The concept of centralised clearance and the VAT aspects2 The main features of the EU VAT system Taxation in the "Member State of consumption". –taxation of supplies of goods and services, –taxation of imports and exemption of exports –exemption of intra-community supplies and taxation of intra-community acquisitions.

3. European Commission / Taxation and Customs Union The concept of centralised clearance and the VAT aspects3 Import VAT procedure Clear distinction between: –the place where the import takes place (MS of arrival of the goods) –and the place of consumption (MS of destination of the goods). Art 60 of the VAT Directive (2006/112/EC) : –"The place of importation shall be the Member State within whose territory the goods are located when they enter the Community."

4. European Commission / Taxation and Customs Union The concept of centralised clearance and the VAT aspects4 Import VAT procedures Different possible scenarios: –Final destination is the MS where the import takes place : VAT declared together with customs duties, possible deferred payment. –Final destination is another MS : VAT exemption of import (art 143.d of VAT Directive) and subsequent intracommunity supply, taxation of intracommunity acquisition in the MS of destination.

5. European Commission / Taxation and Customs Union The concept of centralised clearance and the VAT aspects5 Import VAT procedures Obligations in cases goods are supplied or transferred to another MS: –Conditions for the exemption are set by the MS (art 131 of VAT directive), –Different obligations, control mechanisms in place, - VAT declaration, - VAT identification / possible tax representative, - Recapitulative statement (VIES)…

6. European Commission / Taxation and Customs Union The concept of centralised clearance and the VAT aspects6 The concept of centralised clearance Art. 106 of the modernised Customs Code Possibility for importers to declare and pay all their import duties in their MS of establishment, wherever the goods are supplied / transferred.

7. European Commission / Taxation and Customs Union The concept of centralised clearance and the VAT aspects7 The concept of centralised clearance By 2013… Centralised clearance would apply to: – goods that stay in the MS of physical importation, –Goods that are supplied / transferred to MS of establishment, –Goods that are supplied or transferred to a third MS. Customs formalities complied with and customs duties paid in MS of establishment.

8. European Commission / Taxation and Customs Union The concept of centralised clearance and the VAT aspects8 VAT aspect of centralised clearance Need to comply with current VAT obligations in the MS of physical importation (even if customs obligations are complied with in the MS of establishment). This is both valid in cases: –Where goods stay in the MS of importation (declaration, payment, possibly deferred…) –Where goods leave the MS of importation (declaration, exemption, intracommunity statement…).

9. European Commission / Taxation and Customs Union The concept of centralised clearance and the VAT aspects9 VAT aspects of centralised clearance Clear that the real benefit of centralised clearance for economic operators (importers) will only arise if the VAT dimension is fully taken into account… Council statement stressed that "centralised clearance might need adjustments in the area of VAT.

10. European Commission / Taxation and Customs Union The concept of centralised clearance and the VAT aspects10 Possible ways forward (1) New VAT rules on the place of importation, so that this place coincides with the place of establishment of the importer ? Impact on national VAT revenues ? Consistency with EU VAT system ?

11. European Commission / Taxation and Customs Union The concept of centralised clearance and the VAT aspects11 Possible ways forward (2) To include VAT compliance obligations in the system put in place for centralised clearance ? Integration of additional VAT information in ICS/AIS ? Impact on fraud / compliance ? Issue of VAT identification ? VAT payment ? Possible VAT refunds ?

12. European Commission / Taxation and Customs Union The concept of centralised clearance and the VAT aspects12 Possible ways forward (3) A VAT import one-stop-shop for the users of customs centralised clearance ? –Option 3a: VAT paid in MS of arrival of the goods if goosd stay there or exemption / recapitulative statement if goods moved to other MS –Option 3b : VAT paid in all cases using the OSS. Similarities and differences with other OSS already in force (e-commerce) or to be implemented (mini-OSS) ? Impact on fraud / compliance ?

13. European Commission / Taxation and Customs Union The concept of centralised clearance and the VAT aspects13 Possible ways forward Other solutions ? Open debate at this stage.

14. European Commission / Taxation and Customs Union The concept of centralised clearance and the VAT aspects14 Ongoing work on the subject Previous discussion at the last customs seminar on this issue (Helsinki, June 2005) Comprehensive stock-taking of information on VAT import procedures in the context of the Customs 2007 Project Group on single authorisation for simplified procedures.

15. European Commission / Taxation and Customs Union The concept of centralised clearance and the VAT aspects15 The way forward Discussions will continue at the present seminar, in a devoted workshop. Based on the outcome, DG TAXUD will continue its reflections, in cooperation with the MS tax administrations, in view of finding the best approach. Need to find the right balance between trade facilitation and safeguard of tax revenues. Clearly no 'miracle solution'.

16. European Commission / Taxation and Customs Union The concept of centralised clearance and the VAT aspects16 Questions for the workshop Review of present VAT import obligation and their actual function. Reflection on the best way to solve the VAT challenge of « centralised clearance » (3 possible ways forward f.ex) Need to keep in mind the balance between trade facilitation and fight against fraud.

17. European Commission / Taxation and Customs Union The concept of centralised clearance and the VAT aspects17 Thank you !