VAT on Imports into the EU
VAT Is Paid to Customs by the Importer of Record
Imports in the EU are taxed to keep the system fair for EU manufacturers so they can compete on equal terms on the European market with foreign suppliers. When goods enter the EU, the importVAT has to be paid by the importer of record.
In most cases, the importer of record is an EU based company who has purchased products from a foreign vendor. This EU based company will reclaim the VAT on its regular monthly or quarterly VAT filing and hence, this EU based company will not have to absorb the VAT costs.
What If There Is No Sale?
But in many instances there is no sale following the import. Typical examples are when US companies ship their own equipment to EU data centers, or when US companies send trial or repair shipment to their clients in the EU. In those instances the US company has to act as the importer of record. And in most instances, this US company will absorb the VAT amounts as costs because they aren’t aware that they can reclaim the VAT.
Third-Party Logistics Providers
Many US exporters also use third-party logistics providers, such as fulfillment centers or crating companies, who handle the documentation for them and who pre-pay the importVAT. This importVAT is then charged as an expense or disbursement to the exporter who ultimately absorbs the VAT amount as a cost, even though they are probably not aware of this.
In all these cases ExportVAT will reclaim your VAT by using the 13th directive EU VAT Refund procedures.