Is it possible to not pay VAT on import?

While the special VAT regime for imported goods is not new, this article delves into the provisions governing the payment of taxes on imported goods, emphasizing the nuances of special tax regimes applicable to specific scenarios.

Importing goods involves a complex web of regulations and obligations, particularly in the realm of taxation. The basic premise of import taxation is that the VAT is payable to the State Budget upon the import of goods unless the law provides an exception. Then the question comes – is it possible to bypass the obligation to pay VAT on importation?

When a customs guarantee secures a customs debt, the individual responsible for the customs debt must submit a guarantee for the tax debt. This ensures a safeguarding mechanism aligning with regulatory enactments in customs.

The other option is the application of the special tax regime.  Registered taxable persons engaged in importing goods within their economic activity scope and possessing the necessary permit from the State Revenue Service fall under this regime. Additionally, fiscal representatives handling imports on behalf of entities registered in other jurisdictions can apply the special tax regime

What is required for the import?

To qualify for the special tax regime, a registered taxpayer must meet a set of conditions outlined in the law. These include being registered in the commercial register or with the State Revenue Service, VAT registration,  conducting economic activities in the domestic territory for the past 12 months, and having adequate financial capacities. Other prerequisites involve a clean tax record, timely submission of declarations and reports. Furthermore, there should not be any criminal convictions related to fraud or tax evasion for representative persons, and registration in the Electronic Declaration System.

However, there are exceptions. A registered taxable person can apply the special tax regime for importing fixed assets without the specified authorization, provided certain conditions are met. These include using the asset for taxable transactions for a minimum of 12 calendar months, the asset’s value exceeding EUR 700, and the absence of tax arrears from previous periods.

The definition of a fixed asset is broadened to include passenger cars when imported by a registered taxable person engaged in driving instruction, taxi services, car rental, or hire-purchase of passenger cars.

Moreover, suppose a registered taxable person utilizes customs clearance services from another party during import. In that case, the latter is entitled to apply the special tax regime, contingent on the possession of the necessary authorization in the name of the registered taxable person.

Effect of the special regime

The reverse charge of VAT on imports presents several advantages for businesses involved in importing goods from third countries:

  • Firstly, it enables businesses to bypass paying VAT upon importation, leading to significant cash flow savings. This allows businesses to invest these funds in their operations instead of allocating resources to pay import VAT.
  • The special regime on imports simplifies administrative procedures for businesses. Directly declaring and paying VAT to tax authorities facilitates the monitoring of their tax situation.
  • It helps companies mitigate the risk of disputes with foreign suppliers. Also it helps to avoid conflicts related to VAT, payment methods, and supporting documents related to the deductibility of the VAT.

 

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