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How to apply for Postponed VAT Accounting in Europe

How should European sellers apply for Postponed VAT accounting when importing goods? And how does it work?
How to apply for Postponed VAT Accounting in Europe, Postponed VAT Accounting

Table of Contents

What is Postponed VAT Accounting

Postponed VAT Accounting, when the destination of the goods is Europe or other EU member countries, you can choose the VAT deferred method when importing the goods.

That is, when declaring import value-added tax, the seller does not need to pay import value-added tax immediately.

Which countries allow Postponed VAT?

As of today, Countries that can apply for Postponed PVA include the UK, France, the Netherlands, Belgium and many other countries. And there are some differences in the way of “Postponed VAT Accounting” and the application conditions in each country.

What are the advantages of Postponed VAT Accounting for sellers?

Normally, you can’t not get tax refund until your goods are sold. Also, you need to wait a long time from the time you pay your taxes to the time you get your refund.

This delayed refund of import VAT can increase the financial pressure on the seller, especially if the goods value is high. Therefore import VAT can affect the seller’s cash flow to some extent.

And the biggest benefit that “Postponed VAT Accounting” offers to cross-border sellers is: It provides space for sellers to flow money.

When you apply for “Postponed VAT Accounting” for your shipments, you will not have to pay “import VAT” on customs clearance.

How to apply for Postponed VAT Accounting customs clearance?

Postponed VAT Accounting is a customs clearance method. The seller does not need to do anything. You only need to inform your freight forwarder to use “Postponed VAT Accounting” for customs clearance before your goods are shipped.

And you need to provide the corresponding VAT and EORI to the freight forwarder.

What to Pay Attention to with VAT Deferral

1. Customs Declaration

During customs clearance, the customs clearance company must make an intra-EU transfer declaration.

This declaration requires the VAT number of the destination country, as well as the value and quantity of the goods.

The customs clearance company must retain the logistics proof of delivery (POD) to ensure that the goods do not stay in the declaration country.

2. Tax Agent Reporting

When filing taxes, the tax agent must not only declare the sales amount and deductible amount but also reflect the value of the goods deferred by the customer in the VAT declaration.

3. VAT Deferral Matching

VAT tax deferral must match and be reflected on the corresponding tax number declaration form. If not, the intra-EU goods transfer declaration data will be inconsistent.

Deferred tax goods are a focus of customs inspections, and any non-compliance can result in the seller facing penalties or even store closure.

4. Sales Link

A valid sales link for the goods must be provided during customs clearance

5. Customs Inspections

Customs usually inspect textiles and goods with low declared values.

6. Submitting Information

If customs requests additional documentation, do not take chances; submit the required documents truthfully and on time.

7. Consistency in Naming

The company name on the customs declaration must match the name in the backend of the store providing the sales link.

8. Difficult Goods for Clearance

Goods difficult to clear include seed products, alcoholic liquids, tobacco products, disposable plastic products, and other products that violate legal regulations or are counterfeit.

9. EU Customs Law

According to EU customs law, entities without individual declaration qualifications in Europe must jointly declare with an EU company (usually the customs clearance company), which bears joint liability. Guaranteeing offshore VAT requires taking on the corresponding duties for customs, import VAT, and product safety, and customs retains the right of recourse.

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