VAT-related consequences resulting from the entry into force of the Union Customs Code
Change in the rules on customs valuation
For imported goods, customs valuation has a direct impact on the amount of VAT as it forms the base for tax calculation. In respect of the importation of goods, the taxable amount is the value for customs purposes and the duty payable.
We recommend to carefully analyse the changes in the calculation of the customs value taking place in the following areas and scope:
- determining the customs value in chain transactions, i.e. when the goods were the subject of two or more sales prior to their introduction into the customs territory of the EU. It will no longer be possible to declare the customs value on the basis of the sale which took place before the last sale, based on which the goods have been introduced into the customs territory of the EU;
- determining the customs value when sellers offer discounts to buyers on different bases, such as discount for early payment. A new provision has been introduced focusing on discounts in view of customs valuation. The provision provides for accepting discounts:
- if, at the time of customs declaration, the agreement between the contracting parties provides for their use and determines their amount,
- for early payment (even in a situation where at the time of declaration the price has not been paid).
At the same time the provision rules out the possibility of taking into account discounts resulting from changes in the agreement made after the customs declaration has been accepted;
- determining the customs value when the transaction is accompanied by charges incurred for the right to use the trademark. Under the new provisions the trademark will be treated as any other item of intellectual property;
- determining the customs value based on specific criteria when it may not be calculated on the date the customs declaration is accepted. The scope of the authorization for simplified procedures was extended in comparison to current regulations;
- currency conversion in order to determine the customs value of goods (if the price of goods is expressed in foreign currency). The currency exchange rate of the penultimate Wednesday of the previous month will be applied in the following calendar month, regardless of its fluctuations (a departure from the rule of rate change if the exchange rate recorded on a Wednesday differs by 5% or more in relation to the rate used).
Adjusting the national legislation to the UCC
Although the EU customs legislation is introduced through regulations, which apply in Poland directly and do not have to be implemented, certain procedures must be defined in the national law (such as in the Polish Customs Law). In addition, Polish tax laws refer to respective customs regulations, so some adjustments will be required, for example in the Act of 11 March 2004 on tax on goods and services (Journal of Laws No. 54, item 535, as amended).
The bill amending the Customs Law Act and other laws was submitted on 7 March 2016 for discussions, public consultations and review. The legislative process can be followed on the website of the Government Legislation Centre.
According to the bill, the VAT Act will include provisions that cause, among others, the following effects:
- adjustment of the provisions of the Act caused by changes introduced by the UCC regarding transformation of customs procedures due to departure from processing under customs control or qualifying the free zone as a special procedure (as storage procedure);
- the tax obligation date for the import of goods when the goods are covered by the customs inward processing is established at the moment of closing inward processing under Article 324 of Commission Implementing Regulation (EU) 2015/2447 of 24 November 2015 laying down detailed rules for the implementation of certain provisions of the Regulation of the European Parliament and of the Council (EU) No. 952/2013 laying down the Union Customs Code (OJ EU L 343, 29.12.2015, p. 558);
- the determination of the tax base of goods covered by the above procedure (for which the same Regulation Article will apply) as their customs value (or the customs value plus excise tax);
- preventing the head of customs office to determine the amount of tax by way of administrative decision concerning customs duties if the tax amount was recorded incorrectly in the customs declaration;
- in the application of the simplified procedure - by reference to the new regulations on the basis of which it will operate (Article 166 and Article 182 of the European Parliament and of the Council (EU) No. 952/2013 of 9 October 2013 laying down the Union Customs Code (OJ EU L 269, 10.10.2013, p. 1, as amended) and linking its implementation to the prior authorization as well as modifications associated with the use of the simplified procedure by a direct representative acting on behalf of a taxpayer who does not have authorization to use the simplified procedure under which the goods were acquired;
- the obligation of the taxpayer, when using centralized clearance, as referred to in Article 179 of the Union Customs Code, involving at least two customs administrations of at least two Member States, to calculate and show the amount of tax due for the import of goods in the declaration for import of goods;
- a change in the calculation of late interest payment on the tax difference arising in connection with the incorrect customs declaration;
- indicating the appropriate document confirming the export of goods outside the European Union in case of exports referred to in Article 140(2) of the Commission Delegated Regulation (EU) 2015/2446 of 28 July 2015 supplementing Regulation (EU) No. 952/2013 of the European Parliament and of the Council as regards detailed rules concerning certain provisions of the Union Customs Code (OJ EU L 343, 29.12.2015, p. 1).
The changes in the settlement of tax on goods and services for importers and exporters, designed based on the new EU customs provisions, are not groundbreaking or particularly surprising in view of the Polish tax regulations. However, we encourage you to explore the content of the new legislation that may apply to you and to track the legislative process which will lead, in its final effect of EU customs revolution, in the amended VAT Act.
- Union Customs Code adopted on 9 October 2013 by Regulation (EU) No. 952/2013 of the European Parliament and of the Council;
- Commission Delegated Regulation (EU) 2015/2446 of 28 July 2015 supplementing Regulation (EU) No. 952/2013 of the European Parliament and of the Council as regards detailed rules concerning certain provisions of the Union Customs Code (OJ EU: 2015 L 343, p. 1);
- Commission Implementing Regulation (EU) No. 2015/2447 of 24 November 2015 laying down detailed rules for the implementation of certain provisions of the Regulation of the European Parliament and of the Council (EU) No. 952/2013 laying down the Community Customs Code (OJ EU: 2015 L 343, p. 558).
If you have any questions or need to discuss the topic, you are strongly encouraged to contact our expert, Przemysław POWIERZA.
tel. +48 61 8515 766
fax +48 61 8515 786