The exporter for VAT purposes must be named in Box 44 of the export declaration

The UCC has amended the definition of “exporter”. The exporter is now required to be based in the European Union and have the power to decide that the goods will be taken to a destination outside of the customs territory [2]. So as a general rule, the exporter is the person directly involved in transporting the goods out of the EU. This is also the person who must be named in Box 2 of the export declaration.

We have previously raised the possibility that this amended definition of “exporter” may create a problem in the future for the authorities’ position on the VAT exemption for the export of goods. As supporting evidence for this VAT exemption, the VAT authorities require the supplier to be named as the exporter on the customs document [3].

For example, if a supplier based in Belgium sells goods to a German taxpayer under the “Ex Works” Incoterm, and the goods are collected by the German buyer and exported to the US, according to the VAT authorities’ restrictive position from 1 May 2016 the export document can no longer be supplied as proof of export for the purposes of the VAT exemption. In such a situation it’s not the supplier who has the power to decide that the goods will be taken to a destination outside of the customs territory, but the buyer, who has personally collected the goods from Belgium. In other words, the supplier would not be named as the exporter in Box 2 of the export declaration, so the VAT authorities’ condition for eligibility for the VAT exemption on the export of goods would not be met.

People based outside of the customs territory of the Union would also no longer be able to meet this condition. They will no longer enjoy the status of an exporter for customs purposes and will have to seek the assistance of an indirect representative, whose details would then be entered in Box 2 of the export declaration [4].

The VAT authorities became aware of these discrepancies, and as a result issued Decision No. E.T. 129.169 on 20 May 2016. Under this decision, the exporter for VAT purposes must always be named in Box 44 of the export declaration. The VAT authorities emphasise that for VAT purposes, the exporter is the person who supplies the goods with a VAT exemption for export, and the seller has to pay VAT on the supplies it makes. In other words, it is the name and VAT identification number of the supplier which must be entered in Box 44 of the export declaration. Even if these details are already included in Box 2 of the export declaration – because the supplier is also the exporter for customs purposes – they must be entered again in Box 44. The VAT authorities hope this will help ensure that the export declaration can continue to be used as a form of proof for the application of the VAT exemption for export.

The VAT decision also specifies that for the VAT identification number to be entered in Box 44 of the export declaration, it must be:

• The individual VAT number (starting with “BE”) of Belgium-based or non-Belgium-based suppliers;
• The global VAT number (starting with “BE 0796.6”) of represented, non-Belgium-based suppliers, if they do not have an individual VAT number starting with “BE”;
• The VAT number of non-Belgium-based suppliers, issued by a Member State other than Belgium, if the suppliers are not obliged to identify themselves in Belgium for VAT purposes.

If a supplier is based outside the EU and is not identified in any Member State for VAT purposes, then of course no VAT number should be entered.

Although the decision was dated 20 May 2016, this measure actually took effect on 1 May 2016.

Processing under customs control: VAT consequences of the incorporation of this customs procedure in the special inward processing procedure

According to the “Processing under customs control” (PCC) procedure, import VAT had to be paid immediately, once the goods were subject to this customs procedure [5]. For VAT purposes, this was not a suspensive procedure, given that the goods were intended for the European market right from the start (the procedure was suspensive only for import duties).

Since with the arrival of the UCC this procedure has been incorporated in the special inward processing (“IP”) procedure, under which both import duties and import VAT are suspended, the VAT authorities emphasise in the same decision that the VAT aspects of the PCC procedure also fall under the IP procedure, which means it is now a suspensive procedure. VAT no longer has to be paid when these goods are imported. Instead, the import VAT will be payable only when the customs procedure is discharged by the release of the goods for free circulation.

From 1 May 2016, PCC permits are automatically deemed to be IP permits. The Customs Office itself will take the necessary actions in the future.

The new concept of a “customs representative”

When goods are imported or exported, a customs declaration must be drawn up. The importer or exporter can decide to have this done by a third party. The third party will always act on behalf of its client, either in its own name (indirect representation) or in the name of the client (direct representation).

For a long time in the Belgian customs landscape only the system of indirect representation was recognised. But on 12 May 2014, under pressure from European customs legislation which already provided for direct representation in these situations, the General Customs and Excise Act (“AWDA”) rectified this matter. This Act also replaced the “customs agent” with the “customs representative”. The AWDA describes a customs representative as being any natural or legal person who professionally, in their own name or in the name of their client, but always on behalf of the client, completes the customs formalities for importing, exporting or customs transit, and who is recognised by the authorities as an authorised economic operator under European legislation or who supplies evidence of sufficient knowledge of customs and excise regulations [6].

In Belgium, only a customs representative can represent a third party via-à-vis the authorities in importing, exporting or customs transit matters. Furthermore, the customs representative must be registered in the customs representatives register.

Several implementation decrees concerning customs representatives and direct and indirect representation were passed in March, and took effect on 1 May 2016. Provisions in these decrees include the conditions which customs representatives must meet in order to register in the customs representatives register, the procedures they have to follow (a written application, a certificate of sufficient knowledge of the customs and excise regulations or evidence of recognition as an authorised economic operator, evidence of professional status, etc.) [7], the customs procedures to which direct and indirect representation can be applied and the processes that must be followed.

According to the Customs Newsletter, all customs agents who were registered in the customs agents register on 30 April 2016 will automatically be transferred to the customs representatives register on 1 May 2016, with registration valid for three years. It is intended that within this three-year period, these customs representatives will supply evidence that they comply with the conditions for registration in that register; if they fail to do so, they will automatically be removed from the register [8].

Author: Evy Maurits

[1] The Union Customs Code or UCC.
[2] Article 1(19) of Delegated Regulation No. 2015/2446.
[3] Note that this formal condition can only be found in the VAT authorities’ circular E.T. 97.794 dated 1 March 2001, para. 76. The condition is not included in the VAT Code, in European legislation or in Royal Decree No. 18. When questioned on this matter in 2009, the Minister of Finance made it clear that the fact that the export declaration is made not in the name of the seller, but in the name of the co-contractor, where this is duly justified (e.g. because the co-contractor is based in a different Member State), could never result in a rejection of the VAT exemption in Article 39(1)(2) of the VAT Code (export by or on behalf of a buyer not based in Belgium).
[4] However, transitional arrangements have been put in place, under which the details of exporters not based in the EU can still be entered in Box 2 of the export declaration.
[5] Under this customs procedure it was possible to import raw materials/products under suspension of import duties, then subsequently process the materials, creating a finished product which was then released for free circulation. Import duties were then paid on these finished products only, at the time they were released for free circulation. This procedure was desirable when the import duties on the finished products were less than the import duties on the raw materials. Given that the goods were intended for the European market right from the start, the suspension did not apply to import VAT.
[6] AWDA Section 127.
[7] Royal Decree dated 13 March 2016 establishing customs procedures and the processes by which direct and indirect representation may be applied, Belgian Official Gazette of 6 April 2016; Royal Decree of 13 March 2016 establishing the conditions for the keeping of the customs representatives register, the evidence of sufficient knowledge of the customs, VAT and excise regulations and the professional status of the performance of the role of customs representative, Belgian Official Gazette of 6 April 2016.
[8] See K. MEES, “New rules for customs representatives and their registration in a special register” (Nieuwe regels voor douanevertegenwoordiger en zijn inschrijving in het stamregister), Nieuwsbrief Douane, 2016, No. 9, 3-5.