ECJ rules that Indirect Representative not liable for VAT; only customs duties
The Court of Justice of the European Union has ruled the mandatory indirect representatives are not jointly and severally liable for the VAT of their importer clients.
Representative agents act on behalf of their clients in dealing with customs authorities on imports or exports to/from the EU (or any other country).
- Direct representation, the representative acts in the name and on behalf of a third party.
- Indirect representation, the representative acts in his own name but on behalf of the importer. In this case, the representative is liable for all legal consequences of the customs procedure.
The ECJ held the indirect representative is only responsible financially for any customs duties un the Union Customs Code. The joint and severally liability for and import VAT is not provided for in the VAT Directive. The exception being if a member state imposes the liability within its own laws. See case Case C-714/20
Italian case on import VAT liabilities
Actions brought by U.I. Srl against two tax assessments, issued by the defendant, rectifying certain import declarations submitted by the applicant in its own name and on behalf of two import companies and assessing the import VAT for which the applicant is alleged to be jointly and severally liable.
Judgement based on VAT Directive and Union Customs Code
Interpretation of Article 201 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and of Article 77(3) of Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down the Union Customs Code.
Two issues reviewed on import liability of indirect representative
- In providing that, ‘on importation, VAT shall be payable by any person or persons designated or recognised as liable by the Member State of importation’, is Article 201 of Directive 2006/112/EC of 28 November 2006 to be interpreted as meaning that the Member State of importation is required to issue a State provision relating to import VAT (domestic-law tax: Court of Justice, Case C-272/13 of 14 July 2013) that expressly identifies the persons liable to pay import VAT?
- Is Article 77(3) of Regulation (EU) No 952/2013 of 9 October 2013 ([Union Customs Code]), which concerns customs debts on import and which provides that, ‘in the event of indirect representation, the person on whose behalf the customs declaration is made shall also be a debtor’, to be interpreted as meaning that the indirect representative is liable not only for customs duties, but also for import VAT merely as a result of being a ‘declarant’ for customs purposes in its own name?