Acting as an indirect customs representative for clients is a tricky business at the best of times. The role means joint and several liability with clients for any customs debt. That liability can seem out of scale when it is presumed to cover not just customs duty but also VAT.
The yachting and aviation sectors illustrate the point. The customs duty rate for a large yacht in the EU is 0% – for an aircraft it is 1.7%. Compare that with the import VAT rate for these assets which ranges between 15% and 27%. Besides, where VAT applies it is charged on the value increased by the customs duty payable. So the overall customs debt if it arises will be large enough to sink an ill-equipped customs representative.
That is why the decision of the Court of Justice of the European Union (CJEU) concerning the extent of the joint and several liability of an Italian indirect customs representative and its importing company client is welcome news to providers of customs representation services.
In Case C‑714/20 U.I. Srl v Italian Customs Agency, the CJEU ruled that an indirect customs representative is liable solely for the customs duties payable on goods which he declared for customs purposes, but not also for the import VAT on the same goods.
The case illustrates why customs representatives must take particular care in framing their engagements with importers. Beyond the terms of the engagement itself, they must consider the national context of the importing country. If the national customs provisions explicitly and unequivocally designate or acknowledge that indirect customs representatives are liable for import VAT as well as customs duty, then customs representatives may have no protection when a customs debt arises in their client work.
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