Originally Posted by Greg K
You have said this elsewhere before regarding the costs of importing to the EU ...specifically that the value of insurance and transport is included in the VAT calculations.
I would challenge that. Having just imported a used Aries windvane
into Spain, I only had to pay 6% customs duty on the stated value of the vane and the 21% VAT on the combined value of the vane plus Customs duty. No fees
were levied on the cost of the transportation ( which was more than the stated value of the vane) ) nor the shipper's stated value for insurance purposes.
Sounds like you got a deal.
By way of example.
For customs duty purposes.
15.1 What are ‘delivery costs’?
the cost of transport
the cost of insurance (including global or blanket policies)
loading and handling charges
container charges (for example when hired for transportation of the imported goods)
terminal charges (charges for a variety of services in connection with the handling/storage of freight containers at container depots)
any other charges involved in carrying the goods from one place to another
15.2 Are all of the costs to be included in the customs value?
No. Only costs up to the place of introduction of the imported goods into the UK border are to be included.
Remember you must include in the customs value all inland transport and associated costs in the country of export.
15.3 Where is the ‘place of introduction’?
If the goods are delivered direct to the UK the place of introduction
is the port of importation into the UK.
The place of introduction is the point where the UK border is first crossed during the air journey.
Road, rail or inland waterway
The place of introduction is the point where the goods first pass a customs office - this is usually the point when the goods cross the UK border.
The place of introduction is the address for delivery
, for example, your office or home.
15.4 Can I deduct UK transport costs where they are included in the total freight charge?
Yes. If the freight is charged separately and distinguished, the freight charge can be apportioned to arrive at the value for the journey after the UK border.
For goods transported by sea the freight charge that would have been paid to the place of introduction is to be included in the customs value. Rates shown in rate books
or otherwise advertised by the shipping
line or other carrier are usually acceptable.
For goods transported by rail or road the freight charge is to be apportioned using reasonable means for example by distance covered outside and inside the UK. Section 39 gives other examples.
The percentage of the air transport costs shown on the air waybill to be included in the customs value are published on GOV.UK. The percentages are listed in section 40. Importers connected to CHIEF can obtain details from the relevant data files.
Remember locally agreed rates for UK transport costs for VAT purposes must not be used for ad valorem Customs Duty calculations.
15.5 Can I deduct UK transport costs where they are included in the price
I pay for the goods?
Yes, a deduction for these charges may be made from the price
you pay, provided they can be distinguished and evidence can be produced to support them. Section 39 gives examples.
The following would be acceptable as evidence:
the amount shown separately on the seller’s invoice
a certified statement or telex from the supplier
an invoice or certified statement of the actual freight amount charged by the carrier to the buyer, seller or agent
an invoice or certified statement establishing the total cost of transport, split to show the proportion of actual distance inside and outside the UK
a statement from the buyer referring to a schedule of freight rates normally applied for the same mode of transport
in the case of goods imported by air, a statement on the invoice confirming that the cost of freight included in the price is the same as that stated on the air waybill
15.6 What if the transport is free or I provide my own transport?
You must include in the customs value an amount for transport costs to the UK border. You can calculate this amount by using the freight rates tariff for the type of transport used, for example IATA rates for air transport costs, or conference rates for sea.
15.7 Is the cost of insuring the goods against loss or damage in transit to be included in the customs value?
Yes. You must include the cost of insurance for the goods up to the place of introduction into the customs territory of the UK. However, if you pay a premium which covers the whole journey, the cost of insurance after the UK border does not have to be included in the customs value provided you separately distinguish this element. Also, where there is separate cover for the journey after the UK border, the cost of this separate insurance cover does not have to be included in the customs value.
Remember if your insurance covers more than one importation, or relates to other items as well as the imported goods, the cost of that insurance must be apportioned and the appropriate amount included in the customs value. An example of how to apportion a periodic insurance premium to individual consignments is provided in section 39.
Value For Import VAT
The value for VAT of imported goods is their value for customs duty purposes (whether or not duty is actually due) plus, if not already included in the price:
Any customs duty or levy payable on importation into the UK
Any excise duty or other charges payable on importation into the UK (except the VAT itself)
All incidental expenses such as commission, packing, transport and insurance costs incurred up to the goods first destination in the UK
All such incidental expenses where they result from transport to a further place of destination in the UK if that place is known at the time of importation
The relevant legislation is Section 21 of the VAT Act 1994.
22.8.8 Incidental Expenses
In addition to the examples given above, the term “incidental expenses” also covers such items as customs clearance charges, quay rent, entry fees, demurrage, handling, loading and storage
costs. Generally, where supplies of services qualify for zero-rating because they are supplied in connection with an importation of goods, the cost of those services should be included in the value for import VAT.
In most cases, the services to be included in the VAT value are charged to the importer by a third party, eg an agent, freight forwarder or hauler. However, when a particular service
is provided by the importer, eg own transport, the cost may be left out of the value.
Charges for certain services received from outside the UK – most commonly royalties and licence fees- should not be included in the value for import VAT as they are taxable under the reverse charge/international service
arrangements. For details see VAT Notice 741A (Place of supply of services).
22.8.9 First Destination
‘First destination’ is the place mentioned on the consignment note or any other document by means of which the goods are imported. So, for example, where goods are consigned to Birmingham via Dover (and the import documentation
shows that) Birmingham will be the first destination for import VAT purposes. In the absence of such documentation
, first destination means the place of the first transfer of cargo in the UK.
22.8.10 Further Destination
If a further destination in the UK is known at the time the goods are imported, costs resulting from the transport of the goods to that place must be included in the import VAT value.