Taxation and Customs Union

Other exemptions

This category of exemptions consists of exemptions relating to the importation of goods and exemptions for intra-EU acquisitions.

Exemptions relating to importation

 

Why exempt these import transactions?

It is a fundamental rule of EU VAT that VAT is payable on the release into free circulation of goods imported into the EU from a third territory or from outside the EU altogether.

However, in order to maintain parity and not to penalise the importation of goods where the domestic supply of those goods would be exempt in the same circumstances, the corresponding importation is also exempt without the right to deduct.

 

Which import transactions are exempt?

The exemptions in this category, which are mandatory, are as follows.

Case 1

Transaction

Matching supply

The final importation of goods into EU country 1

(Article 143(1)(a) VAT Directive)

Where the supply of those goods by a business would be exempt in all circumstances in EU country 1

Example
The supply of human organs is exempt under Article 132 of the VAT Directive as an activity in the public interest.
Accordingly, the final importation of human organs is also exempt.

Case 2 Personal and small imports

TransactionConditions

The final importation of goods
(Article 143(1)(b) VAT Directive)

A: free of excise duty and VAT in travellers’ personal luggage
(see Directive 2007/74/EC) or

B: free of VAT as personal property
(see Directive 2009/132/EC) or

C: free of VAT as small consignments
(see Directive 2006/79/EC)

Case 3

TransactionCondition

The final importation of goods in free circulation from a third territory forming part of the customs territory of the EU.(Article 143(1)(c) VAT Directive)

Where the goods would be exempt if they had entered the EU as goods not in free circulation

Case 4 Importation of goods en route to another EU country

TransactionCondition

The importation of goods dispatched or transported from a third territory or from outside the EU

  • Into EU country 1
  • En route for EU country 2, where the dispatch or transportation ends

(Article 143(1)(d) VAT Directive)

Where the subsequent supply of the goods by the importer is exempt as an intra-EU supply or intra-EU transfer

and

The importer can, when importing the goods, provide:

  • His VAT identification number or that of his tax representative
  • His customer’s VAT identification number and
  • Evidence of his intention to dispatch or transport the goods to EU country 2

Case 5 Reimportation after temporary export

TransactionCondition

The reimportation of goods by the person who exported them

(Article 143(1)(e) VAT Directive)

  • The goods must be in the state in which they were exported and
  • They must be exempt from customs duties

Case 6 Diplomatic imports

TransactionCondition

The importation of goods

(Article 143(1)(f) VAT Directive)

Under diplomatic and consular arrangements and free of customs duties

Case 7 International bodies

TransactionCarried out byCondition

The importation of goods into EU country 1

(Article 143(1)(fa)-(g) VAT Directive)

A:

  • The European Union
  • The European Atomic Energy Community
  • The European Central Bank
  • The European Investment Bank or
  • Certain privileged bodies created by the EU1

    1 Bodies to which the Protocol of 8 April 1965 applies

As provided under the appropriate agreements or headquarters agreements and

Only to the extent that the exemption does not lead to a distortion of competition

The importation of goods into EU country 1

(Article 143(1)(fa)-(g) VAT Directive)

B:

  • International bodies other than those in A, recognised by EU country 1 or
  • members of those bodies
As provided under the conventions establishing those bodies

Case 8 NATO forces

TransactionCarried out byCondition

The importation of goods into EU countries that are also NATO members

(Article 143(1)(h)VAT Directive)

C:

The armed forces of other NATO member countries

The goods must be for:

  • The use of those forces or accompanying civilian staff or
  • Supplying their messes or canteens

and

  • The armed forces must be taking part in the common defence effort

Case 9 UK forces in Cyprus

TransactionCondition

The importation of goods into Cyprus by the armed forces of the United Kingdom established there by Treaty2
(Article 143(1)(i) VAT Directive)

2 The Treaty of Establishment of the Republic of Cyprus of 16 August 1960

The goods must be for:

  • The use of those forces or accompanying civilian staff or
  • Supplying their messes or canteens

Case 10 Fishing catches

TransactionCondition

The importation by sea-fishing undertakings of their catches
(Article 143(1)(j) VAT Directive)

The catches must be unprocessed or have undergone preservation before marketing
and

Not yet have been supplied

Case 11 Central bank gold

TransactionCarried out by

The importation of gold

(Article 143(1)(k) VAT Directive)

Central banks

Case 12 Natural gas etc

TransactionCondition

The importation of:

A Gas

Through:

  • A natural-gas system or
  • Any network connected to such a system

or
Fed in from a vessel transporting gas into:

  • A natural-gas system or
  • Any upstream pipeline network
B Electricity...
C Heat or cooling energyThrough heating or cooling networks

(Article 143(1)(l) VAT Directive)

Case 13 Avoidance of double taxation
Case 13 includes transport services connected with the importation of movable property (e.g. furniture) carried out as part of a change of residence (Article 46 of the Implementing Regulation (EU) 282/2011).

Transaction

Condition
Supply of services related to the importation of goods
(Article 144 VAT Directive)
If the value of those services is included in the customs value of the goods (and hence in the amount subject to import VAT)

NB: Unlike Cases 1 to 12, the exemption in Case 13 is an exemption with the right to deduct. 

Exemptions for intra-EU acquisitions

 

Why exempt these intra-EU acquisitions?

It is a fundamental rule of EU VAT that VAT is payable on most intra-EU acquisitions of goods (and deductible as input VAT to the extent the goods are used for the purpose of making taxed transactions).

However, in order to maintain parity and not to penalise intra-EU supplies of goods where the domestic supply or importation of those goods would be exempt in the same circumstances, the corresponding acquisitions are also exempt without the right to deduct.

 

Which intra-EU acquisitions are exempt?

The exemptions in this category, which are mandatory, are as follows.

Case 1

TransactionMatching supply

The intra-EU acquisition of goods in EU country 1

Article 140(a) VAT Directive)

Where the supply of those goods by a business would be exempt in all circumstances in EU country 1

Case 2

TransactionMatching import

The intra-EU acquisition of goods in EU country 1

Article 140(b) VAT Directive)

Where the importation of those goods into EU country 1 would be exempt as:

  • Goods exempt when supplied (see Exemptions relating to importation : Case 1)
  • Personal and small imports (see Exemptions relating to importation : Case 2)
  • Goods in free circulation (see Exemptions relating to importation : Case 3)
  • Goods reimported after temporary export (see Exemptions relating to importation : Case 5)
  • Diplomatic imports (see Exemptions relating to importation : Case 6)
  • Imports by international bodies (see Exemptions relating to importation : Case 7)
  • Imports by the armed forces of other NATO member countries (see Exemptions relating to importation : Case 8)
  • Imports by UK forces in Cyprus (see Exemptions relating to importation : Case 9)
  • Fishing catches (see Exemptions relating to importation : Case 10)
  • Central bank gold (see Exemptions relating to importation : Case 11) or
  • Natural gas etc (see Exemptions relating to importation : Case 12)

Case 3

TransactionByCircumstances

The intra-EU acquisition of goods in EU country 1

(Article 140(c) VAT Directive)

A business not established in EU country 1

Who is in all circumstances entitled to full reimbursement of the VAT due because:

The transactions relate to certain activities causing it to be regarded as a business [taxable person] and carried out outside EU country 1 (see Deductions: Certain transactions carried out abroad )

or

the transactions are exempt with the right to deduct (see Deductions: transactions exempt with the right to deduct )

or

VAT on the transactions is due by the customer alone

or

The business is established in EU country 2 and entitled to a refund under the scheme for Cross-border refunds to EU businesses

 

Optional exemption for customs warehouses etc

If EU countries choose to exempt any of the transactions involving customs warehouses (see Exemptions relating to customs warehousing etc ) or tax and other similar warehouses (see Exemptions relating to tax warehouses etc ) under Articles 154-165 of the VAT Directive, they must also make sure that intra-EU acquisitions of goods intended for placing in a tax warehouse or other similar warehouse are given the same treatment as a supply of goods carried out within their territory under the same conditions.