Concept Definition
What is import VAT?
Import VAT is VAT charged on goods imported from outside the EU or other VAT territory. It is typically paid at the point of customs clearance. VAT-registered importers can reclaim import VAT as input VAT on their VAT return, subject to holding valid import documentation.
What is postponed VAT accounting?
Postponed VAT accounting (PVA) allows importers to account for import VAT on their VAT return rather than paying it at the border. This improves cash flow. The UK introduced PVA for all imports from January 2021 post-Brexit. Several EU member states offer equivalent deferment schemes.
Frequently Asked Questions
- Is import VAT the same as customs duty?
- No. Import VAT and customs duty are separate charges. Customs duty is a trade tariff based on the nature and origin of goods. Import VAT is a consumption tax. Both may apply to the same import, and import VAT is calculated on the customs value plus any customs duty.
- Can import VAT be reclaimed?
- Yes, by VAT-registered businesses importing goods for taxable business purposes. The importer must hold the customs entry document (C88/E2 in the UK, SAD in the EU) as evidence. Import VAT is reclaimed on the periodic VAT return as input VAT.