What is import VAT?
Import VAT is the value added tax charged when goods are brought into the EU from a country outside it. It puts imported goods on the same tax footing as goods produced in the EU. It is normally due when the goods are released for free circulation, at the VAT rate of the EU country where they are imported, and it is paid by the importer together with any customs duty.
Since 1 July 2021, import VAT applies to all goods, however low their value. The old exemption for consignments up to €22 no longer exists.
Core principle: For a VAT-registered business, import VAT is a cash-flow cost, not a final cost. You pay it at the border and reclaim it on your VAT return.
How import VAT is calculated
The taxable amount for import VAT is wider than the price of the goods. It includes:
- The customs value of the goods, usually the transaction price plus transport and insurance to the EU border
- Customs duty and any other import charges
- Incidental costs such as transport, handling and insurance up to the first place of destination in the EU
Example: A brand imports goods into the Netherlands with a customs value of €10,000. Duty at 4% is €400 and transport from Rotterdam to the warehouse costs €300. Import VAT at 21% is calculated on €10,700, which comes to €2,247. If the brand is VAT-registered in the Netherlands, it can reclaim the €2,247 on its VAT return.
Who pays it
The importer named on the customs declaration, usually the importer of record, owes the import VAT. A non-EU company typically imports through an indirect customs representative, and often a fiscal representative for VAT. Whether the customs representative is also liable for import VAT depends on national law: the EU Court of Justice ruled in 2022 that an indirect customs representative is only liable for import VAT if the country’s law says so.
Ways to avoid paying it upfront
1. Postponed or reverse-charge import VAT
Several EU countries let VAT-registered importers declare import VAT on their VAT return instead of paying it at the border, for example France’s automatic reverse charge since 2022, the Netherlands’ Article 23 licence and Belgium’s ET 14.000 licence.
Why it matters: The VAT is declared and reclaimed on the same return, so no cash leaves the business.
2. IOSS for low-value parcels
For consignments up to €150 sold to consumers, VAT is charged at checkout and declared through the IOSS, so no import VAT is collected at the border.
Watch out for: It only works for parcels shipped from outside the EU, not for bulk stock.
3. Customs procedure 42
Goods imported in one EU country and immediately moved to another EU country as an intra-EU supply can be imported free of VAT, with VAT accounted for in the country of arrival.
Why it matters: Used, for example, when goods arrive through Rotterdam but are stored in Germany or Poland.
4. Customs warehousing
Goods kept in a customs warehouse don’t pay duty or import VAT until they are released for free circulation.
Why it matters: Useful when goods may be re-exported or their final destination is not yet known.
Import VAT vs sales VAT
| Import VAT | Sales VAT | |
|---|---|---|
| When | Goods enter the EU | Goods are sold to the customer |
| Rate | Country of import (or customer’s country under IOSS) | Country of the customer for cross-border B2C sales |
| Paid by | Importer | Collected by the seller from the customer |
| Reclaimable | Yes, by VAT-registered businesses | No, it is the tax on the sale |
For the full picture, read Selling in the EU from outside the EU: VAT, EORI and stock.
Frequently asked questions
Can I reclaim import VAT?
Yes, if you are VAT-registered in the country of import and use the goods for taxable sales. You reclaim it as input VAT on your VAT return.
Is import VAT the same as customs duty?
No. Duty is a customs charge that depends on the product and its origin and can’t be reclaimed. Import VAT is a tax that VAT-registered businesses can usually reclaim.
Which VAT rate applies on import?
The standard or reduced rate of the EU country where the goods are released for free circulation, except under IOSS, where the rate of the customer’s country is charged at checkout.
Do low-value parcels pay import VAT?
Yes. Since July 2021 all imports pay VAT. For consignments up to €150, it is usually collected through IOSS or by the carrier on delivery.
