After crossing the border into the European Union, the goods must be placed under one of the customs procedures. For goods that are not immediately released for free circulation, this is most often the transit procedure. This is then terminated in the country of destination by release for free circulation. In practice, however, the goods are sometimes released for free circulation in a country other than that in which the importer is established. For example, a Czech payer may have goods released for free circulation in Germany. What to do?
In the case of Germany and other EU Member States that have introduced a fiscal representative in their tax legislation, the solution is relatively simple. The Czech taxpayer finds a fiscal representative in Germany, who reports their VAT number and the VAT number of the Czech taxpayer to the customs office. At the same time, the fiscal agent will apply to the customs office for the goods to be placed under regime 42, thereby obtaining exemption from import VAT in Germany. Subsequently, the fiscal agent issues a tax document under their VAT number to the Czech payer, stating the value of the imported goods, which will report in the German summary report as a supply of goods to the Czech Republic. The Czech taxpayer declares the acquisition of goods from Germany based on the tax document from the fiscal agent in their Czech tax return and enters the document in the control report.
If goods are released for free circulation to a Czech taxpayer in a Member State that does not have a fiscal representative in its legislation and the Czech taxpayer is not registered for VAT in that State, the Czech taxpayer will have to pay import VAT directly to the customs office, as in the case where goods are released for free circulation to a person not established in the Czech Republic and this person does not have a Czech VAT number.
It is possible to apply for a refund of import tax paid in another Member State through the refund system, the rules of which are based on Directive 2008/9/EC. If a Czech taxpayer, after releasing goods for free circulation in the country where they paid the import tax, wanted to transport these goods to the Czech Republic, they would probably be obliged to register for VAT there in accordance with the legislation of that country because of the transfer of goods. In the Czech Republic, the taxpayer would then declare the acquisition of the goods and, in the State where they registered for the transfer of the goods, they would have to check whether they would be able to claim a deduction for the import tax under the local VAT registration or whether they would have to make use of the refund system.
In the context of importation, situations where goods are released to a declarant who is not the owner of the goods cannot be underestimated. This may be the case of a Czech limited liability company (s.r.o.) that releases for free circulation the goods of its parent company established in another EU Member State. In such situations, it is still necessary to bear in mind the conclusions of the Weidel Logistik case law, according to which import tax can be claimed only in those cases where the value of the imported goods is reflected in the value of the transaction of the taxpayer who wants to claim the import deduction.
Therefore, if the Czech limited liability company acts as a declarant for the importation of goods with the obligation to declare the import tax and the imported goods do not belong to it, it cannot claim a deduction of import VAT. It could be saved by using the fiction of supply provided for in Section 13(4)(f) of the VAT Act, according to which the supply of goods is considered to be the transfer of imported goods in the country without a change of ownership, which have been released for free circulation. In this case, the declarant would issue a tax document to the owner of the goods, based on which the declarant would pay the Czech VAT and the owner of the goods would subsequently claim a refund. However, if the owner is established in a country outside the European Union with which the Czech tax administration does not reimburse the deduction on the principle of reciprocity, the owner of the goods would lose the VAT deduction. This option is therefore economic in a situation where the owner of goods from a third country can be registered as a taxable person in the Czech Republic, because as a taxable person they can then claim the deduction. It is also possible where the owner of the transferred goods is a person established in the EU, because the latter can always claim a refund of Czech VAT under Directive 2008/9/EC.