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Importation Other intermediary services

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Importation Other intermediary services

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    1. Importation Other intermediary services

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    4. 4 Definition DEFINITION “Importation of goods” means: The entry into Malta before 1 May 2004 of goods transported from any other country; The entry into the Community on or after 1 May 2004 of goods transported from a third territory. REMARKS Importation only applies to goods. Services cannot be imported! Any person can act as importer for an importation The subsequent use of the imported goods does not matter

    5. 5 Definition REMARKS Terminology: Importation of Community goods: the entry into the Community for VAT purposes of goods that, for customs purposes, are already in free circulation Importation of non-Community goods: the entry into the Community for VAT purposes of goods that, for customs purposes, are not yet in free circulation

    6. 6 Definition REMARKS In some cases goods are physically entering the Community, they are not put into free circulation, but placed under a customs duty suspension regime In that case, there is also a (VAT exempt) importation of goods and VAT on importation will only fall due when the goods cease to be subject to that regime (unless at that time another exemption of VAT upon importation is applicable)

    7. 7 Definition REMARKS The following customs duty suspension regimes exist: The temporary storage of goods; The placing of goods in a free zone or free warehouse; Customs warehousing or inward processing; The admittance into territorial waters of goods on drilling and production platforms; The temporary entry of goods into an EU Member State; External transit procedures; Internal transit procedures

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    9. 9 Place of importation PRINCIPLE An importation of goods takes place where the goods are at the time when the chargeable event takes place The date of chargeable event in case of an importation of goods is the following: As a general rule, when customs duties become chargeable (or would have become chargeable if the goods were subject to those duties) In case the goods are placed under a customs duty suspension regime, the chargeable event takes place on the date when the goods cease to be subject to that regime

    10. 10 Place of importation EXAMPLES When goods, transported from a third territory, are in Malta at the moment customs duties fall due, the importation for VAT purposes of the goods takes place in Malta When goods are transported from a third territory and on entry on the Maltese territory they are placed under a regime of customs warehousing, the importation for VAT purposes of the goods takes place in Malta if the goods are in Malta at the moment the goods cease to be subject to that regime (and are not put under another customs duty suspension regime)

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    12. 12 Exemptions EXAMPLES The importation of goods whose supply by a taxable person is exempt from VAT (e.g. food, pharmaceutical products) The importation of goods that are intended to be placed under a customs duty suspension regime

    13. 13 Exemptions EXAMPLES The importation of goods exempt from customs duty E.g. personal property belonging to individuals coming from countries situated outside the community; goods imported on the occasion of a marriage; personal property acquired by inheritance; school outfits, scholastic materials and other scholastic household effects under certain conditions; imports of negligible value; capital goods and other equipment imported on the transfer of activities; importation of certain agricultural products and products intended for agricultural use; therapeutic substances, medicines, laboratory animals and biological or chemical substances; goods for charitable or philanthropic organizations; importation in the context of certain aspects of international relations; goods for the promotion of trade (e.g. goods used or consumed at a trade fair or similar event); goods imported for examination, analysis or test purposes; tourist information literature; documents and publications of foreign governments and publications of official international bodies; coffins, funerary urns and ornamental funerary articles, etc.

    14. 14 Exemptions EXAMPLES The importation of goods followed by an exempt intra-Community supply of goods or an exempt deemed intra-Community supply of goods to another EU Member State (see later on under Special Topics)

    15. 15 Exemptions EXAMPLES The re-importation by the person who exported them outside the Community: of goods in the state in which they were exported outside the Community of goods which have undergone outside the Community repair, transformation or adaptation, or after having been made-up or reworked abroad: provided that this exemption is limited to the value of the goods at the time they were exported outside the Community

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    17. 17 Person liable to pay VAT The payment of the tax on a taxable importation is the liability of the importer The importer is the person in whose name the goods are at the time when tax on the importation becomes chargeable

    18. 18 Payment of VAT As a general rule, VAT upon importation is paid at the Customs authorities However the Commissioner can allow deferring the payment of the import VAT to the VAT return

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    21. 21 Supplies of goods following an importation of goods PRINCIPLE As a general rule, supplies of goods that are transported take place where the goods are at the time when the transport of those goods begins EXCEPTION When it concerns supplies of goods whereby the transport of goods begins outside the Community and ends in the Community, the supplies of goods by the importer and any subsequent supply up to the acquisition of those goods, take place in the Member State where they are imported

    22. 22 Supplies of goods following an importation of goods Example A, a US company, supplies computers to B, a Maltese company registered under art. 10 VAT Act. The computers are put at the disposal of B in the USA. B supplies the goods to C. In the frame of this sale, the computers are transported by B from the USA into Malta (to the premises of C). B acts as importer of the goods.

    23. 23 Supplies of goods following an importation of goods

    24. 24 Supplies of goods following an importation of goods Solution: A-B Taxable person: YES Operation in the scope of VAT: YES (supply of goods) Place of supply: USA (Item 1 (a) Third Schedule – where goods are placed at the disposal of B) Exemption: N/A Person liable to pay VAT: N/A

    25. 25 Supplies of goods following an importation of goods Solution: B Qualifying person (importer): YES Operation in the scope of VAT: YES (importation of goods) Place of importation: Malta (Item 15 Third Schedule and item 7 Fourth Schedule) Exemption: NO Person liable to pay VAT: the Maltese company B (art. 20 (1) (c) VAT Act)

    26. 26 Supplies of goods following an importation of goods Solution: B-C Taxable person: YES Operation in the scope of VAT: YES (supply of goods) Place of supply: Malta (Item 1 (c) Third Schedule – in MS of importation) Exemption: NO Person liable to pay VAT: the Maltese company B (art. 20 (1) (a) VAT Act)

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    28. 28 Importation followed by an exempt IC supply of goods PRINCIPLE An importation of goods into Malta, followed by an exempt intra-Community supply of the same goods by the same taxable person, registered under art. 10 VAT Act, is exempt from VAT The importer has to prove at the moment of importation that there will be a subsequent exempt intra-Community supply of the goods (i.e. proof of transport and VAT identification number final recipient)

    29. 29 Importation followed by an exempt IC supply of goods PRINCIPLE The subsequent exempt intra-Community supply can either be: A (normal) exempt IC supply from Malta to another EU Member State, whereby the customer is liable for the VAT on his ICA; or A (deemed) exempt IC supply in the frame of a transfer by a taxable person, registered under art. 10 VAT Act, of goods forming part of his economic activity to another EU Member State

    30. 30 Importation followed by an exempt IC supply of goods Example A Maltese company B, registered under art. 10 VAT Act, purchases office equipment from a Libyan company A. B has the goods transported from A’s premises in Tripoli to Malta. B imports the goods into Malta. At the moment of importation, the goods are destined to be supplied to C, an Italian company that is VAT registered in Italy, whereby the unaltered goods are transported from Malta to Italy. C provides B with its Italian VAT identification number.

    31. 31 Importation followed by an exempt IC supply of goods

    32. 32 Importation followed by an exempt IC supply of goods Solution: A-B Taxable person: YES Operation in the scope of VAT: YES (supply of goods) Place of supply: Libya (Item 1 (b) Third Schedule – where transport begins) Exemption: N/A Person liable to pay VAT: N/A

    33. 33 Importation followed by an exempt IC supply of goods Solution: B Qualifying person (importer): YES Operation in the scope of VAT: YES (importation of goods) Place of importation: Malta (Item 15 Third Schedule and item 7 Fourth Schedule) Exemption: YES (Item 3, Part Four, Fifth Schedule) Person liable to pay VAT: N/A

    34. 34 Importation followed by an exempt IC supply of goods Solution: B-C in the head of B Taxable person: YES Operation in the scope of VAT: YES (IC supply of goods) Place of supply: Malta (Item 1 (b) Third Schedule – where transport begins) Exemption: YES (Item 3 (1), Part One, Fifth Schedule) Person liable to pay VAT: N/A

    35. 35 Importation followed by an exempt IC supply of goods Solution: B-C in the head of C Taxable person: YES Operation in the scope of VAT: YES (IC acquisition of goods) Place of ICA: Italy (Item 13 Third Schedule – where transport ends) Exemption: N/A Person liable to pay VAT: N/A

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    37. 37 Import into a Member State other than the Member State of arrival (1) PRINCIPLE As a general rule, supplies of goods that are transported take place where the goods are at the time when the transport of those goods begins

    38. 38 Import into a Member State other than the Member State of arrival (1) EXCEPTION 1 Goods are deemed to be transported from the Member State of importation if: goods are supplied to a member of the “Group of 4” (“Group of 3” in Malta); and the transport is made from a third territory by or on behalf of the supplier; and goods are imported by the supplier into a Member State other than the Member State of arrival

    39. 39 Import into a Member State other than the Member State of arrival (1) EXCEPTION 1 For these types of operations, it should be determined whether or not distance sales rules or the rules on IC supplies/acquisitions are applicable The move of goods as from the MS of importation into the MS of arrival of the goods has to be taken in to account to determine whether: The threshold for IC acquisitions of the customers in the MS of arrival has been exceeded The threshold for applying the distance sales rules of the supplier for supplies from the MS of importation towards the MS of arrival of the goods has been exceeded

    40. 40 Import into a Member State other than the Member State of arrival (1) EXCEPTION 1

    41. 41 Import into a Member State other than the Member State of arrival (1) Example A, an Libyan company, supplies computers to B (without installation). B is a small undertaking established in another Member State than Malta (Member State 2). Goods are transported by A from Libya into Malta and subsequently A transports the goods to the other Member State 2. A acts as importer of the goods.

    42. 42 Import into a Member State other than the Member State of arrival (1)

    43. 43 Import into a Member State other than the Member State of arrival (1) Solution: A Qualifying person (importer): YES Operation in the scope of VAT: YES (importation of goods) Place of importation: Malta (Item 15 Third Schedule and item 7 Fourth Schedule) Exemption: YES, in case the importation is followed by an exempt IC supply NO, in case the importation is not followed by an exempt IC supply Person liable to pay VAT: if no exemption, A (art. 20 (1) (c) VAT Act)

    44. 44 Import into a Member State other than the Member State of arrival (1) Hypothesis 1: B exceeded the threshold for IC acquisitions in MS 2 or opted to subject IC acquisitions to VAT in MS 2 Solution: A-B, in the head of A Taxable person: YES Operation in the scope of VAT: YES (IC supply of goods) Place of supply: Malta (Item 1 (b) Third Schedule – where transport begins) Exemption: YES (Item 3 (1), Part One, Fifth Schedule) Person liable to pay VAT: N/A

    45. 45 Import into a Member State other than the Member State of arrival (1) Hypothesis 2: B did not exceed the threshold for IC acquisitions in MS 2 nor opted to subject IC acquisitions to VAT in MS 2 AND A did not exceed the threshold for distance sales from Malta towards MS 2 nor opted to subject his supplies from Malta to MS 2 to VAT in MS 2 under the distance sales rules Solution: A-B Taxable person: YES Operation in the scope of VAT: YES (supply of goods) Place of supply: Malta (Item 1 (b) Third Schedule – where transport begins) Exemption: NO Person liable to pay VAT: A (art. 20 (1) (a) VAT Act)

    46. 46 Import into a Member State other than the Member State of arrival (1) Hypothesis 3: B did not exceed the threshold for IC acquisitions in MS 2 nor opted to subject IC acquisitions to VAT in MS 2 BUT A exceeded the threshold for distance sales from Malta towards MS 2 or opted to subject his supplies from Malta to MS 2 to VAT in MS 2 under the distance sales rules Solution: A-B Taxable person: YES Operation in the scope of VAT: YES (distance sale) Place of supply: MS 2 (Item 4 (2) (b) Third Schedule – where transport ends) Exemption: N/A Person liable to pay VAT: N/A

    47. 47 Import into a Member State other than the Member State of arrival (2) EXCEPTION 2 Goods shall be deemed to have been dispatched or transported from the Member State of importation if they: are acquired by a non-taxable legal person; are dispatched or transported from a third territory; and imported by that non-taxable legal person into a Member State other than the Member State of arrival of the goods

    48. 48 Import into a Member State other than the Member State of arrival (2) EXCEPTION 2 The acquisition by the non-taxable legal person of the goods imported by him in another Member State than the Member State of arrival and subsequently transported to the Member State of arrival is considered to be an intra-Community acquisition of goods The supply of goods with the deemed transport as from Member State of importation into the Member State of arrival of the goods has to be taken into account to determine whether the threshold for intra-Community acquisitions of the non-taxable legal person in the Member State of arrival has been exceeded

    49. 49 Import into a Member State other than the Member State of arrival (2) EXCEPTION 2 If the acquisition by the non-taxable legal person is subject to VAT in the Member State of arrival, the non-taxable legal person may claim the refund of the import VAT in the Member State of importation

    50. 50 Import into a Member State other than the Member State of arrival (2) Example A, an Libyan company, supplies computers to B (without installation). B is a non-taxable legal person (e.g. a pure holding company) established in another Member State than Malta (Member State 2). Goods are transported from Libya into Malta and subsequently transported from Malta to the Member State 2. B acts as importer of the goods.

    51. 51 Import into a Member State other than the Member State of arrival (2)

    52. 52 Import into a Member State other than the Member State of arrival (2) Solution: A-B Taxable person: YES Operation in the scope of VAT: YES (supply of goods) Place of supply: Libya (Item 1 (a) Third Schedule – where the goods are placed at the disposal of B) Exemption: N/A Person liable to pay VAT: N/A

    53. 53 Import into a Member State other than the Member State of arrival (2) Solution: B Qualifying person (importer): YES Operation in the scope of VAT: YES (importation of goods) Place of importation: Malta (Item 15 Third Schedule and item 7 Fourth Schedule) Exemption: NO Person liable to pay VAT: B (art. 20 (1) (c) VAT Act)

    54. 54 Import into a Member State other than the Member State of arrival (2) Solution: B with respect to movement of goods to MS 2 Hypothesis 1: B exceeded the threshold for IC acquisitions in MS 2 or opted to subject IC acquisitions to VAT in MS 2 Qualifying person: YES Operation in the scope of VAT: YES (IC acquisition) Place of operation: MS 2 (Item 13 Third Schedule – where transport ends) Exemption: N/A Person liable to pay VAT: N/A

    55. 55 Import into a Member State other than the Member State of arrival (2) Solution: B with respect to movement of goods to MS 2 Hypothesis 2: B did not exceed the threshold for IC acquisitions in MS 2 nor opted to subject IC acquisitions to VAT in MS 2 Qualifying person: YES Operation in the scope of VAT: NO Place of operation: N/A Exemption: N/A Person liable to pay VAT: N/A

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    57. 57 Other intermediary services Question 1 & 2 DEFINITION “Intermediary services” mean services carried out by a disclosed agent. A disclosed agent (i.e. a broker or a mandatory – not an independent agent) is an intermediary acting on behalf of and for the account of another person (i.e. the principal). The supplies for which the intermediary intervenes are deemed to be made by that other person. The service of the intermediation itself is a supply of services made by the intermediary to its principal.

    58. 58 Other intermediary services Question 1 & 2 EXAMPLE A company A has manufactured television sets. A calls upon B to find customers for his products. B, as an intermediary acting in the name of and on behalf of A, contacts C, a hotel, that wants to buy 100 television sets. Subsequently, A delivers the goods to C. The sale of the television sets (for which B intervened as the intermediary of A) is a supply of goods directly from A to C. B will only charge A for his intermediary services related to the supply of the goods.

    59. 59 Other intermediary services question 1 & 2 EXAMPLE

    60. 60 Other intermediary services – Question 3 PLACE OF SUPPLY Principle: intermediary services take place where the underlying transaction takes place Exception: intermediary services rendered to a customer (i.e. the principal) who communicates a VAT identification number assigned by another Member State than the Member State where the underlying transactions (for which the intermediary intervenes) are carried out, take place in the Member State that granted the VAT identification number

    61. 61 Other intermediary services – Question 4 EXEMPTIONS (WITH CREDIT) Intermediary services related to: Exempt exports and like transactions (item 1, Part One, Fifth Schedule) Exempt international goods traffic (item 2, Part One, Fifth Schedule) Exempt transactions related to vessels (item 6, Part One, Fifth Schedule) Exempt transactions related to aircraft (item 7, Part One, Fifth Schedule) Exempt transactions related to gold (item 8, Part One, Fifth Schedule) Exempt supplies of food (item 9, Part One, Fifth Schedule) Exempt supplies of pharmaceutical goods (item 10, Part One, Fifth Schedule)

    62. 62 Other intermediary services – Question 4 EXEMPTIONS (WITHOUT CREDIT) Intermediary services related to: Insurance services Banking services

    63. 63 Other intermediary services – Question 5 PERSON LIABLE TO PAY MALTESE VAT Principle: the supplier Exception: the customer under the following conditions: The supplier is not established in Malta AND not registered under art. 10 VAT Act; and The customer is established in Malta AND registered under art. 10 VAT Act

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