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Import VAT deferment: France overtakes the Netherlands here too

21 December 2021 2 min read By the specialists of VAT INSTITUTE

The Netherlands has long been known for its favourable import climate thanks to the deferment licence. France now defers import VAT automatically, with no licence and no fiscal representative.

The Netherlands has been known for years for its favourable import climate. With a deferment licence, Dutch and foreign businesses can move the payment of import VAT to their VAT return, where it can be deducted in the same return. The net position is nil, so there is no pre-financing. In years when liquidity management became ever more important, that arrangement gave the Netherlands a competitive advantage and made its import climate part of businesses' logistics decisions.

What France is doing

France has now taken a further step to attract businesses to its ports. France and other member states already had comparable deferment arrangements, but those came with special requirements and a separate customs registration.

France is taking a different approach: where a business holds a French VAT number, payment of import VAT is automatically and mandatorily deferred to the VAT return, where it can be deducted straight away. The import VAT payable will reportedly even be pre-completed on the return.

Where a Dutch business does not yet have a French VAT number, it can apply for one specifically for this purpose. Unlike in the Netherlands, foreign businesses need not appoint a fiscal representative in France. On importation, only the French VAT number needs to be given to customs.

It is a simple arrangement that substantially lowers the barrier for businesses that do not want to pre-finance import VAT. The system most closely resembles postponed import VAT accounting, introduced in the United Kingdom after Brexit. France too will make a web portal available where businesses can view their import movements and download VAT specifications.

One concern

In the United Kingdom we see that parcel carriers in particular struggle with automatic deferment. As a result, import documents are issued in the customer's name rather than the supplier's, or import VAT is charged after all. The consequence: no deferment and no recovery of the VAT on the basis of the import document.

Questions about this topic? Get in touch with one of our specialists.

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