Import VAT and Reverse Charge on Your First EU Import

E3 · Landed cost, customs and payment

Import VAT and Reverse Charge on a First EU Import

11 min readFoliware India LLPReviewed 14 September 2026

The short answer

Import VAT is chargeable in the EU member state where goods enter the Union, on the customs value plus duty and transport costs. Whether you pay it at the border or account for it on your VAT return depends on the member state: France reverse charges automatically, the Netherlands needs an Article 23 licence, Germany defers payment instead. Confirm with your own tax adviser.

This article states the position as we understand it from the primary instruments and the national tax authorities. It is not tax advice and you should not act on it without confirmation from your own adviser or from the tax authority in your member state of import.

Where import VAT arises, and why your entry port decides it

Council Directive 2006/112/EC, the common system of VAT, sets the framework. Article 30 defines importation as the entry into the Union of goods not in free circulation. Article 60 fixes the place of importation as the member state within whose territory the goods are located when they enter the Union. Articles 70 and 71 make VAT chargeable when the goods are imported, subject to deferral where the goods are placed under a customs suspensive arrangement.

Read plainly: import VAT is a liability in the country where the container is cleared, not the country where your customer is. A buyer in Sweden who clears a container in Rotterdam has a Dutch import VAT event, not a Swedish one, unless the goods move under a customs procedure that defers it or an exemption applies.

That single fact is why the entry port question belongs in a finance conversation and not only a logistics one. The freight difference between two ports is visible in the forwarder quotation. The VAT difference is not, and on a first container it is usually larger.

What import VAT is charged on

The import VAT base is not the invoice value and it is not the customs value either. It is wider than both.

The components are the customs value of the goods, plus customs duty and any other charges due on importation other than the import VAT itself, plus transport and associated costs up to the first place of destination in the importing member state. Irish Revenue’s Customs Manual on Import VAT expresses this as the CIF value plus duties plus freight from the point of import into the EU to the point of import into Ireland, and cautions that where the invoice already includes freight to a final inland destination, that freight is inside the import VAT base.

So the arithmetic runs in two steps, and they use two different bases.

Duty is charged on the customs value, which under Articles 70 and 71 of the Union Customs Code is the transaction value plus transport and insurance up to the point the goods enter the EU customs territory.
Import VAT is charged on that customs value, plus the duty, plus onward transport costs to the first destination in the member state of import.

Getting this wrong in a landed cost model is common and it always errs in the same direction: understating the VAT funding requirement. The full stack is set out in building a landed cost model for a first container.

Paying import VAT is not the same as bearing it

For a fully taxable business, import VAT is normally not a cost at all. It is recoverable as input tax, subject to the usual deductibility rules. What it is, is a cash flow event: you fund the money at the border and recover it on a return, and the gap between those dates is working capital tied up in tax. Postponed accounting and reverse charge mechanisms exist to close that gap. They do not change what you ultimately bear, only when, and whether, the money leaves your account at all.

Two exceptions matter. If your business is partly exempt, for example certain healthcare, education or financial services operators buying disposables for their own use, some or all of the import VAT genuinely is a cost. And if you are not registered for VAT in the member state of import, you cannot recover it through a local return and will depend on a refund procedure. Both are reasons to speak to an adviser before the first container rather than after.

The five markets compared

The table below compares how import VAT is handled in the five member states this article addresses. Every one of these positions should be confirmed with your own adviser against your own facts.

Member state	Mechanism	Prior authorisation needed?	Practical effect on cash
France	Reverse charge of import VAT, known as autoliquidation, mandatory and automatic since 1 January 2022 for all businesses identified for VAT in France. Declared through the CA3 return to the Direction générale des finances publiques	No authorisation. It applies automatically, but you must hold a French VAT number	No payment at the border. Declared and deducted on the same return
Netherlands	Article 23 reverse charge permit. A non-established business cannot apply for the permit itself and must act through a fiscal representative, either a general fiscal representative who applies on your behalf or a limited fiscal representative using their own permit	Yes, the permit, plus a fiscal representative if you are not established in the Netherlands	No payment at the border once the permit is in place. Declared and deducted on the same return
Ireland	Postponed accounting, available to traders registered for VAT and for Customs and Excise. Declared in the PA1 field of the VAT3 return, with the VAT in T1 and the deduction in T2	No application form, but Revenue applies compliance conditions and can issue a Notice of Exclusion, appealable within 30 days	No payment at the border. Reclaimed at the same time as it is declared, subject to normal deductibility
Sweden	Businesses registered for VAT in Sweden report import VAT to Skatteverket, the Swedish Tax Agency, in the VAT return. Businesses not registered for VAT in Sweden pay it to Tullverket, Swedish Customs, at import	No separate authorisation, but Swedish VAT registration is the condition	No payment at the border if registered. Payment at the border if not
Germany	No general postponed accounting. Import VAT is assessed and collected by customs alongside duty, with the duty provisions applied by section 21(2) of the Umsatzsteuergesetz. A payment deferment under Article 110(b) of the Union Customs Code shifts the due date: customs duty by the 16th of the following calendar month, import VAT by the 26th of the second following month under section 21(3a) UStG	Yes, a deferment authorisation with a comprehensive guarantee under Article 95 of the Union Customs Code, and evidence of regular import activity	The money is still paid, but later. Deferment buys time; it does not remove the payment

The German row surprises buyers who have imported through the Netherlands or Ireland. Germany is a deferment country, not a postponed accounting country, so a cash model built on the Dutch or Irish mechanism breaks if you switch your entry port to Hamburg. That is one reason some distributors clear in the Netherlands and truck to Germany, as discussed in the Netherlands as an EU distribution hub.

What you need in place before the container arrives

The sequence below has dependencies, and each one takes calendar time that a first-time importer usually has not allowed for.

An EORI number in the member state of import. This is the trader identifier used on customs declarations and nothing clears without it.
A VAT registration in the member state of import, where the mechanism requires one. In France, Ireland and Sweden the mechanism is tied to local VAT registration.
A fiscal representative, where you are not established in the member state. This is a hard requirement for the Dutch Article 23 permit and it takes time to appoint, because the representative is taking on liability for your VAT.
The authorisation itself, where one exists: the Dutch Article 23 permit, or a German deferment authorisation with its guarantee.
A customs broker instructed, with your EORI, your VAT number, your authorisation reference and the commodity code from your classification decision.

Points 2, 3 and 4 are the long poles. None of them can be started the week the vessel sails. A buyer running a first import should open these in parallel with the sample evaluation, not after the order is placed.

Importing in one country and supplying in another

Article 143(1)(d) and 143(2) of Council Directive 2006/112/EC exempt from import VAT goods imported into one member state and then supplied onward to a taxable person in another member state, where the onward supply qualifies as a zero-rated intra-Community supply. In customs terms it is normally handled under customs procedure 42.

The conditions are strict and the compliance burden falls on you. Irish Revenue sets them out as: the goods must already be consigned to another member state at import, both the importer and the final customer must be VAT registered, the onward supply must qualify as zero rated under intra-Community rules, and the goods must be dispatched to the true destination within one month of clearance.

It fits a distributor clearing in Rotterdam and shipping directly to a customer in another member state. It does not fit a buyer clearing goods into their own warehouse to hold as stock, a decision examined in holding stock in Europe or shipping to order. Procedure 42 is heavily audited, and if the onward supply evidence is thin the import VAT comes back to you.

What changes if a supplier quotes DDP

Some buyers ask an Indian supplier to quote Delivered Duty Paid so that duty and taxes are somebody else’s problem. On a first EU import that usually produces a worse outcome.

Under DDP the seller is responsible for import clearance and for import duties and taxes. A non-EU seller acting as importer normally cannot recover the import VAT it pays, having no local VAT registration and no local input tax position, so the unrecoverable VAT goes into the price. You pay it inside the goods cost, with no invoice to deduct from, instead of paying it as a recoverable tax on your own return.

The honest version: DDP simplifies your life and costs you money. It suits a buyer taking a single trial pallet who does not want to open customs and VAT accounts for one shipment. For a repeat programme, take the import yourself on FOB or CIF terms and treat the VAT as the recoverable cash flow item it is.

Frequently asked questions

Do I pay import VAT in the country where the container arrives or where my customer is? In the country where the goods enter the EU, under Article 60 of Council Directive 2006/112/EC. If a container clears in Rotterdam for a customer in Stockholm, the import VAT event is Dutch unless an exemption such as customs procedure 42 applies or the goods move under a customs suspensive arrangement.

Can I avoid paying import VAT at the border? In several member states, yes, through postponed accounting or reverse charge. France applies reverse charge automatically to businesses identified for VAT in France. The Netherlands requires an Article 23 permit. Ireland offers postponed accounting to traders registered for VAT and for Customs and Excise. Germany does not have a general postponed accounting regime and instead offers deferment of payment.

Is import VAT a real cost to my business? For a fully taxable business it is normally recoverable as input tax and is a cash flow event rather than a cost. For a partly exempt business, and for any business not registered for VAT in the member state of import, some or all of it can become a genuine cost. Confirm your own position with your tax adviser.

What is import VAT actually charged on? The customs value of the goods, plus customs duty and other import charges other than the VAT itself, plus transport and associated costs to the first place of destination in the importing member state. It is a wider base than the duty base, which stops at the EU frontier.

Do I need a fiscal representative? In the Netherlands a business not established there cannot apply for the Article 23 permit itself and must act through a fiscal representative. Other member states have their own rules on when a non-established business needs a representative. This is one of the first questions to put to your adviser, because appointing one takes time.

What is customs procedure 42 and should I use it? It is the customs handling of the exemption in Article 143(1)(d) of the VAT Directive, where goods are imported into one member state and immediately supplied onward to a VAT registered customer in another. It removes the import VAT event at entry, but the conditions are strict, including dispatch within one month, and the evidence burden is on you. It suits distributors shipping straight through, not buyers building stock.

Should I just ask my Indian supplier to quote DDP so this goes away? For a single trial pallet, possibly. For a repeat programme, no. A non-EU seller acting as importer generally cannot recover the import VAT it pays, so the unrecoverable amount ends up buried in your unit price with nothing for you to deduct.

References

Council Directive 2006/112/EC on the common system of value added tax, consolidated text. Council of the European Union.
Regulation (EU) No 952/2013 laying down the Union Customs Code, consolidated text, Articles 70, 71 and 110. European Parliament and Council.
TVA à l’importation: les essentiels. Direction générale des douanes et droits indirects, France.
Verleggingsregeling bij import uit niet-EU-landen: artikel 23. Belastingdienst, Netherlands.
Postponed accounting for VAT on imports. Revenue, Ireland.
Tax and Duty Manual: VAT, postponed accounting. Revenue, Ireland.
Customs Manual on Import VAT. Revenue, Ireland.
VAT on imports. Tullverket, Swedish Customs.
Das Besteuerungsverfahren bei der Einfuhr. Zoll, Germany.
Zahlung der Abgaben mit Zahlungserleichterung (Zahlungsaufschub). Zoll, Germany.

Supply into your market

Lane, documentation and destination rules for the markets this article applies to. Each page carries the route, the paperwork set and the quotation route for that destination.

Continue across the Foliware library

Each link below answers the question this article raises next, whether that is the rule behind a decision, the same question in another destination, or the commercial step that follows.

Next step

Send us the product, the volume per shipment or per year, the destination country, and the member state and port where you intend to clear the goods. The member state of import determines the VAT mechanism available to you and the documentation we prepare, so naming it at enquiry stage saves a revision later. The enquiry form takes all four. Confirm the VAT treatment itself with your own tax adviser before you commit to an entry point.

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