Importation Other intermediary services

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ImportationOther intermediary services
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IMPORTATION
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DEFINITION
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
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

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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)

Art. 9 VAT Act and item 2 (b), Part Four, Fifth
Schedule Art. 8 VAT Act and item 7 (1) and (4)
Fourth Schedule
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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

Item 7 (4) Fourth Schedule
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PLACE OF IMPORTATION
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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
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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EXEMPTIONS
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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

Art. 9 VAT Act and item 1 and 6, Part Four, Fifth
Schedule
Art. 9 VAT Act and item 2 (b), Part Four, Fifth
Schedule
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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.

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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)

Art. 9 VAT Act and item 3, Part Four, Fifth
Schedule
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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

Art. 9 VAT Act and item 5, Part Four, Fifth
Schedule
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PERSON LIABLE TO PAY IMPORT VAT
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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

Art. 20 (1) (c) VAT Act
Art. 2 (1) VAT Act
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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

Art. 21 (5) VAT Act
Art. 60 (1) (c) and (2) VAT Act
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SPECIAL TOPICS
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SUPPLIES FOLLOWING AN IMPORTION
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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

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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.

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Supplies of goods following an importation of
goods
USA
Malta
A supplies goods
A
B
B supplies goods
B acts as importer
B transports goods
C
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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

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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)

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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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IMPORTATION FOLLOWED BY A (DEEMED) ICS
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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)

Art. 9 VAT Act and item 3 , Part Four, Fifth
Schedule
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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

Art. 9 VAT Act and item 3 (1) , Part One, Fifth
Schedule
Art. 9 VAT Act and item 3 (4) , Part One, Fifth
Schedule
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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 As
  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.

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Importation followed by an exempt IC supply of
goods
Malta
Libya
Movement of goods
B
A supplies goods
A
Movement of goods
B supplies goods
Italy
C provides IT VAT number
C
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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

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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

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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

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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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IMPORTATION IN A MS OTHER THAN THE MS OF ARRIVAL
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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

Art. 7 VAT Act and item 1 (b) Third Schedule
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Import into a Member State other than the Member
State of arrival (1)
Sixth Directive

• 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

Based upon art. 7 VAT Act and item 1 (c) Third
Schedule
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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

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

• EXCEPTION 1

The exception does not apply to New means of
transport Goods to be installed or assembled
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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.

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Import into a Member State other than the Member
State of arrival (1)
Libya
Malta
A acts as importer
A
Movement of goods
A
Movement of goods
MS 2
A supplies goods
B
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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)

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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

The importation by A will be exempt from VAT
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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)

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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

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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

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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

Art. 6 VAT Act and item 18 (1) (c) Second Schedule
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

In case Malta is the Member State of
importation see art. 25 (4) VAT Act
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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.

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Import into a Member State other than the Member
State of arrival (2)
Libya
Malta
B acts as importer
Movement of goods
A
Movement of goods
MS 2
A supplies goods
B
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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
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)

B can claim the refund of the Maltese VAT upon
importation if the acquisition of the goods by B
is subject to VAT in MS 2
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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

B can claim the refund of the Maltese VAT upon
importation
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

B cannot claim the refund of the Maltese VAT upon
importation
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OTHER INTERMEDIARY SERVICES
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Other intermediary servicesQuestion 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.

Item 11, Second Schedule
58
Other intermediary servicesQuestion 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
Other intermediary servicesquestion 1 2

• EXAMPLE

B performs intermediary services for A
A
B
A supplies goods to C
C
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
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)

Art. 9 VAT Act Item 5, Part One Fifth Schedule
62
Other intermediary services Question 4

• EXEMPTIONS (WITHOUT CREDIT)
• Intermediary services related to
• Insurance services
• Banking services

Item 2, Part Two, Fifth Schedule
Item 3, Part Two, Fifth Schedule
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

Art. 20 (1) (a) VAT Act
Art. 20 (2) (c) VAT Act
Sixth Directive?
64
QUESTIONS ?