Postponed import VAT accounting: What is it and how does it work?
Postponed VAT accounting is a way to allow businesses to declare and immediately recover import VAT. Here's what you need to know.
What is postponed VAT accounting?
Postponed import VAT accounting allows businesses to declare and immediately recover import VAT through the same VAT return. In practice, you do not pay import VAT at customs when using this scheme.
Normally, companies must pay VAT upon importation to the Customs authorities. However, when postponed import VAT accounting is allowed, instead of advancing the payment of import VAT at Customs, taxpayers will be able to directly declare it in the VAT return following the Reverse Charge mechanism – i.e., to declare it as payable and deductible in the same return, so the VAT impact is zero. This is a great cash flow advantage for those businesses making imports under this simplification, who will not have to deposit the VAT at Customs. This method is also known as import VAT reverse charge.
Postponed import VAT accounting is not the same as import VAT deferral. We refer to import VAT deferral when the payment of VAT on importation can be delayed to a later date. Payment is still required, but the due date is deferred. Alternatively, we refer to postponed import VAT accounting when VAT is reported as due and deductible via the VAT return. At that point, import VAT has the corresponding nil effect for the taxpayer. Payment of import VAT is not required under the postponed import VAT accounting.
Only in the case of businesses who do not have full right to deduct VAT (eg. Financial services companies, certain real-estate businesses, etc), import VAT will also be paid under this scheme. This is because you declare it as VAT due, but you cannot declare it as VAT fully deductible.
Most EU countries have implemented postponed import VAT accounting as an option under different conditions.
- In France, this method is mandatory for all importers. Have a look at our article about mandatory import VAT reverse charge in France.
- On the contrary, Germany is one of the few countries that have not introduced the postponement of import VAT.
- Spain also introduced import VAT accounting as an optional regime, but in this case, it is connected to additional administrative obligations such as SII.
- UK also applies import VAT accounting as the standard mechanism to recover VAT.
How it works for businesses importing goods into the UK
UK postponed VAT accounting is also known as PVA. If you want to make use of this simplification, there is no specific application to complete. You need to be VAT registered in the UK and inform your customs agent about your wish to benefit from the postponed import VAT accounting.
Find here the official information about postponed import VAT accounting in the UK, published by the HMRC.
How do you declare VAT postponed?
The way of declaring the import VAT postponed will vary country by country. Normally, the reporting will follow the logic of the reverse charge mechanism: you will need to report the VAT amount as payable and as deductible in the same VAT return.
In some countries, you will find specific boxes for this reporting. This is the case of France, for example. While in others, you will need to complete the general boxes for input and output VAT , like in UK VAT return.
In the UK, these are the boxes to complete in the VAT return:
- Box 1: Import VAT amount, together with the rest of your total VAT due.
- Box 4: Import VAT amount, together with the rest of your total VAT deductible.
- Box 7: Total value of your imports, together with the rest of your total purchases (net value). You should not include VAT in this box.
Find here the official information about import VAT in France and how to report it.
Where do I find my monthly postponed import VAT statement?
When the postponed import VAT accounting is in place, you will normally be able to download the monthly import VAT statement. How to do it will vary from country to country.
- For example, France habilitated the section known as Données ATVAI. You can use this link to access the French customs information. but you may have to complete first the form CONVENTION D’ADHÉSION ET D’HABILITATION AU SERVICE EN LIGNE DONNÉES ATVAI and send it to the customs office to have full access to the customs information for your company. Once habilitated, this section should appear on your Prodouanne account. The application form and instructions can be found on the previous link.
- In Spain, you may check and download the postponed import VAT statement in the following link, under the section name “Consultas" and "Consulta del IVA importación con diferimiento de pago”.
- UK also allows checking and downloading the postponed import VAT statement. You need to follow this link and log in with your HMRC credentials linked to your EORI number. You can only access a statement for 6 months from the date it’s published. You must download and keep a copy of each statement in your records.
Postponed import VAT accounting example
As way of example, Company A is VAT registered in the UK and benefits from the postponed import VAT accounting scheme. Company A makes the following transactions during a given quarter:
- Imports of goods for an amount higher than GBP 135 which, in total amount of GBP 200. The import VAT is GBP 40.
- Domestic sales of goods amounting to GBP 400. The collected VAT is GBP 80.
- Domestic purchases of goods amounting to GBP 100. The VAT paid is GBP 20.
The UK VAT return of this company using the postponed import VAT accounting would look as follows:
Box 1: VAT due in this period on sales and other outputsGBP 120
Box 4: VAT reclaimed in this period on purchases and other inputsGBP 60
Box 5: Net VAT to be paid to CustomsGBP 60
Box 6: Total value of sales and all other outputs excluding any VATGBP 400
Box 7: Total value of purchases and all other inputs excluding any VATGBP 300
Need help with postponed import VAT accounting?
Marosa provides European VAT compliance services in all European countries. Our team can guide you on how to obtain a license for this scheme. We will also follow up the process and handle your periodic VAT reporting in any European country once your postponed import VAT accounting has been approved.