What arises at the border: taxable event, tax base and customs duty

An online retailer in Leipzig orders 400 Bluetooth speakers from a manufacturer in Shenzhen for €8,000. The Chinese invoice shows no VAT, so he assumes the purchase is tax free. Then the forwarding agent calls: before delivery, customs duty and import VAT have to be paid, and not on €8,000 but on a noticeably higher amount. Two sections of the German VAT Act explain why.

A taxable event of its own at the external border

Besides supplies of goods, services and intra-Community acquisitions, the German VAT Act knows a fourth taxable event. § 1(1) no. 4 UStG taxes the importation of goods into Germany and gives the tax its name in brackets: Einfuhrumsatzsteuer, import VAT. What triggers it is the goods crossing the border, not a sales contract.

That is the difference from a supply. For an import the Act asks neither for consideration nor for a business. According to the customs administration it also makes no difference whether a company or a private individual brings the goods in. Whoever brings goods in from a third country triggers the tax.

Under § 1(2a) UStG, third-country territory is any territory outside the Community territory. Goods from China, the United States, Switzerland or Norway therefore come from a third country. Goods from Austria, Poland or France come from the rest of the Community territory and are not imported at all in the legal sense.

Goods from another member state follow a completely different system: the buyer declares an intra-Community acquisition under § 1a UStG in his own VAT return, with no duty and no customs office involved. The course on reverse charge and place of supply covers that. This course deals only with goods crossing the Union's external border.

Where Germany ends for VAT purposes

Only an importation into the domestic territory is taxable. § 1(2) UStG carves some areas out of the national territory: Büsingen, the island of Heligoland, the free zones within the meaning of the Union Customs Code, meaning the free ports, and the waters and mudflats between the territorial border and the shoreline. For VAT these areas are abroad.

In practice, goods stored in a free zone are not yet imported for VAT purposes. The tax arises only when they leave the free zone for the domestic territory. Conversely, § 1(1) no. 4 UStG expressly covers the Austrian municipalities of Jungholz and Mittelberg as well, although they are not German territory.

The same subsection names the body of law that VAT relies on here: the Union Customs Code, Regulation (EU) No 952/2013. It governs the customs territory, the customs declaration and the incurrence of a customs debt for the whole Union. Import VAT borrows this machinery instead of building a procedure of its own.

Customs collects, and customs law applies accordingly

§ 21(2) UStG bridges the two fields of law. Import VAT follows the rules on customs duties accordingly, except those on outward processing. Declaration, incurrence of the debt, calculation and payment therefore run through the same clearance as the duty itself.

As the customs administration describes it, import VAT normally arises on release for free circulation, at the moment the customs office accepts the customs declaration. That holds even where no duty is due for customs reasons, for example because of a preference. Only import VAT is then collected.

Who owes the tax is not answered by the list in § 13a(1) UStG either. Its subsection 2 refers import VAT to § 21(2), and so back to customs law. The debtor is therefore usually the person who declares the goods for free circulation.

If a business has a forwarding agent represent it in its name, the business remains the declarant and therefore also the debtor of the import VAT. The agent acts as its representative, and the obligations arising from the declaration fall on the buyer.

If the agent declares in his own name instead, customs explains that he becomes declarant and customs debtor himself, with no power of attorney. For the buyer this is no formality, because it decides whose name the assessment notice carries. Who may then deduct the tax as input tax is a question for § 15 UStG and the second module.

The EORI number and the customs declaration in outline

Anyone importing goods commercially needs an EORI number. The acronym stands for Economic Operators' Registration and Identification, a number valid throughout the Union that registers and identifies traders. It replaced the former German customs number, and according to the customs administration it is a precondition for any customs clearance in the Union.

It is applied for formally at the Central Customs Authority, Dresden office, master data management, and free of charge. Paid intermediaries are not needed. The number must appear in every customs declaration so that the parties can be identified. It must not be confused with the VAT identification number or the tax number.

The customs declaration itself is lodged electronically in the ATLAS IT system, which also uses the EORI number for identification. Many smaller businesses leave this task to their forwarding agent or parcel service. That does not change the amount of tax, but it does change who acts as declarant and who receives the notice.

The tax base: customs value and additions

§ 11(1) UStG measures an importation by the value of the imported goods, determined under the rules on customs value. The starting point is therefore not simply the supplier's invoice total but the value that customs law sets. How the customs value is determined in a particular case is governed by the customs rules.

For a typical purchase the customs administration puts it in a simple formula: value of the goods plus transport costs up to the Union's external border. Someone who buys a machine in America and ships it to Hamburg adds the purchase price and the sea freight together. That figure is the foundation on which everything else rests.

§ 11(3) UStG requires four items to be added to the customs value, insofar as it does not already contain them. The duty itself weighs most: import VAT is also charged on the duty. The same applies to excise duties arising on importation, for example on mineral oils or tobacco products.

• import duties, taxes and other charges owed abroad for the goods (no. 1)
• import duties and excise duties falling on the goods because of the importation when the import VAT arises, except the import VAT itself (no. 2)
• costs of arranging the supply and of transport, and other services, up to the first place of destination in the Community territory (no. 3)
• the same costs up to a further place of destination in the Union, if that place is already known when the tax arises (no. 4)

Transport costs deserve particular attention. The customs value stops at the external border, but the import VAT base reaches further, to the first place of destination in the Community territory. The customs administration reads this as the place where the cross-border transport ends. The lorry from the port to the warehouse can therefore form part of the base.

Under § 11(4) UStG, price reductions and rebates relating to the imported goods are excluded from the base if they are already fixed when the tax arises. An agreed discount therefore lowers the base straight away. A bonus decided months later, on the other hand, was not yet fixed at the time of importation.

If the invoice is in dollars or yuan, § 11(5) UStG refers the conversion to the rules on customs value. The customs administration applies the exchange rate valid on the day the customs declaration is accepted. The rate on the day of ordering or of paying the supplier is irrelevant for import VAT.

The same rates as for a domestic transaction

There are no special import rates. The standard rate in § 12(1) UStG applies to every taxable transaction, and importation is one of them. The reduced rate in § 12(2) no. 1 UStG expressly covers the goods listed in Annex 2 when they are imported as well as when they are supplied at home.

Imported foodstuffs or books therefore usually bear 7 percent, technical equipment or machinery 19 percent. Which goods qualify and how Annex 2 is organised is explained in the course on VAT rates. The same list applies to imports, and it identifies its goods by the customs tariff anyway.

Customs duty in outline and the end of the 150 euro exemption

Customs duty is a separate levy with its own tariff. Import VAT knows only two rates, while duty depends entirely on the kind of goods: the Union's Common Customs Tariff assigns a rate to every product. Finding the right rate means classifying the goods correctly in the tariff, with the help of the customs office if needed.

Until now, consignments from non-EU countries worth less than 150 euros could be imported free of duty. According to the Federal Ministry of Finance, this duty exemption ended on 1 July 2026. Since then a flat customs charge of 3 euros per category of goods in a consignment has applied. Goods of higher value remain subject to the tariff rates.

The ministry illustrates the counting with an example: ten pairs of socks in one consignment trigger the flat charge once, so 3 euros. If two cable ties and four pairs of trousers are added, that makes three categories and therefore 9 euros. What counts is the time of importation, so goods ordered before the cut-off date may also be caught.

For businesses one distinction matters: the reform concerns customs duty, not import VAT. The ministry stresses that import VAT of 19 or 7 percent continues to apply. Anyone receiving small consignments therefore pays import VAT alongside the flat charge, unless one of the statutory exemptions applies.

Exemptions and the small-amount rule

§ 5(1) UStG lists the tax-free importations exhaustively. For trading companies number 3 matters most: an importation is exempt if the import VAT debtor uses the goods immediately afterwards for an intra-Community supply. The goods are cleared in Germany but taxed only in the customer's member state.

Three conditions must already be met at importation. The debtor provides the VAT identification number issued to him in Germany, or that of his fiscal representative. He also gives the number issued to the customer in the other member state. And he proves that the goods are intended to be transported or dispatched to the rest of the Community territory.

Further exemptions rest on an ordinance under § 5(2) UStG, the Import VAT Exemption Ordinance. Under its § 1, anything that may be imported free of duty under the Community system of customs reliefs is in principle also free of import VAT. Whether such an exemption fits a particular case is best clarified with the customs office before importing.

§ 15 of the same ordinance adds a practical relief. Import VAT is not assessed where the goods are subject only to that tax, the amount is below 10 euros, and the importer could deduct it as input tax under § 15(1) no. 2 UStG. Customs thus waives a tax that the tax office would immediately have to credit back.

Small consignments: the Import One-Stop Shop and the § 21a special rule

For consignments with an intrinsic value of no more than 150 euros there are two special routes. § 27(34) UStG brings the relevant provisions into force for importations made after 30 June 2021. Both routes mainly concern distance sales to consumers, but they also matter for firms that receive small parcels from third countries themselves.

The first route is the Import One-Stop Shop under § 18k UStG. A supplier taking part in this special scheme declares the tax on his distance sales himself. Under § 5(1) no. 7 UStG the importation is then exempt, provided his individual identification number is stated in the declaration for release for free circulation.

The second route is the special arrangement in § 21a UStG for consignments without that number. The person presenting the consignments to customs, in practice usually a postal or courier service, may on application handle the import VAT through its deferment account. It collects the tax from the recipient on delivery and reports it in aggregate.

By the tenth day of the following month, the presenting person informs customs electronically which consignments were delivered and how much tax it collected. Goods subject to excise duty are excluded from the arrangement. For the recipient this means paying import VAT to the delivery service rather than to the customs office.