Assessment of the application and impact of the VAT exemption for importation of small consignments : executive summary

In general, imports in the EU are charged with customs duties and VAT unless they are specifically exempt. VAT Directives and Customs Regulations provide for an exemption for the importation of consignments with a negligible value. The low value consignment relief for VAT (hereinafter 'LVCR') has been introduced in the EU in 1983. The relevant provisions in the EU Directive allowed Member States to relieve imports of goods of a negligible not exceeding 22 [ECU] from VAT and was intended as a method to facilitate cross-border trade by reducing the administrative burden and cost involved for business and Member States. The LVCR has been subject to a lot of discussion over time, considering that so-called 'duty & VAT free imports' were adversely impacting domestic sales for which VAT must be charged in any case, but also considering the administrative burden (both for operators and for customs administrations) linked to the collection of VAT on an increasing number of consignments. The Commission has notably received several complains and submissions from industry stakeholders in this area. Some product categories appear to be more affected than other by this type of trade. The Authorities in a number of Member States have therefore also looked into this particular exemption which has led to variety in interpretations and exclusions from the VAT exemption such as mail order.