The most common errors in export

A German customer requested that we supply him using the Incoterms clause DDP. We did so and subsequently paid the German import sales tax of 19%. How can we reclaim this now?

We have deliveries for Brazil and have issued an EUR. 1 for this. Why is the import not exempt from duty?

A customer in Germany has ordered goods from me, which I have had delivered directly by the supplier from Austria to Germany. Now I am being charged the foreign VAT. What can I do?

I sent goods to Germany and thought that, thanks to the free trade agreement, no customs duties had to be paid. Nevertheless, the recipient had to pay customs duty.

80% of our primary materials come from Switzerland and the EU. Nevertheless, the customs authority says that we have wrongly declared Swiss origin. We thought that 80% Swiss and EU origin would definitely be sufficient to declare preferential origin.

There is a “Made in Switzerland” declaration on our goods, so we did not draw up proof of origin for customs exemption.

Our goods are detained at customs in Saudi Arabia. A “Certificate of Conformity” (SASO) is required. This was not the case with previous deliveries. Why is that?

If we have a delivery with the clause “ex works”, we still prepare the export documents for the customer and free the goods for export.

We indicated a lower value than the actual value of goods on the proforma invoice.

We have selected the DAP clause for shipments to Brazil.

We have issued a certificate of origin for goods which were shipped directly from Germany to Qatar. Now we have to pay a customs fine. What have we done wrong?

We applied the outward processing procedure, although the goods were of Swiss origin.

 

A German customer requested that we supply him using the Incoterms clause DDP. We did so and subsequently paid the German import sales tax of 19%. How can we reclaim this now?
In the case of DDP deliveries, “untaxed” should be used if possible, so that the importer still remains liable to pay the import sales tax. The importer can reclaim this without any problems, if it is a company. If you deliver DDP (taxed) as a Swiss company, you should register for VAT in the country of destination in advance, so that you can reclaim this tax. However, registration does also bring some obligations with it. Find out more here.(in german)

In the case of DDP deliveries, an EORIEORI (Economic Operators Registration and Identification)

EORI is a central database of all customs parties in the European Union. An EORI number is required for every customs transaction in the EU. As a rule, a Swiss company does not require a number of this nature, except if it operates in the EU as a customs declarant (e.g. in the case of DDP deliveries, or it has a warehouse within the territory of the EU).

Swiss companies which require an EORI number need to get themselves registered in the EU country in which they operate. Registration in Switzerland is not possible. In Germany, for example, an authority named “Informations- und Wissensmanagement Zoll” (IWM) in Dresden is responsible for this. Detailed information about registration and the application form are available here: Application for EORI number in Germany.
(Economic Operators Registration and Identification) number is also required; this may be requested from the relevant EU customs office.

We have deliveries for Brazil and have issued an EUR. 1 for this. Why is the import not exempt from duty?
The EUR.1 or a declaration of originIn cases where one or more packages are being sent, the declaration of origin can be made on the invoice itself, instead of using a EUR 1 movement certificate. In such cases, however, the total value of the originating products must not exceed CHF 10,300 (or CHF 8800 under the Switzerland/Faroe Islands Agreement).

The declaration of origin is to be submitted in the form and language stipulated in the respective agreement. It must be printed, stamped or typed by typewriter and signed personally. The exporter must keep a copy of the invoice with the declaration of origin for at least three years.
The wording of the declaration of origin in English must be as follows: "The exporter of the products covered by this document declares that, except where otherwise clearly indicated, these products are of (country/zone) preferential origin."
on the invoice is only effective, if a free trade agreement exists with the country of destination. To date, Switzerland has not concluded any agreement with Brazil.

A customer in Germany has ordered goods from me, which I have had delivered directly by the supplier from Austria to Germany. Now I am being charged the foreign VAT. What can I do?
Such chain transactions with the EU are not as simple, from a value-added taxValue added tax (VAT) is a general consumer tax. It is applied to all stages of production and distribution as well as to the import of goods. It is also charged on the services provided by the domestic services sector and must be paid by those obtaining services from companies based abroad. The bodies responsible for collecting the tax on domestic sales in Switzerland and Liechtenstein and on services obtained from companies based abroad are the Swiss Federal Tax Administration and the Liechtenstein tax authority respectively. As far as imported goods are concerned, responsibility lies with the Swiss Federal Customs Administration.

Value added tax in Switzerland is based on the federal law on value added tax of 2nd September 1999 (SR 641.20). Within the European Union, the Sixth VAT Directive (77/388/EEC) applies in this area, subject to the amendments and simplifications listed below. Swiss VAT law reflects the main features of the corresponding EU regulations.

Self-employed suppliers are subject to the tax when their annual domestic (within Switzerland and Liechtenstein) turnover relating to taxable services exceeds CHF 100’000. For non-profit, volunteer-run sports clubs and charitable institutions, the threshold is based on an annual turnover of CHF 150,000.

VAT is paid based on gross income. However, the tax charged on any purchased objects or services can be deducted. This “input tax deduction” avoids any inappropriate accumulation of taxes (whereby both purchases and sales are taxed). In the case of imported objects, tax is charged on their value up to the time when they reach their Swiss destination. There are tax-free allowances for those engaged in cross-border travel. More details are available from the Swiss Federal Tax Administration (www.ezv.admin.ch). For services obtained from a provider based abroad, the domestic recipient must pay tax on the service received. Where this party would not otherwise be liable based on their domestic turnover, they will become liable for tax on this type of service if the annual value of the services exceeds CHF 10,000.
The new VAT Law (MWSTG) went into force on 1 January 2010 together with the related Implementation Ordinance. The most important aim of the total revision of the Federal Law concerning value added tax is to make the legal regulations easier and more user-friendly. More than 50 measures aim at relieving the administrative burden of companies and cutting the costs of levying the tax. A new tax form will also be introduced as of 1st January 2010.

The VAT rates in Switzerland have been as follows since 1 January 2011:
Normal rate: 8%
Reduced rate: 2.5%
Special accommodation rate: 3.8%.

The normal rates in the EU vary between 15 and 27 percent. The reduced rates can drop to 2.1 percent.

A whole range of benefits are exempt from VAT. These include health care, social welfare, education, culture, the transfer of currency and capital (asset administration and collection business are, however, taxable), insurance, residential letting and the sale of property. Anyone providing such benefits, however, has no right to an input tax deduction (a “non-genuine” tax exemption,) even if they are liable for tax on the basis of other taxable turnover. It is possible, subject to certain conditions, to choose to have exempted turnover taxed.
Goods supplied abroad are also essentially taxable. The same applies to services provided abroad. However, such services are later exempted from tax once the required evidence has been provided. In such cases (unlike the provider of services not subject to tax), the provider of the benefit who is liable for tax may claim an input tax deduction (“genuine” tax exemption).

More on the topic here: http://www.s-ge.com/switzerland/export/en/exporthelp/Osec-ExportHelp/Value-added-tax-%28VAT%29
point of view, as you might think at first glance. With these transactions it is always a question of the Incoterms used and whether it concerns a delivery or a collection. Depending on which it is, the delivery is taxable in the country of destination or the country of departure; the consequence is generally an obligation to register for VAT in one of the EU countries. Find out more here. (in german)

I sent goods to Germany and thought that, thanks to the free trade agreement, no customs duties had to be paid. Nevertheless, the recipient had to pay customs duty.
The tariff concessions do not apply automatically and without the cooperation of the exporter. The exporter must (if the goods are preferential originating products) prove the origin (by means of a movement certificate or a declaration of origin on the invoice). In addition, despite free trade agreementsAgreements are becoming increasingly important within the context of international commerce. Given the different written laws and forms of legal practice that exist across the world and the different interpretations of the law that are culturally conditioned, it is impossible to devote too much attention to devising “good” agreements. Model agreements have proven to be useful, particularly for companies with little experience in this area., not all goods are 100% exempt from customs duty. There is absolutely no remission of customs duty for a few goods, while there are simply different levels of tariff reductions for others.  

80% of our primary materials come from Switzerland and the EU. Nevertheless, the customs authority says that we have wrongly declared Swiss origin. We thought that 80% Swiss and EU origin would definitely be sufficient to declare preferential origin.
The list rules regarding the individual customs tariff numbers must always be checked for each agreement or country of destination. In this case, a value criterion was assumed (for example, a maximum of 40% non-originating primary materials), however a jump in position was required. Such false declarations may result in subsequent customs payments, fines and reputational damage. Find out more here.

There is a “Made in Switzerland” declaration on our goods, so we did not draw up proof of origin for customs exemption.
Made in Switzerland and Swiss Made are indications of origin, the use of which is governed by special rules.
However, the Swiss Made designation on a product has nothing to do with origin in the sense of free trade agreements. To obtain exemption from customs duty, a movement certificate or declaration of origin is always needed.
The rules governing the use of the “Switzerland” brand differ substantially from the rules of origin of the free trade agreements. They must not be confused with one another.

Our goods are detained at customs in Saudi Arabia. A “Certificate of Conformity” (SASO) is required. This was not the case with previous deliveries. Why is that?
In Saudi Arabia, declarations of conformity have had to be submitted for the imported goods when importing goods from abroad since summer 2013.
This certificate of conformity confirms that the products comply with the applicable standardsStandards usually refer to the rules of engineering. There are also, however, standards relating to other areas. One such area is accountancy, which is subject to the International Accounting Standards (IAS). Standards promote rationalisation, make quality assurance possible, encourage safety both inside and outside the workplace, harmonise testing methods in such areas as environmental protection, and generally help create a consensus regarding the economy, technology, science, administration and the general public.

Standards also promote the free movement of goods and services. Within the European Union (EU) and the European Economic Area (EEA), the application of harmonised standards makes it easier to prove conformity with basic health and safety requirements (CE marking) for a large number of industrial products. Standards are not created at state level, but by the very people who need them within the fields of finance, consumer rights, administration and science. Representatives from these fields invest their time and expertise in creating standards to suit both their own interests and the broader interest.

There are Swiss standards (SN), European standards (EN), international standards (ISO and IEC), as well as what are known as works standards. Switzerland’s body of standards (well in excess of 10,000 documents from every industry and sector of the economy and society) is maintained by the Swiss Association for Standardization (SNV).
and technical regulations.
Any import shipment must be accompanied by a certificate of conformity which has been issued by an authorized checkpoint. The certificates are required to guarantee customs clearance of shipments and to confirm that the products comply with the relevant technical requirements of Saudi Arabia, as well as the international, national and regional standards.
The certificates must be issued by the competent organizations designated by the Saudi authorities (such as SGS or Bureau Veritas) in the country of origin (i.e. in Switzerland) of the imported goods, and must prove that the imported goods comply with the technical standards in force in Saudi Arabia. Goods excluded from the new customs regulations include food and agricultural products as well as pharmaceuticals.

If we have a delivery with the clause “ex works”, we still prepare the export documents for the customer and free the goods for export.
Actually, you are not responsible for preparing the shipping documents. The seller is under no obligation to free the goods for export. However, it is difficult for the customer to prepare the shipping documents from abroad and to free the goods for export, so the EXW clause should only be used for national transport. The FCA clause should be used for international shipments. In the case of FCA, the goods are freed for export.

We indicated a lower value than the actual value of goods on the proforma invoice.
A proforma invoice is required for each export, so the import duties can be calculated in the country of destination. Therefore, the value of the goods must be specified for customs purposes. In other words, the product cannot be declared at a lower price.

We have selected the DAP clause for shipments to Brazil.
The responsibility for organizing customs clearance on imports and obtaining import licences lies with the purchaser. If there are delays or problems with this customs clearance process, demurrage can be incurred at the port, for which the seller must accept full responsibility in accordance with the 2010 INCOTERMS.
The customs clearance procedure is partly arbitrary in such countries and can take a long time.
DAP supplies should generally only be accepted in OECDAn international organisation for economic cooperation and development to which 30 mainly heavily industrialised countries, including Switzerland, belong. The OECD (Organisation for Economic Cooperation and Development) is the successor to the OEEC (Organization for European Economic Cooperation) which was founded in 1948. Its predecessor was originally charged with helping to rebuild ravaged post-war Europe. This remit included the application and distribution of the resources available under the Marshall plan.

Today, the OECD’s goals are: (1) Support sustainable economic growth; (2) boost employment; (3) raise living standards; (4) maintain financial stability; (5) assist other countries' economic development; (6) contribute to the growth of world trade.

The OECD is headquartered in Paris.
countries.

We have issued a certificate of origin for goods which were shipped directly from Germany to Qatar. Now we have to pay a customs fine. What have we done wrong?
Qatar tightened the import regulationsImport regulations determine the requirements and approval conditions for importing goods (products, foodstuffs, animals) or services in terms of duties, definitions of goods and documentation. They are particularly used to restrict the amount or value of goods that can be imported and are normally based on international trade agreements or on regulations imposed by the country of importation.

More information on Swiss import regulations is available on the website of the Swiss Federal Customs Administration FCA: http://www.ezv.admin.ch/index.html?lang=en
considerably in January 2013. Among other things, the certificate of origin has to be issued in the country from which the goods are exported. Find out more here.

We applied the outward processing procedure, although the goods were of Swiss origin.
The outward processing procedure is not necessary in all cases. If the compensating product can be imported duty-free based on the customs tariff or an originating product, there is no need for outward processing. In this case, the goods intended for outward processing can be declared for exportation in accordance with the general provisions (indication of purpose in the export customs declaration).

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