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2018 Report - The role of customs authorities in exempting exports from VAT in the course of non-commercial travel with focus on : threshold values in the EU and automated export processing systems

Nov 11, 2018

0 Executive summary
We reported several times to the Public Accounts Committee (PAC) on the introduction of value thresholds to govern exemption of exports from VAT in the course of non-commercial travel. The deliberations held by the PAC about the value threshold had given rise to the following questions:

  • whether and in what amount other member states of the European Union (EU) have introduced such value thresholds and
  • which member states have an automated processing system in place.


The German SAI sent a questionnaire on this topic to 27 EU Supreme Audit Institutions. We received responses from 25 SAIs. This report presents the results of our survey.

0.1
Where private individuals not resident in the European Union buy goods for private consumption and export them from the EU in the course of non-commercial travel, these goods are generally exempt from VAT payable where the total value of the delivery exceeds €175. This is stipulated by the European Union Directive on the Common System of Value Added Tax. However, the EU member states may derogate from this value threshold and grant tax exemptions for goods where the invoiced amount is lower.

0.2
In Germany, the goods are exempt from VAT from the first cent. In the EU apart from Germany, only Spain, the Republic of Ireland and the United Kingdom do not apply any value threshold.

Without a value threshold, Germany waives tax revenues in the range of hundreds of millions of euros and at the same time accepts extra expenditure in the range of tens of millions of euros. By means of a value threshold, Germany would be able to collect additional tax revenue without burdening taxpayers.

0.3
A value threshold would serve to reduce administrative burden because the Customs Administration would be relieved from routine work. Disadvantages for German retailers in the border region would not arise. Particularly for Swiss nationals, there is a high incentive to do shopping in Germany. The decisive factors are the differences in price and wage levels between Germany and Switzerland and the favourable exchange rate between the euro and the Swiss franc.

0.4
A survey developed by the German SAI has shown that the member states did not encounter any difficulties in cross-border trade when they introduced national thresholds.

0.5
Several member states use an electronic self-processing system for non-commercial travel to speed up customs procedures. The Federal Ministry of Finance should rely on this expertise when an automated processing system is to be developed in Germany.

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