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Fiscal Duty

Increased liquidity with fiscal duty

When importing goods, tax payments up to a significant extent become due immediately. It can take months until they are reimbursed, which affects the liquidity of a company. However, if a company from an EU member state imports goods via another EU member state, by means of fiscal duty or fiscal representation, it can avoid the immediate payment of turnover tax on imports – completely in accordance with EU legislation.

How does this work?

Fiscal duty/representation shall unburden companies from the administrative effort and the costs caused by pre-financing the turnover tax on imports. It is particularly intended for those companies which import goods into the EU from a third country. Here, they can implement the import via an EU member state in which they are neither resident themselves nor have any turnovers liable to tax payments before the goods are transported into the country of destination.

In this EU member state, which serves as import country, a fiscal representative manages the imports from third countries with respect to turnover tax. They also deal with the prescribed registration and declaration obligations (customs clearance).

What are the benefits of fiscal duty?

There is no prefinancing of turnover tax; the importing company thus has a liquidity benefit.
The company does not have to be registered for turnover tax purposes in the country of import.
The administrative effort is reduced significantly.

What preconditions apply?

A company may utilize the customs clearance by a fiscal representative under the following preconditions:

The goods must have their origin in a third country.
The company which has commissioned the import may neither be resident nor have any other taxable turnover in the EU member state in which a fiscal representative assumes the customs clearance.
The imported goods must not be destined for the country of import.
Immediately after the customs clearance, the goods must be transported into the actual EU country of destination (§ 5 section 1 No. UStG [Umsatzsteuergesetz [German value added tax act]).
The intra-community shipment and receipt must be registered via INSTRASTAT. The verification (signed bill of loading, acknowledged delivery confirmation) shall be provided to the fiscal representative.
A fiscal representative shall be commissioned by way of a separate authorization. A representation is only valid to the extent of the authorization granted.
Fiscal representatives can be forwarding agents, tax consultants, auditors, accountants and lawyers. They must have a fiscal representation in the EU member state in which they are active themselves.

Many CargoLine partners have a network of fiscal representatives with whom they have worked together trustfully for several years. They will be pleased to help with mediation.

By the way: Companies, which are resident in another EU member state than Germany may also utilize fiscal duty. German fiscal representatives support importers from other EU member states with the import via Germany in this respect. Most EU member states provide comparable options of fiscal duty/ fiscal representation in their respective territory.