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HMRC internal manual

Customs Special Procedures Manual

Discharge to free circulation: import VAT calculations

Import VAT is payable on discharge to free circulation. It is based on the value of the discharged goods, inclusive of duty. The VAT rate to be applied is that of the Member State of discharge at the date of discharge. No account is to be taken of changes in the value of goods following transfer from other IP traders, as this will have been accounted for under the normal VAT rules.

If traders wish to opt to discharge goods based on the tariff classification, customs value, quantity, nature and origin at import, they must request permission to use this.

If the authorisation holder is discharging several items with different duty rates the EU supplier should be asked by the authorisation holder to confirm the value for VAT of the discharged goods at import to that country.

IP goods which are discharged on their sale to a taxable person in another Member State may be eligible for relief from import VAT under ‘onward supply relief’, see:

Imports (IMPS)

VAT Notice 702/7: import VAT relief for goods supplied onward to another country in the EC.

The authorisation holder making the discharge may produce an INF1 (see SPE13615) which has already been endorsed by the Customs authority in the first Member State. If the authorisation holder does not have an endorsed INF1, send one to the first Member State to obtain details of the amounts due.

Council Regulation (EU) 952/2013, Article 86 (3); Commission Implementing Regulation (EU) 2015/2447, Article 85