Services related to imported goods where the value is included in the taxable amount are exempt from VAT in accordance with Article 144 of the VAT Directive (41, § 1, first paragraph, 2° VAT Code).

Transport costs to the first place of destination upon importation, as well as the costs of transport to another place of destination in the Community (if this place is known at the time of importation) must be included in the taxable amount upon importation (Article 86 of the VAT Directive / Article 34, § 2, first paragraph, 2° VAT Code).

In practice, we observed that it is not easy to prove that transport costs are included in the taxable amount of the imported goods at the time of customs clearance.

A complication may arise when the logistics service provider is not involved in the customs clearance process or when the clearance was done on the basis of an estimate (lump sum calculation of costs).

The question which then often arises is whether the VAT exemption should be subject to the condition that the logistics service provider must be able to prove that the costs are included in the taxable amount for customs clearance?

And what if it turns out that the transport costs are not included in the import taxable amount upon customs clearance? Does the VAT exemption remain in place? And can the authorities only ask for a correction of the import document to be rectified?

The Cartrans Preda judgment should hopefully clear up the confusion.

The case concerns a logistics service provider based in Romania that performs road transportation services.

The Romanian tax authorities had claimed VAT at the occasion of an audit.

The VAT was claimed on transport services linked to import transactions since i) no documents were presented showing that the transported goods were imported into the Union, and ii) Cartrans Preda could not prove that the value of the transport services was included in the taxable amount of the imported goods.

According to the Romanian tax authorities, it was irrelevant for the VAT exemption that (i) other documents accompanying the importation (in this case: the summary declaration and the CMR consignment note evidencing the delivery to the consignee) were presented and (ii) there was no evidence to cast doubt on the authenticity and reliability of the summary declaration or CMR consignment note.

The referring court asks whether this Romanian practice is compatible with the provisions of Articles 144 and 86(1)(b) and (2) of the VAT Directive. And whether the VAT exemption for transport services linked to imports can be refused on the grounds that no strict formal proof of the inclusion of the transport costs at the time of customs clearance was provided?

The outcome of this case may shed more light on the scope of the VAT exemption for services linked to imports and may bring additional comfort for logistic players when applying the VAT exemption.

We very much look forward to the outcome of this important case!