As of 1 May 2016, the new Union Customs Code entered into force, having a significant impact on the definition of the exporter in the European Union. Companies that are not established in the EU will in some cases no longer be able to act as exporter of record. This new regulation also concerns Swiss principal companies, which often own goods in warehouses in the EU. Many questions were raised regarding the transitional period and the introduction of the Automated Exporter System (“AES”). 

Are non-EU established companies totally excluded?

As indicated in the guidance of the European Commission the person who disposes of the goods to be exported or otherwise motivates the exportation does not qualify as an ”exporter”. Parties involved in the export transaction should establish other contractual or business arrangements in order to determine the person who is responsible for the export of the goods outside of the customs territory of the Union.

This means that non-EU established companies are not excluded from exporting goods out of the Union. They can still export goods when such a non-EU established company appoints:

• An indirect customs representative established in the EU who will then have the power to export the goods out of the Union; or
• A third party established in the EU to export the goods out of the Union. The third party will then take full customs responsibility.

What are the potential VAT consequences?

The UCC’s new ”exporter” definition also raises a number of concerns with respect to VAT. A supply of goods, whereby goods are dispatched or transported outside of the EU a) by or on behalf of a vendor, b) by or on behalf of a non-EU established customer, is a VAT exempt export (also known as a VAT zero-rated export). In order to claim this, the supplier must be able to prove that the goods have left the EU.

According to our experience the assessment of proofs to demonstrate that goods have left the Union can differ between national tax authorities. The importance of the customs export declaration is however self-evident. When claiming a VAT exemption it is appropriate to discuss with the advisor and in specific cases with the competent authorities to avoid any uncertainties.

What does this mean for you?

For non-EU established companies willing to export goods outside of the Union, appointing an indirect representative or a third party established in the EU will be necessary. In addition, content of the customs export declaration should be carefully considered in view of the new applicable customs rules.

Our recommendation for companies claiming a VAT exemption for export is to check their proofs demonstrating that goods have left the EU with the competent tax authorities in the country of export.

What to do?

For non-EU established companies that would like to continue exporting goods outside the EU after 1 May 2016, we advise the following:

• Make the necessary arrangements with an indirect representative of your choice and to adjust procedures and systems in order to complete the customs export declaration in accordance with the new rules. 
• In addition, possible supply chain adjustments and other arrangements should be identified and analysed. 

Benno Suter - Partner, Indirect Tax

Benno is the Lead Partner for our indirect tax practice in Switzerland covering all industries. He has about 20 years’ experience as corporate and indirect tax advisor and many years in-house experience as a tax director of a leading Swiss multinational SMI company. He is a member of the prestigious Swiss VAT competency group of the Swiss Institute for Certified Accountants and Tax Consultants.

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Jonathan Baumeler - Assistant Manager, Indirect Tax

Jonathan is an Assistant Manager and Customs expert at Deloitte in Switzerland as well as a member of the EMEA Center of Excellence for Customs & Global Trade. He had a broad and deep knowledge in Customs & Excise as well as in additional regulations governing cross border compliance. Jonathan holds a Degree in Business Administration from the Berne University of Applied Sciences and is a Swiss Certified Customs Expert.

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Yannick Maes - Senior, Indirect Tax

Yannick is a Senior Associate in the Customs & Global Trade practice of Deloitte in Switzerland. Yannick specializes in Global Trade Strategy, Free Trade Agreements, Automation (SAP GTS), Export Controls and has deep working knowledge of EU as well as Swiss Customs Regulations. 

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