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Research by Country/Region October 21, 2014  
European Union: Customs, Taxes and Documentation Requirements for IT Produts and Services Imports

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The following 15 countries are Member States of the European Union: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Portugal, Spain, Sweden, Luxembourg, and the United Kingdom. For specific information on regulations and procedures that are decided at the country level (and not the EU level), click on the country above.

A. Which countries are members of the Information Technology Agreement?

B. Customs documentation requirements for IT products

C. Software: duties and taxes, updates, licenses, electronically delivered

D. IT services: tax treatment and other regulations

E. Refurbished, used, or repaired computer equipment imports


A. IS THIS COUNTRY A MEMBER OF THE INFORMATION TECHNOLOGY AGREEMENT?
All EU Member States are signatories to the Information Technology Agreement (ITA). The following 15 countries are Member States of the European Union: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Portugal, Spain, Sweden, Luxembourg, and the United Kingdom.

Signatories to the Information Technology Agreement (ITA) have eliminated their import duties on a wide range of information technology products, including software and computer hardware. For more information on the ITA, and exact tariff elimination schedules of signatories, click here.

B. CUSTOMS DOCUMENTATION REQUIREMENTS FOR IT PRODUCTS

What are the documentation requirements for the physical import of software? For other information technology products?
(This issue is decided at the EU level.) When physical goods with software included are imported, the normal customs requirements as regards the supply of supporting documentation apply. Such requirements are usually limited to a document in support of the customs value, which in most cases need only be the relevant invoice.
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C. SOFTWARE: DUTIES and TAXES, UPDATES, LICENSES, ELECTRONICALLY DELIVERED DUTIES AND TAXES ON SOFTWARE IMPORTS

Are duties assessed on the intellectual property of the software or on the medium on which is it presented?
(This issue is decided at the EU level.) Customs Duties – these are not applied to IP, only to certain physical media on which the software is carried. These media are specified under the HS codes.

Value Added Tax (VAT) is a tax on consumer spending so as with Sales Tax it is private consumers who end up paying it. However, while the Sales Tax is only applied at the point of sale, VAT is applied at all points along the value chain. Each trader along the chain collects VAT on sales and is charged VAT on its purchases. In its VAT return the trader declares any eventual surplus or deficit to their national authorities and either pays or is reimbursed the difference. The effect of offsetting purchases against sales is to impose the tax on the value added at each stage of production – hence value added. The private consumer who is not registered for VAT absorbs the tax as part of the purchase price. Businesses therefore account for VAT rather than pay it.

VAT is applied to software imports in the EU. Off the shelf software supplied via a physical medium such as a disk is treated as a good for VAT purposes while customized software is treated as a service. When non-EU established US companies export software to the EU the following ground rules apply:
· Goods B2B – the importer of record accounts for the VAT
· Goods B2C – the exporter does not include VAT in the price but local VAT can be collected from the customer by the deliverer.
· Services B2B – VAT is chargeable and the business customer accounts for it using the Reverse Charge or Self-assessment procedure.
· Services B2C - In July 2003 the EU started applying VAT to sales by non EU based companies of electronically supplied services to EU based, non-business customers. U.S. companies that are covered by the rule change must collect and submit VAT to EU tax authorities. For more information, please click here.

    Is customized software treated differently than packaged software?
    (This issue is decided at the EU level.) For customs duty purposes customized software is not treated differently from off-the-shelf software.
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    1. IMPORTS OF SOFTWARE UPDATES

    What are the customs duties and tax implications for software sold with updates when the full sales price, including cost of updates, is shown on the original commercial invoice? Are duties and taxes paid on that amount? What happens when the updates are sent at a later date? Are duties/taxes applied again? If so, based on what value? How should information presented on the commercial invoice for the original and subsequent shipments to avoid paying duties/taxes more than once on a single sale?
    (This issue is decided at the EU level.) In most cases, updates sent at a later date are not dutiable or taxable if the importer can present documentation showing that the value of the updates was included in a previously processed commercial invoice. If updates are sent at a later date, and there IS NOT a clear notation on the original commercial invoice, custom duties and taxes will have to be paid again.

    At the time updates are sent, it is important to attach a copy of the original invoice. The original commercial invoice should clearly specify all the relevant aspects of the contract to facilitate customs charges on the original shipment as well as update shipments. The original commercial invoice should include the right to receive updates, the expected number of updates, and state that the value of the updates is included in the value of the original commercial invoice. Although it is often impossible to know the total number of updates in the first delivery, the original invoice should state the value and total number of shipments expected to follow. The updates that ARE NOT included in the original invoice will be subject to import duties and taxes on a value that will be determined independently.

    The charges that apply to the delivery of products on the original shipment (including the expected updates) are:

    1) Customs tariff/duty on the medium,
    2) VAT on the value of the medium,
    3) VAT on the value of the intellectual property.
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    2. SOFTWARE LICENSES: CUSTOMS CLASSIFICATION, IMPORT DUTIES, TAXES, OTHER


    Are software licenses classified in Harmonized System 4907?
    (This issue is decided at the EU level.) Software can be licensed for reproduction in the European Union. Documents, including licenses, are usually classified in tariff heading 4907. The software license may be shipped separately from the delivery of the product. As a right that is transferred via a paper medium (in most cases), licensing is not considered a sale, as such. Items classified in 4907 are duty-free as are software products classified under 8524.

    Are import duties/taxes applied? If so, on what cost/price base are they levied?
    (This issue is decided at the EU level.) Customs duties are applied only to physical products that cross a border. However, customs authorities would normally be interested to know whether a payment stated to be made in respect of a 'document' might indeed refer in practice to a payment for imported goods. A copy of the invoice accompanying the physical delivery of the product can serve to clarify the transaction involving the separate shipment of the license.

    Duties are assessed on the C.I.F. value; VAT is levied on the C.I.F. plus duty (where applicable) value of the software/license.

    For more specific questions in this area please contact the Commercial Service at the US Mission to the EU.
        Rosemary Gallant
        Deputy Senior Commercial Officer
        Phone: 011-32-2-508 2755
        Fax: 011-32-2-513 1228
        Email: Steve.alley@mail.doc.gov

        Chris Sherwood
        Commercial Specialist
        Phone: 011-32-2-508 2624
        Fax: 011-32-2-513 1228
        Email: Chris.Sherwood@mail.doc.gov

        Website: http://www.buyUSA.gov/europeanunion
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    Are withholding or other additional taxes applied on software licenses? If yes, how?
    (This issue is decided at the Member State level. Click here for Member State information.)

    If a U.S. license agreement is included in the packaging or is part of the installation/registration of shrink-wrapped software imported from the United States, would that agreement be binding on consumers in your market? If so, would U.S. or local laws pertain?
    (This issue is decided at the Member State level. Click here for Member State information.)

    3. SOFTWARE DELIVERED OVER THE INTERNET/ELECTRONICALLY DELIVERED SOFTWARE

    Are taxes applied to software delivered to the end-user over the Internet? If so, on what value?
    (This issue is decided at the EU level.) The EU treats downloadable software as a service. When US companies sell such software to EU business customers they do not include VAT in the price – it is the customer that handles the VAT accounting using the Reverse Charge or Self-assessment procedure.

    In July 2003 the EU started applying VAT to sales by non EU based companies of electronically supplied services to EU based, non-business customers. U.S. companies that are covered by the rule change must collect and submit VAT to EU tax authorities. Now, VAT must be collected at the rate applicable in the customer’s VAT jurisdiction. Non-EU based suppliers can choose which EU Member State (MS) tax authority they deal with for VAT purposes. They must then register with that authority by providing information including name, postal and electronic addresses, web sites, national tax number and a statement that the company is not already identified for value added tax purposes in the EU. The chosen tax authority will then provide the supplier with a dedicated number by email after which the supplier must submit a quarterly VAT return that includes details on the total value of sales and tax collected in each MS. The supplier remits tax collected to the tax authority that is then responsible for reallocating the VAT revenues among the other MS. For more information, please click here.
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    Would the situation be different if this software were instead delivered to a distributor who has a license to produce (replicate) and sell the software?
    (This issue is decided at the EU level.) For sales from the US to the EU, the B2B scenario outlined above would apply - it would be the locally VAT registered distributor that would account for the VAT. The distributor would then charge VAT for onward sales of the software to private individuals (B2C).

    What are the documentation requirements for the electronically delivered import of digitized products (i.e. software, movie downloads) over the Internet or other networks?
    (This issue is decided at the EU level.) No customs documents requirements.

    Must an electronically delivered software import be accompanied by a physical shipment of the same product?
    (This issue is decided at the Member State level. Click here for Member State information.)

    D. IT SERVICES: TAX TREATMENT AND OTHER REGULATIONS

    Are services (i.e. training, set-up, etc) relating to the sale of software taxed? If so, at what rate and based on what value?
    (This issue is decided at the EU level.) These services would normally be subject to VAT, but on the assumption they are being supplied to a taxable person*, the recipient would account for the tax under a Reverse Charge or Self-assessment procedure. Tax would be calculated on the amount of the consideration.

    Are U.S. IT solution providers permitted to send personnel into the country to set up hardware/software-related systems?
    (This issue is decided at the Member State level. Click here for Member State information.)

    Are special visa, work permits, and/or professional certification by an accredited body required?
    (This issue is decided at the Member State level. Click here for Member State information.)
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    E. REFURBISHED, USED, OR REPAIRED COMPUTER EQUIPMENT IMPORTS

    1. REFURBISHED COMPUTER EQUIPMENT

    Is the import of refurbished computer hardware, parts, and accessories (including toner cartridges) permitted?
    (This issue is decided at the EU level.) YES

    If so, what are the documentation requirements?
    (This issue is decided at the EU level.) The normal customs requirements as regards the supply of supporting documentation apply. Such requirements are usually limited to a document in support of the customs value, which in most cases need only be the relevant invoice.

    What value should be shown on the invoice?
    (This issue is decided at the EU level.) EC customs rules do not specify the form or content of commercial invoices (although for VAT purposes the provisions of the 6th VAT Directive will be relevant – this specifies “the price exclusive of tax and the relevant tax as well as any exemptions”). Customs value is usually determined on the basis of the relevant facts of a commercial transaction (i.e. the cost of the product, insurance, and transportation). The invoice usually provides the necessary information, subject to the importer's declaration in relation to customs value in the relevant customs document.

    How are duties and taxes assessed?
    (This issue is decided at the EU level.) In the same way as for all other imports of goods. For general customs related information, it is useful to refer to a customs information source (e.g., trade specialist, EC customs administration information center, website of most EC customs administrations) for more details.
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    2. USED COMPUTER EQUIPMENT

    Is the import of used computer hardware, parts, and accessories (including toner cartridges) permitted?
    (This issue is decided at the EU level.) YES

    If so, what are the documentation requirements?
    (This issue is decided at the EU level.) The normal customs requirements as regards the supply of supporting documentation apply. Such requirements are usually limited to a document in support of the customs value, which in most cases need only be the relevant invoice.

    What value should be shown on the invoice?
    (This issue is decided at the EU level.) EC customs rules do not specify the form or content of commercial invoices (although for VAT purposes the provisions of the 6th VAT Directive will be relevant – this specifies “the price exclusive of tax and the relevant tax as well as any exemptions”). Customs value is usually determined on the basis of the relevant facts of a commercial transaction (i.e. the cost of the product, insurance, and transportation). The invoice usually provides the necessary information, subject to the importer's declaration in relation to customs value in the relevant customs document.

    How are duties and taxes assessed?
    (This issue is decided at the EU level.) In the same way as for all other imports of goods. Duties, where applicable, are assessed on the C.I.F. value; the VAT is assessed on the C.I.F. value plus applicable duties. For general customs related information, it is useful to refer to a customs information source (e.g., trade specialist, EC customs administration information center, website of most EC customs administrations) for more details.
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    3. REPAIRED COMPUTER EQUIPMENT

    Are duties and taxes assessed on the re-import of repaired computer equipment?
    (This issue is decided at the EU level.) Customs duties and taxes are charged on re-imported goods that have been subject to repair or processing abroad. However, the EC customs rules allow for the non-taxation of the previously exported goods, provided certain conditions are met.

    How should the commercial invoice appear?
    (This issue is decided at the Member State level. Click here for Member State information.)



    RESPONSE INFORMATION

    The responses to issues that are decided at the EU level were prepared by U.S. Department of Commerce/Commercial Service at the US Mission to the EU. For more specific questions to any of the EU level issues, please contact:
        Rosemary Gallant
        Deputy Senior Commercial Officer
        Phone: 011-32-2-508 2755
        Fax: 011-32-2-513 1228
        Email: Steve.alley@mail.doc.gov

        Chris Sherwood
        Commercial Specialist
        Phone: 011-32-2-508 2624
        Fax: 011-32-2-513 1228
        Email: Chris.Sherwood@mail.doc.gov


        Website: http://www.buyUSA.gov/europeanunion
      * A taxable person can be an individual, a partnership, a company, or any other legal entity that independently carries out an economic activity.

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      Special Note: The above information is intended to serve only as unofficial guidance. In seeking to obtain government rulings in specific cases, it will often be necessary to refer to special laws, separate regulations and announcements, and case-by-case decisions by the government. Beyond the general guidelines shown above, legal counsel should be retained at an early stage of consummation of a major procurement contract, and before entering into any legal commitments.

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