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Customs duties

Customs duties are indirect taxes imposed on goods that are imported into, or exported from, a country. Because of a multitude of trade agreements, the European Union is considered as a single country for customs purposes. This means that intra-Community imports and exports are exempt from customs duties. These duties are payable on goods at the EU’s external borders.

How high customs duties will be depends on the good that is being imported and its country of origin. Customs duties are typically a percentage of the customs value, which, in principle, corresponds to the economic value (i.e. transaction value) of the imported good plus costs, if any, such as commissions, brokerage fees, packaging costs, delivery costs, royalties and licence fees.

Where doubts arise whether the customs value corresponds to the total amount paid or payable, there are several alternative ways to determine the customs value of a good. The value can be based on the transaction value of identical goods, the transaction value of similar goods, the deductive value method, the computed value method and the fallback or reasonable means method.

Collection by Customs

Everyone is liable to pay customs duties in principle, whether they are a business or an individual. All imported products must be declared and any customs duties are payable upon declaration. Once a declaration has been filed, it can be amended(link to page in Dutch) for a period of three years. In case of fraud, this period spans five years. The customs authorities are responsible for collecting customs duties (also called the 'Green' Tax and Customs Administration).

Tax disputes – demand for payment or additional assessment

It's not uncommon to have disagreements (link to page in Dutch) with the customs authorities. There can be different sources of conflict, but most disputes are about customs value and/or the applicable alternative value.

Such disputes, as well as customs checks, can lead to a demand for payment or an additional assessment being imposed, possibly accompanied by a fine. A demand for payment is basically a tax assessment for customs duties payable on the taxable event of importation.

Based on the European principle of defence that applies to customs duties, the taxpayer essentially has the right to be heard (link to page in Dutch) on the customs authorities’ intention to impose a demand for payment or an additional assessment before it is imposed. Not giving the taxpayer this opportunity may have implications for the demand for payment or additional assessment. It is important to keep this in mind.

If the taxpayer disagrees with the final demand for payment or additional assessment once it has been imposed, they have the option to submit an objection. The deadline for submitting the objection is six weeks after the date of the demand for payment or additional assessment. Taxpayers should remember to request a payment deferral in the notice of objection itself or in a separate document that is submitted at the same time. If they fail to make such as request, the amount specified in the demand for payment or the additional assessment will become payable immediately. The tax inspector’s decision on the objection is open to appeal with the tax court.

Are you involved in a dispute with the customs authorities about a customs declaration? Or have you been, or do you expect to be, served with a demand for payment or additional assessment? We know better than anyone what your rights are. We can help.

VAT on pleasure craft

It is not uncommon for Dutch-resident individuals with a pleasure craft to run into issues with the customs authorities. We have extensive experience dealing with such issues. To be able to operate a pleasure craft in the Netherlands, a person must have paid VAT on the vessel in the EU. Because of the free movement of goods in the EU customs territory, i.e. the single market that was established on 1 January 1993, a pleasure craft must have been subject to VAT somewhere in the EU to be able to be operated on European inland waterways. A pleasure craft entering/returning to the Netherlands from outside the EU customs territory may qualify as a taxable event of importation; at this time, customs will check whether VAT has been paid on the vessel.

In the Netherlands, individual taxpayers can request to receive a VAT declaration from Dutch Customs to serve as evidence of the fact that VAT has been paid in the Netherlands in the past and this VAT has not been refunded. In general, however, the customs authorities have a tendency to call into question the VAT status of pleasure craft. Please do not hesitate to contact us if you have an issue with the customs authorities about your pleasure craft or if you want to challenge their position.

Additional assessment for possession of excise goods

As we experience from our practice, the customs authorities are prone to impose additional assessments on persons who are, or have been, in possession of excise goods that have not been taxed as per the applicable excise duty legislation. This qualifies as release for consumption, which is subject to excise duty.

But other, more drastic, measures may be imposed as well. The customs authorities can decide to raise an administrative fine or institute criminal proceedings. Being in possession of excise goods that have not been taxed as per the applicable excise duty legislation is prohibited under Section 5(1)(b) of the Dutch Excise Act and qualifies as an offence under Section 97 of this Act.

Criminal prosecution

A customs matter can also be taken to criminal court (link to page in Dutch) under Section 10:5 of the Dutch General Customs Act, for instance if the importer or exporter intentionally files an incorrect and/or incomplete customs declaration (link to page in Dutch) or has committed fraud, for example by using forged certificates of origin. The Fiscal Information and Investigation Service (FIOD) will then start a criminal investigation, in which context it has the power to take coercive measures against a suspect. At present, criminal investigations into businesses and/or their importers and/or exporters are increasingly being initiated at European level. These investigations are conducted by OLAF, the European Anti-Fraud Office.

While the criminal prosecution route is not currently followed all that often, this does not mean that there is no need to worry about its consequences. The associated sanctions include a penalty order, a fine or even imprisonment.

If you are embroiled in a dispute with the customs authorities and you want to challenge their position, it is imperative that you follow the right strategy and seek expert legal advice. Hertoghs advocaten has the experience and the right expertise to bring your customs issue to a successful conclusion, whether it involves a dispute about a customs declaration or a threat of criminal prosecution. We are here to help.

 In a nutshell

Collection by Customs

Customs duties

Tax disputes

VAT on pleasure craft

Possession of excise goods

Criminal prosecution

Contact our specialists

A.A. (Anke) Feenstra

R. (Roelof) Vos

R.J. (Reinder) de Jong

R. (Ron) Jeronimus

D.C. (Diede) Molenaars

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