Intellectual Property Law

Taxation of Imports in Ireland

By Martha L. Arias

Taxation of imports becomes an essential element to be aware of in e-commerce. E-commerce transactions involving the transfer of physical goods and parties from two or more countries, regardless of the business model used (B2B, B2C, C2C, etc.), usually demand the payment of taxes by the buyer in the importing country.  Import taxes may vary depending on the importing jurisdiction.  In Ireland, taxation of imports involves three specific forms of taxes, (a) custom duties; (b) excise duties, and (c) value added tax (VAT).  Following, there is a brief description of these taxes in Ireland.        

Customs Duties are taxes charged on imported goods from non-EU countries.  Ireland and most EU countries do not levy customs duties taxes on goods imported from other EU countries; except for sugar or sugar-based products and according to the EU's Common Agricultural Policy (CAP).  Ireland uses the EU's Common Customs Tariff (CCT) to determine the custom duties for non-EU members' importing goods, which currently range from 0 to 117%.  CCT, as most import custom tariff agreements, determine the customs duty to be paid based on three elements (a) customs valuation; (b) tariff classification; and (c) country of origin. 

Customs valuation is the price paid for the goods, called the "transaction value," which constitutes the base to assess the custom duty of a particular item.  In Ireland, additional charges such as insurance, transportation costs, know-how charges, copyright fees, are added to the "transaction value."  For this reason, some know-how charges or assembly of certain products are conducted in Ireland after the importation of goods to reduce customs duties.  When the importer cannot show the transaction value of the importing goods, this value is calculated through some methods including, the computed value method, the deductive value method, and the identical or similar value method.

Ireland's tariff classification is no different from most countries'.  Products are assessed custom duties based on the category they fit as established in the EU CCT.  CCT is based on the International Harmonized Commodity Description and Coding System, an international classification of products and tariffs that provides (somehow) uniformity to classification of goods for custom duties purposes. 

Country of origin to determine custom duties is a complex subject in international trade.  Basically, countries assess custom duties depending on the product's country of origin; some countries enjoy preferential treatment usually due to the existence of trade agreements.   Ireland's country of origin rules also include preferential and non-preferential treatment for import products.  Preferential treatment is afforded to products from EU member states or countries with which Ireland has special agreements.  The products must be made from local materials or manufactured in the country of origin.   Non-preferential treatment is given to certain group of products (usually those produced in the country or whose industry is being incentivized), i.e., some electronics, textiles, and footwear.  

Anti-dumping duties are a form of customs duty charged to products from non-EU countries.  Currently, Ireland charges anti-dumping duties to certain products from China, India, and Japan.    

Excise duties are duties levied on certain products from both EU and non-EU countries.  Some of the products incurring excise duties are tobacco, beer, cider,   hydrocarbons oils, and liquid petroleum gas. The excise duty rate depends on the type of product and quantity.  Currently, only products imported into Ireland are charged excise duties at the time of import in Ireland; products coming from other EU countries are assessed excise duties at the importer's place. These products must include an Excise Administrative Document showing the duty assessed to and paid by the importer of the product.  

In Ireland, Value Added Tax (VAT) is not required to be paid at the time of import for goods coming from EU members. Commercial imports pay VAT as follows; an EU e-commerce supplier sells goods to an Irish commercial customer and ships the Goods to Ireland.  The EU supplier classifies this sale as zero-rated VAT sale and enters the Irish purchaser VAT number.  When the product is received in Ireland, the purchaser does not need to pay VAT at the time of entry but it has to pay the VAT in his VAT returns.  The situation is different for individuals' imports.  The EU supplier cannot zero-rate the sale; he must charge VAT on the sale to the Irish individual according to the VAT rate specified by the supplier's country.   Goods from non-EU member countries must pay VAT at the time of import in Ireland or at the port of entry into the EU.  VAT is assessed based on the value of the goods and additional charges such as insurance, freight, etc.  There are some exceptions to the payment of VAT at the time of import.  For instance, when the importer has a warehouse and VAT payment is deferred, when the goods are in transit, goods imported by mail or courier and whose value is less than £200, when the goods are reported, goods imported due to the importer's change of residence, goods received by inheritance, and certain goods for handicapped.     

The above description of import taxes in Ireland provides a clear view of taxes incurred by products bought offline and online and imported into Ireland.  Most EU countries follow the same structure on import taxes.    

Full post as published by IBLS Internet Law Blog on August 06, 2008 (boomark / email).