Judgment regarding customs and value added tax

The Supreme Administrative Court has examined how a customs debt, which arose due to non-compliance with customs legislation, is to be calculated when the goods are covered by preferential tariff measures in accordance with the provisions of an agreement regarding the customs union entered into by the EU with Turkey. In addition, the court has examined if the Swedish Customs was the right authority to take the decision to impose value added tax.

As a main rule, in conjunction with the importation of goods into Sweden from a country outside the EU, duty and value added tax are levied. The EU has entered into an agreement with Turkey according to which certain goods which are in free circulation in Turkey are subject to preferential tariffs treatment which entails that they can be imported into the Union duty-free. The fact that the goods are in free circulation may be certified by means of a so-called A.TR. movement certificate.

A Turkish company had principal responsibility for the transit procedure when four containers containing television sets were transported to Sweden from Turkey. The goods were not declared to customs upon entry into Sweden and a customs debt arose. The Swedish Customs designated the Turkish company as debtor for the customs debt.

According to a special calculation rule in the Union Customs Code, a customs debt may be calculated in accordance with the provisions on preferential tariff measures, on condition that the failure which led to the incurrence of a customs debt did not constitute an attempt at deception. The Supreme Administrative Court found no reason to question the certificates or whether the failure to declare the goods upon entry into Sweden took place by mistake. Accordingly, the customs debt would therefore be determined at the amount to which the preferential tariff measures under the agreement between the EU and Turkey would be calculated, i.e., SEK 0.

Value added tax is not to be charged in accordance with the Customs Act where there is a declarant, and the declarant is registered for value added tax in Sweden at the time of the decision regarding duty and acts in the capacity of a taxable person. In this case, the Swedish company that imported the goods had submitted a declaration before the Swedish Customs made its decision. According to the Supreme Administrative Court, there was thus a declarant at the time of the decision. Against this background, value added tax is not to be established by application of the Customs Act. Thus, it was incorrect of Swedish Customs to take the decision to impose value added tax and Swedish Customs’ decision regarding value added tax shall be overturned.

Read the judgment here: