German warehouse VAT

The European Court of Justice’s Advocate General (AG) has opined on a VAT treatment of goods held within customs warehouses. Eurogate Distribution GmbH and DHL Hub Leipzig GmbH

Eurogate operated a German bonded warehouse to hold non-EU cleared goods destined for export from the EU for its customers. Eurogate failed to record these exports on time, resulting in a breach of the German customs code 3-month rule. The goods therefore incurred German duties and import VAT on the late recorded movements. Eurogate challenged the imposition of German input VAT on the basis that duties had been charged. The AG ruled in favour of Eurogate on the basis that the imposition of duties was on a technicality, and the goods had not physically cleared into free circulation within the EU. They were therefore not re-imported, and no import VAT due.