VAT'S IMPORTANT - NEWSLETTER 2023 - 05
NEWSLETTER 2023 - 05
Inward processing procedure
Swiss Federal Administrative Court outlines the conditions in its ruling
of August 29, 2023 (A-1485 / 2022)
WHAT IS IT ABOUT?
Inward processing is the temporary importation of goods for processing, treatment and repair. All goods crossing the Swiss customs border must be declared to Swiss customs. For goods that are temporarily entering the customs territory for processing, you can use the inward processing procedure instead of the normal import procedure. Under the inward processing procedure, the goods to be processed can be temporarily imported duty-free or with the right to a duty refund. In certain cases, exemption from value added tax on imports (import tax) is also possible. This traffic is subject to authorization.
CONDITIONS OUTLINED IN THE COURT RULING OF AUGUST 29 - A-1485 / 2022
In its ruling, the court states that the conditionally suspended customs duties do not become due if the inward processing procedure is duly completed. This is the case if the holder of the authorization has complied with the conditions set out in the authorization. The license must
a) submit the application for definitive duty reduction or duty exemption within the prescribed period;
b) proof that the goods brought into the customs territory have been re-exported as compensating products within the prescribed period; and
c) provide evidence of the quantity of processed goods and waste generated.
If, on the other hand, the conditions are not complied with and thus the inward processing procedure is not properly completed, import duties will be levied. However, this does not apply if the processed goods have been demonstrably exported within the set time limit; the corresponding request must be submitted within 60 days of the expiration of the set time limit.
KEY MESSAGE OF THE COURT CASE
The complainant argues that a reinstatement of the time limit is justified if the defaulting person was prevented from acting in time due to an error. The complainant further argues that the customs administration's conduct has reinforced her error: since the customs administration did not draw the complainant's attention to the default after the expiry of the first settlement deadline, she remained in the mistaken belief that she had fulfilled all her obligations.
The court states that ignorance of legal regulations is not considered to be an obstacle through no fault of the complainant, which justifies the restoration of the deadline. In addition, the court ruled that high demands are placed on the customs debtors with regard to the duty of care: they must inform themselves in advance about the customs duty and the respective clearance procedures; if they fail to do so, they must bear the responsibility themselves.
In addition, the court is of the opinion that the complainant's argument that the timely settlement of accounts is a "mere formality" is also incorrect. Contrary to the complainant's statements, the uniform application of procedural rules in conformity with the law serves legal certainty. Even if legal certainty should not be endangered by a late filing, the "mere formality" of the (timely) settlement cannot have any influence on the examination of an application for the restoration of a time limit. The restoration of a time limit is linked to formal and material requirements. Under the material conditions, the reasons that led to the delay are examined. The type of time limit is not examined.
CONCLUSION
Therefore, it must be emphasized that all formalities must always be checked and respected. It should not be forgotten that the tax authorities impose a high level of due diligence on the taxpayers. These must be fulfilled in order not to be confronted with unexpected tax or customs claims, as stated above in the ruling.
We at terraVAT always support an open discussion with the SFTA upfront via a written ruling request as this may minimize sleepless nights.
If you have any questions, please do not hesitate to contact us.
Your terraVAT team is happy to assist.
With best regards
Your terraVAT Team
Sabrina Frey Florian Hanslik
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