VAT and customs duties in COVID-19 times in the European Union – do the ends justify all means?

VAT text on coins

 by Andreia Barbosa, PhD Candidate at the University of Minho

Given the international public health emergency, it is paramount to adopt measures to mitigate the global spread of the virus and its underlying impacts at different levels – including at the international trade level.

The adaptation of the tax regime related to international exchanges of goods has already begun to be made, given the need to facilitate (through the reduction of taxation) the acquisition of equipment for the prevention and combat of COVID-19. The European Commission itself has addressed a note to the General- Directors of Tax and Customs Administrations of the Member States (and the United Kingdom), clarifying what exceptional instruments are available to help disaster victims and which can be used to tackle this health crisis without precedents.

In Portugal, the VAT exemption already enshrined in the transmission of goods free of charge, for later distribution to people in need, made to the Portuguese State agencies or other philanthropic organizations [in accordance with the provisions of in articles 51 to 57 of Council Directive 2009/132/EC of October 19th, 2009, which determines the scope of Article 143 (b) and (c) of Directive 2006/112 / EC], was assumed as an instrument capable of promoting aid to the victims of the COVID-19.
Continue reading “VAT and customs duties in COVID-19 times in the European Union – do the ends justify all means?”

The Customs Union – an island under construction?

17151463241_5c37e1a40b_o

 by Andreia Barbosa, PhD student at the Law School of UMinho

“No country is an island”[i]. It is an idea that is entirely valid in the context of the European Union and is particularly relevant in the area of ​​the Customs Union. Although the European Union represents only 6.9% of the world’s population, the volume of trade with the rest of the world corresponds to approximately 20% of the volume of world exports and imports[ii].

In fact, and in order to meet the characteristics that have been identified as necessary for a perfect Customs Union, there can be no frontiers among the Member States, although their territories may be separated by sea.

In particular, in the field of the European Union, the levying of customs duties between Member States no longer makes sense in view of the establishment of the internal market. Thus, the 1957 Treaty of Rome prohibited customs duties and charges having equivalent effect in trade between Member States. A Customs Union emerged, where national borders were replaced by the limits of the customs territory of the Union.

It happens that the Customs Union is not – and cannot be – an island. Commercial contact with the rest of the world is essential for the very survival of the Member States, making it reasonable that trade with third countries is sometimes facilitated, in approximate terms to those that exist internally. Free trade agreements are particularly important in this area.
Continue reading “The Customs Union – an island under construction?”