A current article in the magazine PraxisSteuerstrafrecht on the topic of criminal tax law and imports deals with customs law and, in particular, the risks of the DDP (Delivered Duty Paid) delivery condition for imports from China for online retailers. It explains how Chinese suppliers often offer customs declaration and tax payment as part of their service, which sounds tempting but carries legal and tax risks.
The complexity and pitfalls of this practice, such as changing the delivery route, the role of indirect representatives in the customs declaration and the tax consequences, are described in detail. The article makes it clear why caution is required both on the Asian side and on the German recipient side. The topic is also worth a few lines here.
Tax regulations in international trade clauses
DDP, DAP and CIP are international trade clauses that regulate the distribution of costs and risks between buyer and seller in cross-border transactions:
- DDP (Delivered Duty Paid): Here, the seller assumes all costs and risks of transportation to the buyer’s destination. This includes transportation costs, customs duties and taxes. The seller is responsible for the customs declaration and payment of all duties and taxes.
- DAP (Delivered At Place): With this clause, the seller bears all costs and risks up to the agreed destination. This can be a port, an airport, a construction site or a warehouse. In contrast to DDP, customs clearance is usually the responsibility of the buyer, which enables legally secure customs and tax processing.
- CIP (Carriage and Insurance Paid to): Here, the seller assumes all costs for transportation and transport insurance up to the destination. However, the risk is transferred to the buyer earlier than with DAP. As with DAP, the buyer is responsible for customs and tax clearance.
Customs declaration with obstacles
As a non-EU resident, a seller from China or Vietnam cannot declare customs himself! According to Article 170 (2) of the Union Customs Code (UCC), he needs an indirect representative for this. This indirect representative submits the customs declaration in his own name, but on behalf of the Chinese supplier. Acting as an indirect representative for the customs declaration entails various significant risks:
- Liability for customs debts: As an indirect representative, you assume responsibility for the correct customs declaration. If errors are made, such as incorrect tariff classification, undervaluation of goods or insufficient documentation, the representative can be held liable for any customs debts that arise.
- Legal responsibility: The indirect representative is legally responsible for compliance with all customs regulations. Non-compliance may result in legal consequences, including penalties or sanctions.
- Information risks: The indirect representative is dependent on the information provided by the principal. If this information is incomplete or incorrect, the agent bears the risk of a resulting incorrect customs declaration.
- Financial risk: The customs declaration can and will result in original financial obligations such as customs duties and taxes. The indirect representative may find himself in situations where he has to bear these costs in advance, especially if the principal does not meet his financial obligations.
- Risk of non-recognition: In some cases, the customs authority might not recognize the representation, especially if the representative is not duly authorized or qualified. This only further complicates the whole relationship.
It is precisely because of these considerable risks that freight forwarders, for example, are generally no longer prepared to get involved! As a result, the agreed customs declaration, however honestly it may be offered at the beginning, is not submitted in cases of doubt.
A lot of trouble …
Even if everything is supposedly settled in the end, a lot of trouble remains. As the recipient, it is better to ensure that the situation is clear and – as the quintessence of the article on criminal tax law suggests – it is better to dispense with the DDP clause. Not only do unnecessary costs arise, but there is also the threat of criminal prosecution.
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