Direct or indirect representation: who owes the duty

In direct representation, your customs broker declares in your name and on your behalf: you are the declarant and you owe the import duty. In indirect representation, the broker declares in its own name but on your behalf: the broker is the declarant, and you both owe the duty, jointly and severally [1]. Germany and the Netherlands apply the customs rules to import VAT as well, so the same split holds there [7] [8].

The two forms in the Union Customs Code

Any person may appoint a customs representative. Article 18 of the Union Customs Code knows two forms: direct, where the representative acts in the name of and on behalf of another person, and indirect, where it acts in its own name but on behalf of another person [1]. The declarant is the person lodging the declaration in its own name, or the person in whose name it is lodged [1]. That one definition decides who the declarant is in each form.

The representative has to tell customs that it acts on behalf of someone and say which form it uses. A person who does not say so, or who says so without being empowered, is treated as acting in its own name and on its own behalf [1]. Customs may ask for evidence of the empowerment [1]. German customs accepts it in writing, scanned and sent by email, or as a digitally signed authorisation [3]. Irish Revenue expects an authorisation along the lines of its own specimens, and states that a letter which only lets the agent use the importer's duty account is not enough [2]. On an Irish import declaration the agent enters code 2 for direct and 3 for indirect representation in data element 3/21 [2].

Who owes the import duty

The declarant is the debtor of the customs debt. In indirect representation, the person on whose behalf the declaration is made is a debtor too [1], and several debtors of one customs debt are jointly and severally liable for it [1].

Revenue puts the same in two lines: in direct representation the importer is responsible for any customs debt; in indirect representation agent and importer are jointly liable [2]. Under either form, whoever supplied information for the declaration knowing, or when they ought reasonably to have known, that it was false also becomes a debtor for the duty that was not collected [1]. And lodging a declaration makes the person concerned responsible for the accuracy of the information and the documents behind it, with the representative bound by the same obligations [1].

A parcel carrier's terms show the direct form in practice. DHL Express in Germany clears in the name and for the account of the recipient, under Article 19, and its terms state that the recipient thereby becomes a party to the customs procedure and the debtor of any import duty and import VAT [5].

Who owes the import VAT

Import VAT is national. The VAT Directive leaves it to the member state of import to designate who pays it [6].

• Germany. The rules for customs duties apply to import VAT accordingly [7], so an indirect representative owes it alongside the importer. The business for which the goods were imported deducts the import VAT as input tax [7].
• Netherlands. The customs legislation applies accordingly to VAT on import [8]. A business that holds the article 23 permit pays the import VAT through its periodic VAT return instead of at the border [8].
• Ireland. Postponed accounting lets a business registered for VAT in Ireland account for the import VAT in its next VAT return instead of at entry [9].

When your supplier sells DDP

A declarant has to be established in the EU customs territory, with exceptions such as persons who lodge a declaration only occasionally, where customs consider this justified [1]. A supplier outside the EU that sells on delivered duty paid terms and arranges the clearance therefore usually cannot be the declarant itself. A broker then declares in its own name on the supplier's behalf, which is indirect representation [1]. Under Article 77, the debtors are then the broker and the supplier, not you as the buyer, unless you supplied information you knew or ought to have known was false [1].

Rules for the representative

A customs representative has to be established in the EU customs territory, with a waiver where it acts for persons who need not be established there [1]. In the Netherlands every representative, direct or indirect, has to meet the criteria for authorised economic operators: compliance, a sound trade and transport administration, financial solvency and practical professional competence [4]. German customs adds that an indirect representative keeps the records for at least three years and presents them at an audit [3]; the code itself requires everyone involved to keep the documents for customs controls for at least three years [1].

What to agree with your broker

• The form, in writing. Direct or indirect, and for which procedures. It decides who the declarant is and who owes what.
• Whose numbers. Your EORI number on the declaration, and whose deferment account pays the duty; the guide on customs clearance costs shows what paying from the broker's account costs.
• A copy of each filed declaration. In direct representation it was lodged in your name, and the code, the origin and the value on it are the ones you answer for.

The guide on choosing a customs broker has the other questions worth asking before the first shipment.