New Year's post about the importance of making music by ceramic angels

While shepherds watched their flock by night,
They saw a bright new shining star
They hear a choir sing
The music seemed to come from afar.

Hark, now hear the angels sing,
A king was born today,
And man will live for evermore,

Because of Christmas Day.

Wishing you a succesful and happy New Year, I would like to shortly recall an anecdote from the times before my current job in fine art shipments. Those who know me have most probably already heard it.
Back then I used to work for a world leading manufacturer of seasonal decorations and we were exporting a great deal of goods to Switzerland. Among our products, we had a wide range of ceramic angels for all possible occasions - baptism, first communion, wedding, Christmas, Easter, falling in love, baby shower etc.etc. which for long years used to be declared as the HS Code

69139093 Statuettes and other ornamental articles of earthware or fine pottery.

Everyone was happy about that until one day, when the Swiss customs suddenly doubted this classification. We had to send samples of our angels to the Main Customs Office in Bern, where as you suspect, Swiss guys are even worse than the Germans, as far as accuracy and the customs go :)

Our classification was considered quite correct with one exception: from now on, angels making music have to be declared as:

95051090 Christmas articles (excl. of glass, candles and electric lighting sets, natural Christmas trees and Christmas tree stands)

The notion of angels singing is present in many Christmas carrols, but not really to be explicitely found in the Bible itself. But the Swiss customs just seem to know better than the Bible, what angels were doing during the Nativity :)

Art fair aqusitions and VAT

As usual, with Art Basel Miami Beach going to its end, many clients ask, if and how much import tax for their aquisitions will apply, if bringing them back to Europe. Some of them were promised by the selling gallery that no import tax will be due at all, as the purchased art work "originally comes from the EU and can be reimported free of any import charges". 
Unfortunately,  I very often have to disappoint them with my answer.

Let me shortly explain how it works and why doesn't it work the way clients expect it.

Here some general rules for invoicing the VAT between the EU countries (applies to VAT payers of course):

1) a sale within the EU is in customs' terms not an export. It is subject to VAT!

2) if the buyer is another EU-VAT payer, like another gallery, the invoice may be issued net and the transaction has to be declared in the so called quarterly recapitulative statement. Sounds terrible, I know :) but means just that the finance authorities in the buyer's country are informed about this purchase and that this purchase will be taxed in the buyer's country of tax residence, with the local VAT rate.

3) if the buyer is a private person, like an art collector, the ivoice should be issued with VAT, according to the rate valid in the seller' country.

4) regardless of the purchaser being a private person or a company, if a sale between an EU seller and an EU buyer takes place at a fair held outside the EU (like all editions of Art Basel), the acquired art works are seen by the customs as third-country goods and are as such subject to import VAT upon return. Taxation cannot be legally avoided that way! 

The advantage of  fair aquisitions is the import VAT rate that is usually much lower than of the regular sales VAT. In Germany it is 19% and 7%, so the difference may be considerable. Still, please note, that faking fair sales to lower the VAT amount payable by your client is encouragement / contribution to tax evasion and as such not quite legal :)

As for the famous "tax-free reimportation", it is commonly practised indeed but possible mostly for the actual owner/exporter of the art works or in cases, in which a non-commercial character of such imports is proven and comprehensible for authorities (like a temporary travelling exhibition).

Of course there are may cases in which a tax free reimport by the buyer "somehow" worked, mostly due to negligence of individual customs officers...but still - it was definitely not correct :) Generally, the customs check reimport docs much much more thorough than all other ones, as they are well aware of tax fraud practises.

Wish you luck with your return shipments and I'm warming up for all the "charming" Miami imports and reimports awaiting me very soon :)

About customs, love, pizza, the new Union Customs Code and Kafka

„We have a saying in our office: He, who is lucky at customs, is unlucky in love. So jugding by you recent 'luck' with import entries, you must be having the time of your love life now, hm?”, said a customs officer to me yesterday on the phone... :) 

Very frustrating indeed but I do have an impression that to deal with the EU customs one needs more luck than knowledge or experience. If having a customs issue, you ask three agents for a solution and receive three different answers – they are probably all three true and right! It suffies that every agent talked to a different customs officer – and here we are!

Please remember that the law is not made by agents or customs brokers. If an agent emails you for the 10^th time to ask for the 20^th document, needed for a clearance, they are not doing it for fun or to annoy you. They are just conveying messages and requirements from the customs and are just as sick & tired with authorities' whims as you are.

However incredible it sounds, EVERY customs office, at least in Germany, works in a bit different way and officers have some freedom in interpretation of the law. In the meantime, I more or less know what is forbidden and what is allowed in the five customs offices with whom I work most often. Unfortunately, I have no guarantee that these ways of proceeding are going to work with a sixth one. And every other EU country has its own specialities and variations anyway.

On May 1^st 2016, a new Union Customs Code was introduced, as an attempt to unify and standardize customs procedures in the EU. So far, it has led to even more chaos and confusion, as every office introduces new regulations gradually and in its own pace and thus you can never know, if already the new or still the old ones are valid.

Below some authentic quotes from customs officers, which made me pray for luck, more than learn the new customs law:)

„No, you cannot declare it this way and I don't care that all other customs offices do accept it!”

Me: Could I order a customs inspection in the ethnographic museum? The objects are very fragile and really shouldn't be unpacked anywhere else.
Customs: You cannot just call here and order a customs officer, an officer is not a pizza!

„Yes, my other colleague allowed such a procedure several times but he was simply wrong.
I wouldn't have and he shouldn't have.”

„Aha, I see. Our colleagues from the other customs office told you to declare this way?
They have always been known for being lazy and having no idea.”

„Yes, this procedure was still possible last week; however, it actually should have been forbidden since May, the new Union Customs Code, you know, but we just haven't introduced this prohibition till yesterday.”

Customs: „I need to inform you that tax-free temporary imports for restoration purposes are no longer approved by our customs office and the consevator has to deposit 20.000 EUR, otherwise the artwork won't be released to him. It may be that our colleagues in Freiburg and Dresden allow it but we don't. Since last month not anymore. You see: the new Union Customs Code.”
Me (in shock): ….????
Customs: „We are actually about to fully waive temporary imports for commercial consignees. All such importes will be taxed in the future.”
Me (still in shock): But when?
Customs: „We don't know. We're still discussing. We're actually not entirely convinced that it is a good idea. But this new Union Customs Code....we'll see and let you know.” 

4 months later – no news – apparently still discussing :)

Kafka should have written a novel titled "A Customs Clearance" :) It'd surely be just as good as "The Trial".

Luckily, there are SOME helpful and competent customs officers, and SOME rules that are valid in the whole EU. A post about customs basics to follow soon!