Customs, tax & compliance VAT / KDV

VAT (value added tax) on imports and exports

A tax on consumption. Exports are zero-rated in most countries, so the exporter can reclaim the input VAT it has paid. On imports, VAT is collected at customs on the customs value plus duty and other taxes, and a registered importer can usually deduct it, so the main impact is on cash flow. Between VAT-registered businesses in intra-EU trade the reverse-charge mechanism applies. Standard rates vary widely (e.g. 20 % in Türkiye, 19 % in Germany), and some raw materials enjoy reduced rates.

Related terms

Import duty (customs tariff)

A tax charged on imported goods on their customs value, according to the HS code and country of origin. It is usually a percentage of value (ad valorem), sometimes an amount per quantity (e.g. EUR per tonne). The rate can change with the general WTO rate (MFN), free trade agreements (zero or reduced rates), additional duties or anti-dumping measures. In landed-cost calculations it is computed on the CIF value including freight and insurance and is then added to the VAT base.

Inward processing relief (IPR)

A customs regime that lets manufacturers import raw materials used to make export products without paying duty, anti-dumping duty or import VAT (or against a guarantee). It is granted through an inward processing authorisation – in Türkiye the DİİB certificate – and the export commitment must be discharged within a set period. It is a major cost advantage for exporters sourcing raw materials at world prices.

Delivered Duty Paid DDP

The Incoterm with the greatest obligation for the seller: the goods are delivered in the buyer’s country, cleared for import with duties and import taxes paid, ready for unloading. It is hard to apply if the seller has no tax registration or authorised representative in the importing country, and costs such as non-recoverable import VAT can arise. Because of these risks, raw material trade usually prefers DAP with the buyer handling import clearance.

Explained in the trade handbook

Trade handbook