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Car customs clearance pitfalls and potential problems 

Economou & Economou Law Office > Uncategorized  > Car customs clearance pitfalls and potential problems 

Car customs clearance pitfalls and potential problems 

Car customs clearance pitfalls and potential problems 

As revealed by the ADDE in its annual report, revenue losses from non-payment of VAT and from under-valuation amount to tens or hundreds of millions of euros and indeed the Greek authorities are in cooperation with the authorities of other member states to catch the tax evaders.

In addition, in imported used cars, triangular sales for non-refund of VAT, the presentation of false documents and the driving of kilometres by dealers in order to pay a lower Registration Fee at customs are constantly being recorded and are increasing. Also many used car dealers who know that the authorities can “catch” them at any time have found another way to escape the clutches of the authorities.

The procedure is simple and familiar to the fraudsters as the whole customs clearance process seems to be carried out by the prospective buyer and private consumer and not by the dealer. Indeed, in order to lure unsuspecting consumers, the fraudulent traders even reduce the selling price of the vehicle to make it easier to convince their customers.

However, this poses huge risks for private consumers as they are the ones who are liable to any control by the authorities as the dealers are literally nowhere to be seen!

As a result of the above actions, private consumers are faced with huge fines and also with the “detention” of the vehicle by the customs authorities. That is, regardless of who now owns the suspect vehicle if the Customs Authorities find violations then the vehicle cannot be transferred regardless of whether the violations have been carried out by the previous owner!

According to APE, the auditors of the Independent Authority for Public Revenue, after systematic research and intensive checks, managed to identify 880 such cases of cars that have been purchased without having paid the taxes due to the public coffers.

As it turns out, the scam set up by dealers with imported used cars, with unsuspecting individuals as victims, has reached explosive proportions due to the economic crisis.

In recent years the situation seems to have got out of control as more and more dealers adopt unfair practices to avoid paying VAT in Greece in the name of profit and more competitive prices than others. As a result, the bleeding for public revenues is great, with tax evasion amounting to tens of millions of euros.

When used cars are imported, registration tax and VAT must be paid, unless it has been paid by the private individual who owned the car. Given that 99% of used car imports are leased cars, official figures show that they have to pay VAT.

According to the AADE data, the tricks of dealers of imported used cars include:

VAT evasion

An invoice is submitted to customs, which does not regularly verify the paperwork it receives, stating that the foreign dealer had purchased the car in his country from a private party (“at a profit margin”), so VAT is not due in the country of origin, nor in Greece.

In practice, the foreign trader has issued a different invoice from the one submitted by the Greek importer, as there is no special security marking on the documents due to the lack of a KBA.

Thus the e.g. The German dealer states that he sells the car without VAT, while in Greece another invoice is filed, which shows the German dealer selling a car that he has purchased from a private individual.

Alternatively, Bulgaria is used as a ‘surrogate’ country, only for invoicing purposes. So a Bulgarian company is set up by the Greek importer and invoiced to it by, for example, the German dealer, with true figures, so with VAT to be paid in the country of destination (Bulgaria).

The Greek importer is then invoiced and therefore Bulgaria does not claim VAT, since the vehicle was actually exported. The invoice from Bulgaria now states that it is with a profit margin, when in the previous transaction (Germany > Bulgaria) it was not, as the backward search is expected to be problematic.

 2. Concealment of equipment, false Euro declaration

In order to calculate the registration fee as mentioned, it is necessary to find out which model, Euro etc. the car is, as well as its equipment.

All this information is taken from the foreign, crossed out registration certificate and the certificate of conformity submitted, but no one checks if it is genuine.

Similarly, equipment is taken from the service book (usually has a sticker on the back with accessory codes) when this is also easily falsified.

Physical inspection of the car is not done, since the customs officer cannot figure out what model it is, what engine capacity, what equipment it has, etc.

What is decisive in falsifying the age, equipment, Euro or even the model is that customs only accepts “paperwork”, without being able to verify the data directly, but only through ex-post procedures, something that importers of used cars know well.

Customs clearance in the name of the customer

Dealers know that they are at risk of ex-post controls, and also do not want to show a profit on the sale and be taxed on it.

Also, customers often want a very low acquisition price to solve any “hidden assets” problems they have.

The combination of the above and the dealers’ methods of persuading customers at the last minute, results in individuals clearing cars in their own name, declaring also that the information submitted is true and genuine!

In practice, of course, it is most often found that the trader is paid afterwards, if investigated, and there is never a money trail from the individual to the foreign supplier.

The result is, as discovered by the Piraeus B Customs in 880 cases out of 3800 investigated in the period 2011-2016, when registration tax and VAT are due, and therefore smuggling is attributed, hundreds of private individuals are faced with confiscation and inability to sell their cars (when they find that they are prosecuted!).

Uncontrolled entry of second-hand vehicles, illegal storage

Cars that owe registration tax and VAT must be declared the day after they arrive in Greece at the competent customs office, while the corresponding registration tax and VAT must be paid on the 15th day of the following month of arrival.

Thus, thousands of cars enter the country without being declared anywhere and only when customers are found are they declared to customs in order to be cleared through customs and have their plates taken out.

As customs asks to ‘see’ the transport documents, the same hauliers who transported the cars often issue dummy bills of lading with ‘today’s’ date of arrival in order to maintain good cooperation with the dealer. The bill of lading (CMR) kept by the motor carrier during its actual journey to Greece does not indicate the chassis numbers of the transported cars, nor are they recorded at the entry gates.

Alternatively, on a home printer, a fake bill of lading is printed on a “today’s date” and submitted to customs, which again does not verify the documents it accepts.

The above practices are particularly dangerous for the individuals involved because the customs authorities acknowledge responsibility to the current Owner of the car which was illegally imported and registered in Greece with missing documents and unpaid duties, taxes and VAT, resulting in huge fines and convictions for tax administrative offences.

If you want to know more about customs offences follow the link below:

https://www.econlaw.gr/portfolio-item/customs-law/

If you want to be represented by the best lawyers in customs law available at Economou & Economou Law Firm in Greece, entrust us with your customs administrative case and we will, with an unlimited sense of responsibility and commitment, successfully represent you before any criminal civil and administrative court or authority anywhere in Greece. Contact us by sending us an email at econlaw@live.com or call us at (+30) 2103603824

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