Drittland (Non-EU territory)

A Drittland (literally "third country", also "non-EU country") is any territory outside the EU customs and VAT area. Sales to Drittland customers follow a different tax and shipping regime than sales within the EU.

What counts as a Drittland

The EU customs area includes the 27 EU member states. Drittländer include:

• Switzerland (EFTA, separate customs area despite EU-style economic integration).
• United Kingdom (since Brexit, 1 January 2021).
• United States.
• Norway, Iceland, Liechtenstein (EFTA, separate from EU customs).
• All Gulf Cooperation Council states (UAE, Saudi Arabia, Qatar, etc.).
• Japan, Hong Kong, Singapore, Australia, etc.

Notable edge cases:

• Canary Islands, Ceuta, Melilla are part of Spain politically but outside EU VAT and customs. Treated as Drittland for VAT purposes.
• Channel Islands (Jersey, Guernsey) are also outside EU VAT.
• Monaco is inside EU customs and VAT despite being independent.

Tax effect for the seller

• VAT-exempt export under § 4 Nr. 1a UStG. The dealer issues an Ausfuhrlieferung invoice with no German VAT.
• Export documentation required. ATLAS export confirmation or equivalent proof must be archived for 10 years.
• No EU recapitulative statement. Unlike intra-community supply, Drittland exports do not enter the Zusammenfassende Meldung.

Tax effect for the buyer

• Import duty at the destination country's rate (4.5 percent on wristwatches into the EU, similar bands elsewhere).
• Import VAT or sales tax at the destination country's standard rate (US states impose state sales tax depending on jurisdiction; UK applies 20 percent import VAT; Switzerland applies 8.1 percent import VAT).
• Customs broker fees for declaration, typically €30 to €150 per shipment.

DDP versus DAP

Two delivery terms matter for watch dealers shipping to Drittländer:

• DAP (Delivered At Place): the seller pays for transport to the buyer's country; the buyer pays import duty and VAT on arrival. The default for most dealer shipments.
• DDP (Delivered Duty Paid): the seller pays for transport, import duty, and import VAT, delivering the watch to the buyer's door with all charges settled. More convenient for the buyer; higher logistical cost for the seller.

Many luxury watch dealers offer DDP to US, Hong Kong, and Singapore as a competitive feature. DDP requires either an in-country tax representative or a logistics partner that handles the import compliance.

Returns from Drittländer

A watch shipped to a Drittland buyer who returns it triggers a Rückwaren re-import in Germany. With proper documentation, the dealer can reclaim the outbound export and avoid paying German VAT a second time. Without the re-import declaration, the dealer's own watch is effectively imported and taxed.

Related: ausfuhrlieferung, customs, innergemeinschaftliche-lieferung, insured-shipping.