No this is incorrect. The VAT is paid by all the steps in the line and reclaimed until it hits the final seller. That seller collects the VAT and pays it to the taxman. If you import something into a European country, you pay VAT but the VAT is reclaimable basically immediately. Many European countries allow you to postpone the payment of vat as long as you are VAT-registered in that country. You can then declare it to your VAT tax return and basically deducted in the same return. So although the vat might give some cashflow problems, you cannot put it in the same ballpark as a tariff or import tax.