EU-UK Trade and Cooperation Agreement: Rules of Origin

Introduction

  • The EU-UK Trade and Cooperation Agreement (EU-UK TCA) has eliminated tariff duties for trade between the EU and the UK where the relevant rules on origin are met.
  • A claim for preferential tariff treatment for imports into Ireland can be made only where the goods are of UK origin.
  • A claim for preferential tariff treatment for imports into the UK can be made only where the goods are of EU origin.
  • There is full bilateral cumulation, including both materials and processing, between the UK and the EU, allowing EU inputs and processing to be counted as UK input in UK products exported to the EU and vice versa.
  • To note, the TCA does not include diagonal cumulation which would include parts sourced from third countries.
  • This means that products imported from a third country to the UK which do not undergo a substantial transformation such as processing will not qualify for access to the EU tariff-free. In some cases, the requirements are less restrictive for a set period or for limited quantities of goods.
  • Any goods exported from either the EU or a third country to Britain (which are not held under customs controls) and then subsequently re-exported to the EU will incur tariffs. This principle also applies to goods moving from Britain to the EU and back to Britain. These provisions mean that distribution hubs in the UK must act, for example creating customs warehouses, if they wish to continue to move goods through their centres and onwards to the EU.

UK unilateral decisions

  • EU material will be recognised as originating in all their continuity trade agreements, including with Japan and Canada.
  • Businesses which import components from outside the EU are granted some specific exemptions from elements of rules of origin declarations on arrival in the UK until 1 January 2022. However, businesses will still need to abide by the origin rules under the TCA and may be required to demonstrate compliance with declarations retrospectively.

Further information

  • Importers into Ireland claiming the preferential tariff rate must be able to prove UK preferential origin and must claim the preferential rate on their import declaration.
  • For details on the precise rules of origin requirements under the TCA please consult the detailed annexes.
  • For the Import Declaration Codes of goods of EU Origin on their subsequent re-import in AIS and AEP, see here.
  • For any enquires on this, consult the Origin and Valuation Unit through MyEnquiries, email: Origin&QuotaSection@revenue.ie.

Free circulation

  • The terms release for free circulation/placing on the market mean released on to the EU or UK market for sale and consumption. For Non-EU goods imported into the EU, all custom duties must be paid before the goods can be released for free circulation. 

Compliance / Distribution Options

Where the movement of the goods through the UK is a requirement, a business could use the UK landbridge and the transit procedure. Transit is a customs procedure that allows goods to be moved across international borders under customs control. A guarantee is required to secure all charges on the goods. Further information on Transit is available here. Examples of using this procedure are contained in the scenarios outlined below.

Where the movement of the goods through the UK is a requirement, a business could use the UK landbridge and the transit procedure. Transit is a customs procedure that allows goods to be moved across international borders under customs control. A guarantee is required to secure all charges on the goods. Further information on Transit is available here. Examples of using this procedure are contained in the scenarios outlined below.

You can re-import goods into the EU without payment of Customs Duty and VAT if they are originally exported from the EU and have not received a treatment other than

  • treatment altering their appearance or
  • necessary treatment to repair them, restore them to good condition or maintain them in good condition.

VAT relief only applies if the goods are re-imported into the EU by the same economic entity that originally exported the goods out of the EU.

For goods that are subject to SPS requirements, they will be treated as an import from a third country and will be subject to full import controls.

The returned goods relief (RGR) is claimed on a standard import declaration meaning full import formalities apply.

Specific conditions apply if relief from import duty is claimed for goods which have benefited from measures laid down under the common agricultural policy on export out of the Union.

Import VAT is chargeable where the goods are imported by a different economic operator to the one who completed the export formalities. The following documentary proof is required by Revenue on importation to Ireland:

  • Export Declaration if originally exported from Ireland.
  • The returned goods information sheet (Form INF 3) completed by the competent authorities in the exporting Member State, if originally exported from a Member State other than Ireland.
  • Proof that the goods have not been altered e.g., by way of your inventory system or other means of tracking the import/storage/re-export from UK of those goods.

Compliance / Inward and Outward Processing

Business must apply to HMRC in the UK for an Inward Processing authorisation. This allows goods to be imported for processing/manufacturing under customs supervision without them being subject to import duties. The duty liability in the UK is discharged if the goods are re-exported (e.g., to IE/EU). However, if the goods are released to free circulation in the UK, then the duty and other charges become payable at this time. See HRMC advice here.

Businesses may temporarily export EU goods for processing or repair in a non-EU country. You can claim full or partial relief from import charges when these goods are re-imported and released for free circulation in the EU. For more information about outward processing, see here.

What simplification procedures are available from the Revenue Commissioners?

Applicants for simplification procedures must have a valid EORI number and be established in the customs territory of the EU. They are subject to an application and assessment process by Revenue.

Centralised Clearance (CC)

  • Authorises a holder to lodge, or make available, at the customs office where they are established, a customs declaration for goods which are presented to customs at another customs office within the customs territory of the Union. Further information on Centralised Clearance is available here.

Authorised Economic Operator (AEO)

  • AEO is not a Simplification but a customs status and is for secure and compliant traders and entitles them to enjoy benefits throughout the European Community. See here for more information and the AEO benefits.

Scenarios / Q&A

EU goods located in the UK before 31 December 2020

Q: If not altered or processed, can they return to the EU without paying customs duties? 

A: The goods, located in the UK, are not of EU preferential origin at the end of the transition period as goods can be considered as originating under the EU-UK TCA only after the 31 December 2020. These goods are not originating in the UK either as they have not acquired UK origin under the Rules of Origin in the TCA. Therefore, the TCA tariff preferences cannot be claimed. However, returned goods relief (duty relief) may be used if the requirements for returned goods are fulfilled. In this scenario, and in all scenarios that follow, animal products imported from Britain are subject to official controls from 31 December. These apply even if these were EU goods located in the UK before 31 December 2020. 

 

Moving EU originating goods through the UK after 31 December 2020 

Q: They are brought into the UK from the EU under a T2 procedure and remain under customs control in a customs warehouse. They are not altered unless for preservation or splitting of consignment purposes. Can they come back to the EU without paying duties? 

A: When EU originating goods are brought into the UK from an EU member state under a T2 transit procedure, remain under customs control in a customs warehouse and undergo no production/transformation while in the UK, the goods can be returned to the EU under another T2 Transit procedure. This is provided that they have not been altered other than for preservation or splitting of consignments without replacing the packaging. There is a requirement to have an Approved Consignor’s Premises authorisation in the EU and to have a customs warehousing authorisation in the UK. See here for further information.

 

Q: They are exported to the UK and released for free circulation there. They are not altered or processed. Can they come back to the EU without paying duties? 

A: These EU Origin goods have not acquired UK origin. The EU-UK FTA tariff preferences cannot be claimed because the goods need to be of UK preferential Origin to avail of the 0% tariff. These goods are EU origin and therefore liable to a tariff on re-entry to the EU. Consult the returned goods relief (duty relief) as this may be applicable. These goods would be subject to EU SPS import requirements.

Q: They are exported to the UK and released for free circulation there. They are subject to small alterations such as simple packaging, keeping them in good condition, labelling etc. Can they come back to the EU without paying duties? 

A: These EU origin goods cannot be considered as UK originating as they are not sufficiently processed to qualify. Therefore, they cannot use the TCA preferences. Consult the returned goods relief (duty relief) above as a potential solution. On re-importation to the EU, these goods would be subject to EU SPS import requirements and subject to the relevant official controls on import into the EU if applicable. 

Q: They undergo substantial processing in the UK. After 31 December 2020, can they come back to the EU without paying duties? 

A: In the same way as in Q2, the “EU goods” located in the UK before the EU-UK TCA, do not have EU preferential origin. Therefore, they cannot be used for cumulation as they are non-originating. The only way that these goods could come back to the EU under preferences is if the production carried out in the UK satisfies the Product Specific Rules of origin (PSR’s) to acquire UK preferential origin. Preference must be claimed on the import declaration and proof of the acquired UK origin must be available. Returned good relief does not apply in this scenario. These goods would all be subject to EU SPS import requirements where appropriate. These are not an “existing good” placed on the market prior to the end of the transition period.

Q: They are exported to the UK and released for free circulation there. They are subject to processing beyond insufficient operations. Can they come back to the EU without paying duties? 

A: Goods originating in the EU, exported to the UK, and released for free circulation there may acquire UK preferential origin if they are subject to processing beyond insufficient operations. These goods can be exported back to the EU without incurring customs tariffs provided preference is claimed on the import declaration and the acquired UK origin can be proven. These goods would all be subject to EU SPS import requirements where appropriate. 

 

Moving third country/non-originating goods through the UK after 31 December 2020 

Q: Third country/non-originating [non-EU or UK] goods which are imported into the UK and are not altered or processed in the UK before being re-exported to the EU. Can they come back to the EU without paying duties? 

A: The goods may incur tariffs if they are cleared for free circulation in the UK and may incur further tariffs on re-importation into the EU. These goods are subject to the EU’s SPS import control requirements, whether they went through UK SPS import control requirements or not.

Q: Third country/non-originating [non-EU or UK] goods which are imported into the UK and undergo processing under Customs supervision using the Inward Processing Procedure in the UK before being re-exported to the EU. Can they come back to the EU without paying duties? 

A: In this scenario they can be imported into the UK with import duties suspended. The duty liability in the UK is discharged if the goods are re-exported (e.g., to IE/EU). However, if the goods are released to free circulation in the UK, then the duty and other charges become payable at this time. 

The amount of processing on the goods will determine if duties must be paid on re-export to the EU. These goods can only qualify for preferential origin under the EU-UK TCA on re-export to the EU if the processing meets the requirements as specified in the PSR. If UK preferential origin can be proven, preferential origin can be claimed on re-export to the EU under the TCA. The advantage of using Inward Processing is that the import duties due on import into the UK are suspended.  As scenario 7 these goods are subject to the EU’s SPS import control requirements. 

Q: Third country/non-originating [non-EU or UK] goods which are imported into the UK and undergo processing in the UK NOT under Customs supervision before being exported to the EU. Can they come back to the EU without paying duties? 

A: In this scenario they may qualify for preferential origin under the EU-UK TCA on re-export to the EU if the processing meets the requirements as specified in the PSR for the product. If UK preferential origin can be proven, preferential origin can be claimed on export to the EU under the TCA. Any tariffs due on the materials used in the processing in the UK must be paid on import to the UK. As in scenarios 7 and 8, these goods are subject to the EU’s SPS import control requirements.