Rules of Origin

What are Rules of Origin?

“Preferential origin is conferred on goods from particular countries, which have fulfilled certain criteria allowing preferential rates of duty to be claimed” European Commission

Trade in goods of preferential origin between the EU and the UK will in principle take place without tariffs. 

Companies must demonstrate that their goods meet the rules of origin to qualify for the tariff exemption.

  • To reach the threshold for tariff- and quota-free market access in the UK or in the EU, materials of UK origin count as constituents of preferential origin (vice versa in the EU):
  • The rules of origin also specify, per product group, what maximum materials from third countries may be used without losing the preferential origin status. The specific rules per product group can be found here (ORIG 1-6) 
  • Look up duties, VAT and Commodity Codes:
    • From UK Government website here. 
  • Find out about tariffs & taxes, customs procedures, rules of origin and trade barriers:

 

EU – UK Exports

How can your importer be exempt from import duties?

You can do this by drawing up a declaration of origin to prove that you meet the requirements of origin for your product.

The EU currently uses a system of self-certification via an export invoice, packing list or other trade document.

 

  • A declaration of origin may be submitted up to an invoice amount of €6,000.
  • The exporter then uses a statement of origin (origin declaration) to declare that the goods are of preferential EU origin.
  • Shipments of a higher value require the exporter to have a REX registration number stated on the statement of origin. 

    Will Brexit affect your exports to other countries? 

  • It is possible, yes. Materials and components from the UK will not count as components of preferential EU origin as of 1st Jan 2021. This could affect products exported to countries with which the EU has other preferential trade agreements, if it has been agreed that some of the materials must be of EU origin. 

STEPS TO PROVE ORIGIN:

  1. Determine the correct HS Code of the product to be exported. 
  2. Find out what the import duty is with or without a preferential origin declaration. 
  3. Is there any benefit?
    1. Then check in the agreement (Annex ORIG-2) which requirement the product must meet in order to obtain preferential origin. 
  4. Are you a producer?
    1. Collect evidence to identify preferential origin. (Production process description, costing, requesting preferential supplier declarations for materials you have purchased in the EU.) 
  5. Are you a trader?
    1. Then it is sufficient to request and record in your administration supplier’s declarations for products of preferential origin purchased in the EU.
    2. Include the prescribed text of the preferential origin declaration on your export invoice. 

WHAT IS REX?

REX stands for ‘registered exporter’ and enables you to receive a REX number from Customs if you register. This allows the exporter to not have an origin document issued by Customs.

 The EU has provided in depth details regarding REX here 

This is a self-certification scheme. To do so, complete the following steps: 

  1. Complete the REX Application Form and send to the postal address found in the form (this will be a digital process from the 25/01/2021 – Follow this link to create a pre-application for REX). 
  2. Once you receive your REX number from Customs you can issue a declaration of origin yourself, should you want to export your product. Orig – 4 of the Trade Agreement explains how this statement should look.  
  • As there is no license involved and you are certifying yourself, REX makes it easier to declare origin. 
  • However, you must:
    • Check in advance whether the goods to be exported meet the preferential requirement.
    • Record this properly in your administration (with production declarations, cost calculations and supplier declarations)
    • (Exporters) must keep a copy of the declaration of origin and all other information showing that the product meets the conditions for obtaining origin status for at least four years after the origin declaration has been made out
    • As a REX holder, you may only draw up something if you also have the proof.
    • Pay attention to the percentage of ’non-originating material’ of your products.
      • An increase may mean you no longer meet the requirements for exemption from UK import duties (creating complications for your importer who will have claimed exemption from import duties based on your information as an exporter).

 

UK-EU IMPORTS


How to meet the conditions for preferential origin when importing from the UK 

You need to prove that the products you are importing meet the conditions of preferential origin (the conditions can be found in the agreement). This can  be done using a declaration of origin written by your exporter. Without this, you cannot qualify for exemption from import duties. 

As an importer:

  • You must request preferential tariff treatment. 
  • You are responsible for the accuracy of the request for preferential treatment and for compliance with the conditions laid out in the agreement. 

A request for preferential tariff treatment can be based on one of the following:

  • An origin declaration written by your exporter which states that the products you are importing are of UK origin or;
  • Importers knowledge  This is information known by the importer that demonstrates the product is of UK origin. The importers knowledge should be based on information proving that the product originates from the UK and meets the agreement conditions. 

It is your responsibility, as an importer requesting preferential treatment, to hold the following data for 7 years from the date of import: 

If the request was based on an origin declaration  the origin declaration written by the exporter must be kept. 

If the request was based on importers knowledge  all data demonstrating that the product meets the conditions for obtaining originating status must be kept.