Rules of Origin
What are Rules of Origin?
Trade in goods of preferential origin between the EU and the UK will in principle take place without tariffs, but 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)
INITIAL CONSIDERATIONS OF PREFERENTIAL ORIGIN:
- Determine the correct Harmonised System code (HS Code) of the product.
- Find out what the import duty is with or without a preferential origin declaration.
- Is there any benefit?
- Then check in the agreement (Annex ORIG-2) which requirement the product must meet in order to obtain preferential origin.
- Are you a producer?
- Collect evidence to identify preferential origin (i.e production process description, costing, requesting preferential supplier declarations for materials you have purchased in the EU.)
- Are you a trader?
- Then it is sufficient to request and record in your administration supplier’s declarations for products of preferential origin purchased in the EU.
- Include the prescribed text of the preferential origin declaration on your export invoice.
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.
DETAILED CHECKLIST FOR EU EXPORTERS, EXPORTING TO THE UK
- Are you verified as an exporter and located in the EU? (i.e a trader or producer). The exporter does not need to be the individual completing the export declaration.
2. Are your products subject to import duties when imported into the UK?
3. Do your exported products have EU originating status?
4. Are you registered in the EU Registered Exporters System (REX) and have a REX number? This will be needed if you export consignments with a valid of EUR 6,000 or more.
5. Do you or your suppliers have sufficient information on the production processes of your goods to complete a statement on origin?
6. Set up a contractual agreement with the UK importer to determine if they will claim preferential tariff treatment through a statement on origin or through importers knowledge?
- If importers knowledge is used, you should give the importer relevant information to acquire the necessary knowledge.
- If you don’t wish to share documents or information with the importer, a statement on origin is the more appropriate option.
7. Complete a statement on origin on an invoice or other document (if chosen method of claim). The statement should outline the exact origin of the products in either a single shipment or for multiple shipments of identical products.
- Keep a copy of the statement on origin and any other relevant documents (i.e supplier declarations) for 4 years minimum in case any addition verification is requested.
8. Ensure your products comply with the ‘non-alteration’ rule (i.e are not altered or transformed) while the goods are being exported from the EU and declared for import into the UK.
9. Give the UK importer the statement on origin (if chosen method of claim) and prepare for any further verification on the EU origin the good requested by UK customs authorities for the customs authorities in the EU Member State where you are registered for REX.
A statement on origin is completed by the exporter of a good, based on information which proves the origin of a product (i.e materials used to produce the good). The exporter is responsible for providing accurate information on the statement on origin.
What is a supplier’s declaration?
A supplier can complete a supplier’s declaration by giving the exporter or trader relevant information to determine whether the goods can claim originating status for the purpose of gaining preferential tariff treatment.
What is a long-term supplier’s declaration?
If a supplier supplies an exporter or trader with regular consignments of goods, that all have the same originating status, the supplier can complete a single declaration (a long- term supplier’s declaration) to cover multiple consignments of those goods.
One-year Transition Period
Due to the short amount of time businesses had to prepare for preferential tariff treatment, EU exporter’s completing a statement on origin based on supplier’s declarations have a one-year transition period.
Within this transition period a statement on origin can still be completed even though the exporter may not have all the information from the supplier’s declarations readily available to prove originating status for preferential tariff rates. The following conditions apply:
- The missing supplier’s declarations must be given to the exporter by 1.01.2022 at the latest.
- If the EU exporter already has sufficient information to prove the originating status of the products (production materials or components through other sources of information including invoices or contracts, then this facilitation does not apply.
- Exporters are still required to complete a statement on origin, to prove that the product is originating, but the validity of the statement on origin will not be questioned by customs authorities while the exporter does not have the relevant supplier’s declarations to complete the statement
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:
- 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).
- 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).
Will Britains exit from the eu 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.
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.
DETAILED CHECKLIST FOR EU IMPORTERS, IMPORTING FROM THE UK
- Will your products be subject to import duties when imported into the EU?
2. How will you be claiming preferential treatment? (i.e paying no customs duties)
- Through a statement on origin from the UK exporter (this must be obtained from the UK exporter), or
- Through importers knowledge that the good is originating (gather the relevant documentation to prove the product is originating i.e records of manufacturing or production processes)
3. Does the statement of origin from the UK exporter include an exporter reference number? Commonly referred to as a UK EROI number.
4. Do your products comply with the ‘non-alteration rule’? (i.e they will not be altered or transformed while they are being exported from the UK and declared for import in the EU).
5. Have you stated the correct code for preferential import and the code ‘GB’ for the preferential country of origin in your import declaration?
- Use the code ‘U116’ (Statement on origin for a single consignment) or code ‘U118’ (Statement on origin for multiple shipments), if you are making a claim through a statement of origin.
- Use the code ‘U117’ if you are making a claim through importers knowledge.
6. Keep a copy of the statement on origin (or for importers knowledge, keep all the relevant records to prove your product can obtain an originating status) for a minimum of three years. Customs authorities may ask for these documents upon importation.
7. Once the import declaration and claim for preferential treatment is submitted to the EU Member State, customs authorities may need to get the origin verified. If this is the case:
- For a claim based on a statement on origin: provide the statement of origin. EU customs authorities may contact the UK customs authorities for information on specific conditions enabling the product to be originating.
- For a claim based on your knowledge: provide information which confirms that the goods meet the conditions to be deemed as originating.
8. Have you considered implementing any guarantees or safeguards incase customs authorities delay the verification process to grant the preferential tariffs to your goods.
- To help determine the origin of your goods, use the new Rules of Origin Self-Assessment Tool (ROSA), developed by the European Commission on their ‘Access2Market’ web platform.
- Further Guidance on preferential treatment and rules of origin from the European Commission.
The information provided on this page does not constitute legal advice and is subject to change in line with government rules and laws. While BritCham will endeavour to keep the information on these pages as current as possible, we advise you to seek expert independent legal advice an any matters relevant to your situation