The EU-UK Trade and Cooperation Agreement offers the possibility to benefit from preferential treatment. However, what if goods are shipped from the EU to the UK, stored in the UK, then re-exported back into the EU?
While EU preferential goods that are stored in the UK outside of a customs warehouse cannot legally benefit from preferential treatment when imported back into the EU, there are two possible ways to avoid the payment of customs duties.
- Use the Returned Goods Relief procedure.
- Send the goods from the EU under T2 transit procedure to a customs warehouse in GB and re-export from GB back to the EU with T2 transit procedure, then declare the goods as of EU status in the EU Member State they are being sent to.
However, certain requirements apply in order to be able to claim preferential treatment and the burden of proof lies on the economic operator. If these conditions, verified and confirmed by Irish customs authorities, are not met, companies stand to lose preferential treatment and will be liable for customs duty and import VAT.
CAS is a centralised customs management platform that supports both of these scenarios along with many more customs formalities to optimise efficiency and ensure companies benefit from the preferential treatment they are entitled to.
Returned Goods Relief (RGR)
To be able to re-import goods into the EU without payment of customs duty and import VAT, the goods must have been originally exported from the EU. VAT relief is only allowed if the person that re-imports the goods is the same person who originally exported them. In order to qualify for the Returned Goods Relief, the goods must be:
- were originally Union goods that were exported from the customs territory of the Union and returned to Union territory within a period of three years. This period may be extended under special circumstances.
- are returned in the same state in which they were exported. They cannot have been processed abroad, however the following treatments are allowed:
- Treatment necessary for repair or to keep the goods in good condition.
- Handling or treatment which only altered the appearance of the goods.
- Other treatments done to the goods that were later found to be unsuitable for the intended use of the goods.
- were in free circulation at the time of export (which means they are Union goods) unless they were originally declared to Inward Processing or End Use.
When the goods are reimported, proof that the re-imported goods are those which were exported from the EU must be attached to the outside of the parcel and marked ‘Customs Documents’. Proof can be provided in one of two ways:
- an original or a certified photocopy of the export declaration. Copies of the export declaration must be authenticated by the competent authorities in the exporting EU Member State.
- the returned goods information sheet (form INF3) issued by the competent authorities in the exporting EU Member State and stamped by customs.
- 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 the UK of those goods, must also be provided.
Note: If the re-import is to the Republic of Ireland, Irish Revenue has confirmed that the audit trail maintained in the CAS Special Procedures module is sufficient to qualify for RGR, as CAS retains a certified copy of the export declaration. Therefore, no INF3 form is required. It is possible that the CAS Special Procedures module will also satisfy RGR requirements for other EU Member States, however in practice it has only been confirmed by the Republic of Ireland.
Returned Goods Relief requires a digital platform like CAS to automate the process and produce the proof customs authorities require to grant preference. CAS supports the RGR procedure end-to-end, from export from the EU, import/export to and from the UK, and import back into the EU.
- Export declarations are uploaded and processed in CAS for shipments from EU plants to a non-EU country
- CAS immediately produces the import declarations in the UK using the preferential treatment for those goods that are supported by proof of preferential origin
- INF3 documents are requested from the customs offices of export
- The obtained INF3 documents can be uploaded as PDFs in CAS
- The INF3 reference number is manually added to the export declarations
- For each shipment from GB to the EU, export declarations are processed in CAS
- CAS automatically retrieves the export declaration references and INF3 references and produces the import declarations with RGR procedure in the EU
One of the biggest advantages of choosing CAS is that it can be set up immediately, without the need for a customs warehouse authorisation or the requirement for stock segregation. Therefore, it is a perfect solution for companies faced with importing EU goods back into the EU without having to pay duty.
Obtaining an INF3 Form
There are two options to obtain the INF3 paper document:
- Receive an INF3 “a priori” – export where the re-import was foreseen
- The export is created with a temporary export declaration (procedure 23).
- The temporary export declaration has to state the reason for export with re-importation and contain all information to facilitate the identification of the goods.
- The “a priori” INF3 form can be requested and obtained from the customs office of export. Someone should go to this office to request the paper document. This will then have to be submitted to the customs authorities of the EU country where the re-importation takes place.
- The customs office will perform the control and check whether the information in the INF3 document, export declaration, and invoice match. If they match, customs will put a stamp on the INF3 document, and the truck driver can leave. The customs office will also keep a duplicate of the INF3 document.
- Export is done and verified by customs with identification of the goods.
- Receive an INF3 “a posteriori” – export where the re-import was not foreseen
- Standard export is created.
- The “a posteriori” INF3 form can be requested and obtained from the customs office of export. The INF3 may also be issued “a posteriori” if the application is lodged at the customs office of export AFTER the foreseen re-importation deadlines.
On the import declaration for the EU Member State that is re-importing the goods:
- complete an electronic customs declaration (this is done in CAS).
- enter the code ‘F01’ in D/E 1/1 of the declaration (code for returned goods).
- enter the relevant procedure code in D/E 1/10 of the declaration.
- enter the code 1Q27 and the number of the original export declaration in D/E 2/3 of the re-import declaration.
When goods subject to sanitary or phytosanitary (SPS) checks such as products of animal origin (POAO) are re-imported into the EU, they are treated as coming from a 3rd country, hence these products will be subject to full import controls (SPS checks) at a border control post (BCP). Their entry in the EU needs to be pre-notified in TRACES NT.
This also applies to POAO originating in the EU, shipped to GB, and kept in a GB customs warehouse (CWH). These products keep their EU preferential origin but will be subject to full SPS controls (BCP checks, pre-notification in TRACES NT) when reimported into the EU/Ireland.
Use of a Customs Warehouse in GB with T2
Another option is to move Union goods (goods released for free circulation in the EU) from the EU to GB with a transit T2 declaration. The T2 movement is ended and discharged by putting the goods under the customs warehouse procedure at an inland customs warehouse in GB. Following an order from an EU Member State entity, the bonded goods are discharged from the customs warehouse procedure by entering them under the reexport procedure (3171) followed by a T2 transit movement from GB to the EU. The goods have kept their EU preferential origin and may re-enter the EU duty free. As proof, the second T2 must refer to the corresponding initial T2 declaration(s).
The possibility to use the combination of T2 declaration and storage in customs warehouse is provided for in section 5.4 of the EU Transit Manual (Reconsignments of Union goods from a common transit). Certain restrictions apply:
- Storage in a customs warehouse may not exceed six months for goods from Harmonized Tariff chapters 1-24.
- For all other goods, the storage period may not exceed five years.
- Goods must be segregated either physically or in the customs software and may receive no treatment other than that needed for their preservation in their original state.
- All of the goods traveling under the original T2 must be consigned to the EU and shipped together; they cannot be split and shipped with different T2 declarations from the customs warehouse to the EU. However, Union goods stored in the logistics warehouse may be split and subsequently shipped to the EU with several T2 declarations, each referring to the initial T2 but the original packaging must be retained.
If the EU originating goods are animals or animal products under transit, they lose their EU SPS status if they are unloaded in GB. In order for these products to re-enter the EU, they would need to meet the EU SPS import requirements and the health certificate (EHC) must be certified by a UK veterinary OV.
This is our understanding of the options for avoiding duty on EU goods stored in the UK and then exported back into the EU unprocessed based on documentation, notices from customs authorities, and direct communication with Irish customs authorities. However, it is always best to check on a case-by-case basis.
If you are interested in learning more about how our customs compliance solution, CAS, can support these processes and more, contact us to schedule a demo.