Consequences for the free movement of goods
Free movement of goods is one aspect that will impact EU businesses when trading with the UK. Until 31 December 2020 European businesses could still trade with the UK without the added administrative tasks and financial consequences.
From 1 January 2021 onwards, customs formalities will apply, declarations will need to be lodged and Customs Authorities may require guarantees for customs debts when trading with the UK. This means that administrative records will need to be kept for tracking goods staying in the European Union and goods going into the UK.
New origin rules
Under the terms of the EU-UK Trade and Cooperation Agreement ('FTA EU-UK'), where goods qualify as originating in the EU or UK, these goods will not be subject to duty on import into either territory.
If goods do not qualify as originating, then WTO rates will apply.
Therefore, your first step now is to:
- Determine the tariff classification of your finished products
- Check the applicable rule of origin to see if you qualify for the 0% rate
- If not, check the duty rate that will need to be paid.
Goods qualifying as originating*
For goods qualifying as 'originating products' under the terms of the Agreement, there will be no customs duties applied on import from GB (Wales, Scotland & England – excluded Northern Ireland) into Ireland or from Ireland/EU to GB.
In order to qualify as originating goods, the goods must either be:
- Wholly produced in Wales, Scotland and England (GB) or EU, or
- 'Substantially transformed' in line with the specific origin rules applicable to the product being exported.
*EU-UK Trade and Cooperation Agreement – To be considered ‘originating’ and qualify for preferential tariffs, products must be sufficiently worked or processed within the parties to the agreement. By contrast, ‘non-originating’ materials are materials imported from third countries. ‘Non-originating’ may also refer to materials of which the origin is unknown or not possible to determine.
Goods produced in Northern Ireland, even before the end of the transition period, are not considered as EU originating for the purposes of their direct exportation, or exportation after further processing, to an EU preferential partner country.
Confirming goods quality
To confirm the origin rule applicable to your product, you need to:
- Confirm the Tariff Heading
- Check the applicable rule for that heading
- Ensure you meet the rule (you can cumulate EU and UK origin as one (under what is known as 'bilateral cumulation')
- Obtain suppliers declaration of origin if you obtain goods from UK suppliers - in this case an easement has been introduced so that Suppliers Declarations (required to support verification of origin status) do not need to be in place when goods are exported but will need to be on file by 31 December 2021 for all 2021 exports which availed of the relief.
To claim the 0% duty rate the importer will be required to declare on the Import Declaration that they hold proof that the goods comply with the rules of origin.
This can be done either by providing a statement from the supplier on the attached commercial invoice (or other commercial documents that describe the goods; thereby confirming the origin status) or by way of self-declaration based on your own knowledge and analysis.
If you are claiming the origin preference based on your own knowledge, you must have supporting documents and records and obtain sufficient evidence that the goods qualify as originating.
If you are using the invoice declaration:
- For exports from EU and Northern Ireland, you will need to be registered on REX and quote your Rex number
- For exports from the UK you will need to quote your GB EORI