Prosessing under contract

Processing of goods under contract refers to cases where goods are delivered to another Community country for processing or continued processing. The goods, usually raw material or semi-finished products, are delivered for processing free of charge. When returning the processed goods, the value of the extra material used for the manufacturing and other such manufacturing expenses are charged.

The full value of goods delivered for processing under contract or returned after processing under contract is always declared in the statistical declaration. Concerning goods supplied free of charge, the current value is reported. The invoice value of a finished product is its value plus the additional expenses according to the invoice. The commodity code often changes as a result of processing under contract. For arrivals, the Member State where the processing has taken place is declared as the country of origin of goods processed under contract.

In the compilation of statistics, processing under contract is distinguished from regular goods deliveries by a transaction code. Goods delivered for processing under contract are declared using the code 41, if the goods are returned or are assumed to be returned to the Member State where they were originally dispatched. The code 42 is used, if the goods are not returned or are not assumed to be returned to the Member State of dispatch. The goods that are returned after processing are declared using the code 51, if they are returned to the Member State of dispatch. The code 52 is used, if the goods are not returned to the Member State of dispatch. The same codes can be used both for arrivals and dispatches; which form to use is chosen according to the direction of the delivery.

If the company is exempted from the obligation to submit declarations concerning the direction of the delivery, this transaction is left undeclared (see example 2).

Example 1

The Finnish company FI is obliged to provide information on both dispatches and arrivals. FI delivers goods for processing to the Danish company DK, and FI and DK agree that the goods will be returned to Finland after processing.

  • FI submits an Intrastat declaration on dispatches for this transaction. The invoice value is the value of the goods at the moment of delivery (for example EUR 100 000). The transaction code is 41.
  • FI submits an Intrastat declaration on arrivals for this transaction. The invoice value is the previously reported value of the goods (EUR 100 000) + the value of the processing work (for example EUR 50 000) = EUR 150 000. The transaction code is 51.

Example 2

The Finnish company FI is obliged to provide information on dispatches only. FI delivers goods for processing to the Danish company DK, and FI and DK agree that the goods willl be returned to Finland after processing.

  • FI submits an Intrastat declaration on dispatches for this transaction. The invoice value is the value of the goods at the moment of delivery (for example EUR 50 000). The statistical value is the invoice value (EUR 50 000) plus freight and insurance expenses (for example EUR 500) as far as to the Finnish border = EUR 50 500 in total. The transaction code is 41.
  • FI does not submit an Intrastat declaration on arrivals for this transaction.

Example 3

The Finnish company FI is obliged to provide information on both dispatches and arrivals. FI delivers goods for processing to the Polish company PL, and FI and PL agree that the processed goods will be delivered directly to FI’s warehouse in Germany.

  • FI submits an Intrastat declaration on dispatches for this transaction. The invoice value is the value of the goods at the moment of delivery (for example EUR 100 000). The transaction code is 42.
  • FI does not submit an Intrastat declaration on arrivals for this transaction because the goods do not arrive in Finland physically.

Example 4

The German company DE has sold goods to the Swedish company SE. The goods are delivered to the Finnish company FI for processing. After the processing FI delivers the goods to Sweden and sends an invoice for the processing to DE. The Finnish company FI is obliged to provide information on both dispatches and arrivals.

  • FI submits an Intrastat declaration on dispatches for this transaction. The invoice value is the value of the goods at the moment of delivery (for example EUR 100 000). The transaction code is 42.
  • FI submits an Intrastat declaration on arrivals for this transaction. The invoice value is the previously reported value of the goods (EUR 100 000) + the value of the processing work (for example EUR 50 000) = EUR 150 000. The transaction code is 52.
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