Inward processing

Under inward processing, goods are imported from third countries to the European union e.g. for the purposes of manufacturing, repair, restoring, putting them in order or other handling.

After inward processing, the goods can be re-exported or released for free circulation.

No import duties or import taxes will be collected on the goods placed under the procedure, unless the procedure is discharged by releasing the goods for free circulation in the customs territory of the Union. Also, the goods will not be subject to commercial policy measures, insofar as they do not prohibit the entry or exit of goods into or from the customs territory of the Union.

A bill of discharge must be presented to the supervising customs office for the goods placed under the procedure.   

If the procedure is discharged by releasing the goods for free circulation, customs duty and value added tax are paid for the goods. As of 1 January 2018, importers registered for VAT declare the VAT to the Tax Administration.

Points to consider

Inward processing can be discharged by transit only if the goods are transferred to another authorisation holder within the Union. In the transit declaration, in the box for additional information, enter the following information:

  • “ZZZ” (other) and “IP” and the electronic INF reference number (if any).

As the previous procedure, enter the number of the customs clearance decision concerning the inward processing procedure.

If the goods placed under the inward processing procedure are subject to commercial policy measures (e.g. surveillance document), enter also “C P M” in addition to “IP”.

As a rule, an authorisation for inward processing is granted to a business established in the Union which carries out the processing or arranges for it to be carried out. An authorisation is not granted e.g. to an importer who sells or uses the goods as such or that doesn’t have any connection with processing operations.

In occasional cases, where it is considered justified, an authorisation may also be granted to a person established outside the customs territory of the Union, e.g. regarding a private person, when the case is not considered being of any great economic importance.

In the standard authorisation procedure, an authorisation for the procedure has to be applied for in advance with customs form No. 1017e.

A standard authorisation is required e.g. when the placement of goods under the procedure and the discharge of the procedure take place in the territory of different EU Member States or when the goods are to be processed or used in the territory of another Member State.  

An authorisation for the procedure can be applied for with a customs declaration. In that case, the required additional information is submitted with a message declaration or a SAD form. An authorisation for using the procedure is granted, when the goods are released for the inward processing procedure.

  • The applicant is established in the territory of the Union (the authorisation may, on special grounds, also be granted to an applicant established outside the Union).
  • The applicant has a valid comprehensive guarantee.
  • The applicant’s economic conditions are fulfilled.
  • The applicant shall not have committed any serious infringements of customs or tax legislation.
  • The applicant keeps sufficient records, which allow customs controls.
  • The applicant is able to submit a sufficient bill of discharge.

Where a customs debt is incurred as a result of inward processing, the amount of import duty to be paid shall be determined either on the basis of the goods placed under the procedure (UCC Art. 86(3)) or on the basis of the products to be released for free circulation (UCC Art. 85).

Regardless of the article applied when determining the amount of customs debt, the level of the import duty is always the amount of duty valid the day when the customs debt was incurred. In the authorisation application, the applicant shall choose which article shall primarily be applied.

The procedure has to be discharged within the time limit prescribed in the authorisation, and it can be discharged with any acceptable customs procedure, e.g. re-export or customs warehousing.

After the discharge of the procedure, the bill of discharge has to be presented to the supervising customs office within 30 days after the expiry of the time limit for discharge.

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