Preferential treatment of goods based on origin
The duty levied on goods may be lower than the valid general customs duty or not levied at all (0% rate, or zero duty) if the imported goods originate in a specific country. It must be possible to prove the origin with a proper proof of origin. Preferential treatment must be requested with a customs declaration (preferential treatment codes and document codes). Reduced duty rates are referred to as preferential treatment.
From which countries can you import and receive preferential treatment?
Most of the countries in the world are covered by the various EU systems of preferential tariff treatment. Only around 20 countries are completely outside these systems (incl. the United States, Russia, Belarus, Saudi Arabia, Australia, Taiwan and Hong Kong). In the attachment about preferential proof of origin upon import (in Finnish), the groups of countries listed in addition to individual countries, namely GSP, OCT and ACP/EPA states, include almost 200 countries. The countries and areas included in these groups are listed in the Commission’s TARIC database. The GSP group includes, among others, Pakistan and India.
What is required for obtaining preferential treatment?
- The imported product is covered by the relevant agreement. For example, sensitive agricultural products have often been excluded from agreements.
- The product must originate in an agreement country (beneficiary country). Each preferential treatment arrangement mentions which conditions the product being produced or manufactured in the country must meet in order to be considered as originating (so-called rules of origin).
- The product must be imported directly from the beneficiary country to the EU (so-called condition of direct transport). However, direct transport is not mandatory for, for example, products originating in the Euro-Mediterranean partnership area which are transported within the area.
- The origin of the product must be proven with an appropriate proof of origin, such as Form A for imports from GSP countries (developing countries) or, depending on the developing country, a registered exporter’s statement on origin. The EUR.1 goods certificate is used upon imports from other preferential countries. Both certificates must be endorsed by competent authorities of the exporting country.
- Origin can also be proven with a standardised exporter’s declaration included in the invoice (invoice declaration or declaration of origin). Only the declaration of origin (invoice declaration) is used upon imports from Korea and Canada.
- When importing goods from Japan and the UK, preferential origin can also be proven using so-called ‘importers knowledge’, which means a declaration made by the importer on the origin of the product. When using importer’s knowledge, the exporter’s statement on origin is not needed. Read more under Points to consider.
The certificates of origin used in import for preferential treatment are listed according to country and country category in the attachment about preferential proof of origin upon import (in Finnish). The validity (4, 5, 10 or 12 months) of the proofs of origin is also indicated in the list.
Preferential treatment according to preferential tariff agreements may involve various additional conditions relating e.g. to derogations from the rules of origin (preferential treatment quotas and special entries on proofs of origin). Import certificates or certificates of quality and authenticity are required for certain agricultural products.
When claiming preferential treatment for an originating product based on importer’s knowledge, the importer has a particular responsibility for the information. The claim for preferential treatment must always be based on information that is in the possession of the importer before the claim for preferential treatment is made. With this information, the importer must be able to prove, on Customs’ request, that the goods are regarded as originating products under the agreement’s rules of origin. If Customs wishes to verify the origin of the products after their release, the verification only concerns the importer and the evidence in the importer’s possession. The exporter or the authorities of the export country are not required to participate in the post-release verification process.
What information can Customs demand from the importer?
If the preferential treatment has been granted based on importer’s knowledge, the importer may be asked to provide information for a post-release verification detailing the manufacturing process of the products, the acquisition prices of materials and the acquisition countries. The importer must make sure they have the required information when applying for preferential treatment.
If Customs asks for information, the importer must submit it within three months of the date of Customs’ request for information. If Customs subsequently asks for additional information, it must also be submitted within three months. If the importer does not respond to Customs’ request for information within the time limit, or does not provide sufficient details for verifying the origin of the product, the preferential treatment may be denied. Furthermore, once preferential treatment has been sought based on importer’s knowledge, it is not possible to claim it again based on a statement origin, even if the exporter makes out such a statement for the importer.
The exporter in the exporting country draws up a declaration of origin for the buyer in the EU. The exporter draws up this standard form declaration of origin in the commercial document that is related to the export consignment containing originating products and where the originating products have been sufficiently specified to identify them.
The exporter must have a decision on approved exporter authorisation issued by Customs if the value of the originating goods in the consignment exceeds 6,000 euros. Approved exporters must include the number of their authorisation in the declarations of origin they draw up. As for exports from Canada, the exporter provides its business number on the origin declaration, no separate authorisation or authorisation number is required.
Any exporter can draft a declaration origin if the value of the originating products in the export consignment does not exceed 6 000 euros. In such cases, the declaration of origin must bear the original signature of the exporter.
You can request Customs to revise the customs clearance decision so that the full duty (so-called third country duty) already levied is changed into a preferential duty. The change will also affect the amount of VAT levied.
- Read more: Appeals
You can request preferential treatment on the customs declaration as well as a specific time limit for presenting the proof of origin after the import. Note that a guarantee will also be reserved.
- For instructions, see: Authorisation to present missing documents
You can request preferential treatment on the customs declaration. On the customs declaration, you must provide the codes for customs treatment and for documents of origin.
In the following code lists, you will find the codes to be used in the customs declaration:
- 0017 Customs treatment (preferential treatment)
- 0127 Customs system
Provide these details in the basic information on the goods item. As additional document for the item, also provide the document code for the certificate of origin. You will find it in code list 0006.
The EU has customs union agreements with Turkey, San Marino and Andorra.
Imports from Turkey
Imports of industrial products from Turkey to the Union are, as a rule, duty-free trade within the customs union. A condition for duty free customs union treatment is that the goods have been in free circulation before the export to the Union. Another condition for the duty-free treatment is presentation of an A.TR. movement certificate.
Free trade agreements between Turkey and the Union are applied to basic agricultural products as well as to coal and steel products. A condition for preferential treatment in the EU is that the products originate in Turkey. Upon import, proof of origin is provided with an EUR.1 goods certificate or an (approved exporter’s) invoice declaration.
Imports from San Marino
1. In trade between San Marino and the Union, the customs union agreement is applied and goods are granted exemption from customs duties without proof of origin. The agreement applies to all goods (so-called customs union products) that are either
1) produced or manufactured within the area of the agreement parties, or
2) third country goods that have been cleared for free circulation in the area of the agreement parties (all customs formalities completed).
2. Goods that are not covered by the customs union agreement are subject to a third country duty (cf. above-mentioned description of customs union goods).
Imports from Andorra
Imports from Andorra under preferential treatment takes place as either customs union trade or free trade as follows:
1. The customs union agreement between Andorra and the Union applies to goods belonging to the HS chapters 25–97, and these goods are granted exemption from customs duty without proof of origin.
2. Agricultural products in the HS chapters 1–24 are covered by free trade, and rules of origin are applied to them, meaning that the goods must have proof of origin that justifying preferential treatment: either an EUR.1 goods certificate or an invoice declaration.
Information to be declared on the customs declaration:
- Declaration type (SAD 1): IM
- Customs treatment code (SAD 36): 300
- Customs procedure code (SAD 37): 40xx
- EUR.1 goods certificate or invoice declaration (SAD 44)
3. If the products do not meet the conditions (cf. imports from San Marino) concerning customs union products (HS chapters 25–97), third country duties will be levied on them. Similarly, if agricultural products (HS chapters 1–24) do not meet the conditions of the rules of origin or are entirely outside them, third country duties are levied on them.
The origin declared for the product in the proof of origin can be checked afterwards in the country where the proof of origin was issued. If the origin of the goods declared upon import and proven with a proof of origin is proven false in a post-clearance audit, full customs duties must be paid for the product with post-clearance. It can also be checked if the authority who endorsed the certificate of origin has had the competence to do so. The authenticity of the certificate of origin can also be examined (fake certificates).
When importing products from third countries, in certain situations a so-called general certificate of origin must be presented (non-preferential origin). Such certificates are generally issued by chambers of commerce in different countries. Preferential treatment is never granted based on a general certificate of origin, unless there are separate provisions on it concerning certain special products.