On 24 December 2020, the European Union and the United Kingdom reached an agreement in principle on the EU-UK Trade and Cooperation Agreement.. Content on the site is being monitored to reflect this and the changes.
EU-UK / UK-EU Trade and Cooperation Agreement provides for zero tariffs and zero quotas on all goods that comply with the appropriate rules of origin. Content is currently under review and will be updated to reflect the agreement. In the meantime please see here
Before we get started…
…you should know that the practicalities of rules of origin can be complex. This bitesize guide will give you an overview but it’s a good idea to take expert advice to make sure that you are complying with them, whether you are an importer or an exporter.
What are rules of origin?
Rules to establish the country of origin of imported and exported goods, not where they have been shipped from, but where they have been produced or manufactured. This is to help identify those goods which qualify for lower or nil customs duty. The rate of duty that must be paid on your goods will depend on three key questions:
Let’s look at each of these questions in more detail.
The Three Key Questions
The first need is to determine what good is being traded. To do this you’ll need a unique code called a commodity code. For the purposes of rules of origin, you may only need the first four digits of the commodity code. But it’s important to note length of the full code depends if the goods are imports or exports:
• Imports have a 10-digit commodity code
• Exports have an 8-digit commodity code
Getting the right commodity code is fundamental and it is the legal obligation of the trader. Invest the time needed to obtain the correct commodity code as getting the code wrong can be considered as fraud and can result in penalties. If you rely on the commodity code from a supplier, you’ll need to check it is accurate. This task can be complex, but there is help at hand to make sure you get the right code for your business needs. In order to find the correct commodity code for your goods, you’ll need to describe them accurately. For example, you must know:
• What the product is
• What it is made of
• What it’s used for
• How the product works/functions
• How it’s presented/packaged
• If it unassembled or unfinished
• Its technical specifications.
You’ve different ways of getting the commodity code. You can choose to find the commodity code by self-assessment. For more information please see the official websites for Ireland or Northern Ireland. Alternatively you can request a Binding Tariff Information (BTI) ruling. It’s not a legal requirement to have a BTI ruling, but it has advantages. It is the only option which gives you legal certainty for three years about the correct code for your goods. A BTI ruling is free, but you may have to pay the costs of laboratory analysis, expert advice and/or returning samples. For more information please see the official websites for Ireland or Northern Ireland.
Once you know this you’ll be able to determine what specific requirements are associated with that country.
There are two main categories of origin in the rules:
• goods wholly obtained or produced in a single country, for example: If a product is wholly obtained or produced in a country, it will be deemed to have originated in that country;
• goods whose production involved materials from more than one country, for example: for a product that has been produced in more than one country the product shall be determine where the last substantial transformation took place.
Once you know the answers to these three questions you’ll have determined if you need a certificate of origin. We’ve addressed some follow-up questions below.
What supporting documents do I need?
You’re likely to need the following supporting documents:
• Commercial Invoice
• Packing List (if the Gross Weight is not shown on your Invoice)
• Full Names and Addresses of the manufacturers
• If any of the goods were manufactured overseas, proof is required, usually through a commercial document (for each product), for example: a foreign certificate or an invoice from the manufacturer.
What is the estimated costs and time
for associated with certificates of origin?
Cost depends on a number of factors, including if you’re a member of the chamber of commerce, the method of payment, if it’s an electronic or hard copy. As a guide costs usually start at £50/€55 for non-members for a blank certificate of origin. Some chambers of commerce offers a same or next day service.
Binding Origin Information
It is not mandatory for you to obtain Binding Origin Information but if if there is uncertainty about the origin in particular for goods that are made up of multi origin parts or you wish to have legally certainty you maybe wish to apply for a Binding Origin Information which provides you with a decision from an individual EU Member State on the origin of your goods. These decisions are legally binding throughout the EU. We’ve provided the links below to apply for Binding Origin Information.
What do the future scenarios look like?
Whilst negotiations continue it’s difficult to predict what will happen after the withdrawal agreement but what we do know is that UK government has set out its intention to negotiate a free trade agreement with the European Union, meaning that If the United Kingdom leaves the European Union with a trade deal but doesn’t agree to a future customs union with the European Union, there could be rules of origin. If this is the case, then businesses on both sides will need to comply with origin requirements. Let’s look at some examples:
It is also worth mentioning that a trade agreement would grant both jurisdictions with preferential duties for importing their goods, this will be less than standard duties applicable to third country goods. Note that the rules of origin provisions in each preferential trade agreement differ. This preferential duty will only apply based on the origin of the goods. The adequate proof of origin required by the importer is yet to be agreed but can be a statement of origin on the invoice or maybe a movement certificate issued in the country of Origin confirm the origin of the goods.