Brexit: Customs Overview
by Eddie O'Shea
 
 

Part 5 of our Brexit Series will discuss an overview of the customs procedures coming in and out of Ireland. It is important to note that Irish customs law is very complex since Brexit. Therefore, please be aware that this article only discusses a general overview and advice should be sought on a case to case basis.

 

Overview – Customs Three Pillars

 

Origin

  • Origin is the "economic" nationality of goods in international trade and origin of every product is extremely important, this determines possible Duties / charges or any customs restrictions or obligations applicable to goods will depend on their origin.

 

  • The origin of goods is the country where they last underwent a significant transformation. Example: a car part from S. Korea incorporated into a car in Germany origin of car is Germany.

 

  • The origin of goods will determine whether they can benefit from trade agreements and can affect the level of perceived risk and the level of checking and certification required.

 

  • Once goods are cleared for free circulation, their origin ceases to matter, unless they are being re-exported.

 

Classification

  • Product classification is determined by the "Commodity Code" (up to 10 digits) assigned to each item.  There are well over 10,000 codes, and it is still quite difficult at times to precisely categorise a product.

 

  • We use the TARIC system to determine the rules around different products. The system not only gives the code, but also shows the rates of duty, rules and other requirements depending on which country the goods are coming from.

 

  • TARIC website can be found here.

 

Valuation

  • Valuation of goods determines the level of duty and VAT which is applied to each declaration. Important to note that the transactional value includes “product cost, insurance and freight” value.

 

  • The commercial invoice is a vital starting place to support valuation but amendments to the valuation are necessary for currency changes, surcharges or discounts not shown, or anything else that affects the total cost to the buyer.

 

  • Incoterms directly effect a products valuation, as they are the commercial terms which details the tasks, risks and costs involved during the transaction of goods from seller to buyer.

 

Brexit

 

Sadly, for some businesses Brexit will deliver increase costs, delays, customs and possible tariffs along with new cashflow demands.

 

 

Customs Imports

 

Imports into EU

 

Imports in Northern Ireland

No custom requirements if Irish company transports goods directly into the EU. The UK landbridge could cause issues. Potential solutions for these issues would be;

 

- use the new ferry services direct to France,

- apply for customs transit exemption in the UK,

- use the returned goods relief for product traveling through the UK.

 

UK companies transporting directly into the EU are required to complete and file custom declarations.

 

 

Northern Ireland currently are apart of the EU and the UK, so can benefit from custom exemptions.

 

Imports EU (Ireland) to NI

  • No change in protocols, as there is no customs border.
  • Goods traveling via UK landbridge might encounter customs requirements in the UK first.

 

Imports NI/ GB

  • Unfettered access granted under the NI Protocol.
  • Free circulation of goods between NI & UK. But, anti-avoidance rules in place to stop businesses using NI as a vehicle to avoid duties.
  • NI Protocol outlined that goods from UK which are not deemed to be at risk of leaving the UK customs territory will not pay any duties. However, goods ‘at risk’ of entering the EU’s single market will pay EU tariffs.

 

Detailed rules being released in 2021.
       

 

Imports into UK (excluding NI)

 

Customs process has been split into three steps;

 

1) January to March 2021

No requirement to submit full customs declarations for most imported goods. You must keep sufficient records of imported goods and file paperwork and duties after six months.

 

2) April to June 2021

Animal & plant products will now require pre-notification and relevant heath certifications. Reduced physical checks will start to take place.

 

3) July onwards

Full customs procedures to be followed and duty payments to be made. Increased physical checks.

New UK global tariff costs available for imports not qualifying for preferential duties under Free Trade Agreements.

 

Custom Reliefs

 

Below are a list of the common customs reliefs which could help to avoid custom and duty charges,

 

Returned goods relief

 

You can re-import goods into the European Union (EU) without payment of Customs Duty and VAT. These goods:

  • must have been originally exported from the EU
  • can include parts or accessories belonging to other products previously exported.

 

Inward/Outward Processing

 

Exporting/importing goods in order to add value to the product. Processing would mean anything from repacking and sorting to the most complicated manufacture.

 

Transit relief

 

Goods could be exempt from customs when goods are transported from warehouse to warehouse. For example, there would be no UK customs charged on goods travelling from France to England and then onwards to Ireland if the goods are stored in an UK warehouse. Please note, there are certain conditions that the receiving warehouse must abide by, but the relief will help to avoid delays at the ports.

 

What to do now?

 

 

Please note that the above is provided for informational purposes and should not be considered customs advice. if you would like to speak to Quintas about any Brexit issues, please contact either Kevin Canning (Kevin.canning@quintas.ie), Dave O’Brien (Dave.obrien@quintas.ie) or Eddie O’Shea (Eddie.oshea@quintas.ie)