Is there any duty relief when we import from a third country into the UK and export to the EU?

Duty reliefs offer a great opportunity to save customs duty and import tax, but only if you meet all requirements, argues Arne Mielken from Customs Manager Ltd.


Peter J, Sales Manager, and a subscriber of the On-Going Support Plan want to reduce the customs and tax duty spent. His subscription offers unlimited support for customs and global trade questions. Here is what we answered.


Peter,


Thanks for the great questions.


There are quite a few duty reliefs schemes that may be applicable, but they depend on what you want to do when the goods are in the UK. We have a dedicated duty savings section on our expert blog you may wish to check out:

https://www.customsmanager.org/customs-global-trade-blog/categories/duty-savings


Of course, prior to you even considering these relief schemes there is some work to be done to verify the cost-benefit. These reliefs come with some admin costs, so that's the first that must be considered.


Here is an overview of the special procedures that we can consider together. They can be grouped, broadly, into 4 main categories of special procedures as follows:

  • Customs Transit: internal and external transit

  • Storage: customs warehousing and free zone

  • Specific use: temporary admission and end-use

  • Processing: inward and outward processing


Customs Transit

Customs transit is a customs procedure used to facilitate the movement of goods between two points of a customs territory, via another customs territory, or between two

or more different customs territories.


The different customs transit scenarios are :

  1. by entering and consecutively leaving your country,

  2. by leaving and consecutively re-entering your country,

  3. by entering customs territory and continuing the movement until a specific point in that customs territory

  4. by placing the goods under an export procedure and consecutively under a transit procedure.

We have some great guide on transit and many further explanations on the expert blog, why don't you take a look here: https://www.customsmanager.org/customs-global-trade-blog/categories/transit


Customs warehousing

This can benefit you if you import goods that you wish to store for a while and then export. This is because it offers a storage facility that delays duty and/or import VAT payments until the goods leave the customs warehousing procedure or enter another customs procedure. There is no limit to the duration for which goods remain under a storage procedure.


There are different types of customs warehouses. In the EU, for example, there are four. They are

  • public customs warehouse type I,

  • public customs warehouse type II,

  • public customs warehouse type III and

  • private customs warehouse, but details can vary from country to country.

Free zones

These are soon to operate in the UK. They exist already in the EU. Free zones are special enclosed areas within a customs territory. Goods placed within these areas are considered to be under the free zone procedure and are, therefore, free of import duties, VAT and other import charges. Maybe that is a future option for you. But note that persons, goods and means of the transport entering or leaving free zones maybe

subject to customs controls.

To take the goods out of the free zone you either have to follow:

  • the (re-)export formalities when taking the goods out of your customs territory

  • the formalities regarding entering goods into your country

  • when bringing the goods to another part of the customs territory of your country.


Temporary admission

The purpose of temporary admission is to:

  • allow for a limited period the use (but not processing) of "foreign" goods in your country, which are intended for re-export;

  • grant a total or partial relief, such that they are free from other charges such as VAT, excise duties and no commercial policy measures are applied on them.

The maximum limit for which goods can be placed under temporary admission is usually

2 years (24 months). Sometimes, duty may have to be paid. For example, in the EU, for each month or fraction of a month that the goods remain under the temporary admission procedure, the amount of import duty is 3% of the import duty due had the goods been released for free circulation. This amount has to be paid when the procedure has been discharged.


End-use

End-use means use or process-specific third country goods released for free

circulation in a specific way within a specific period to grant a duty exemption or

a lower duty for a specific end-use (e.g. processing of fish into food preparation).

If these conditions are not met, the normal duty becomes payable. Where goods are suitable for repeated use, customs supervision will continue for a period not exceeding two years after the date of their first use. As you will be re-exported your goods, Peter, this is not useful in your case.


Inward processing

Inward processing means to import third country goods into your country and to process these goods under duty and tax suspension with a view to:

  • re-export the processed products (and thus avoid duty);

  • release the processed products for free circulation (and thus pay lower duty);

  • release the waste of the processed products (and thus pay lower duty).

Under this procedure, the third country goods remain third country goods. The customs authority specifies the period within which the inward processing is to be discharged.


Outward processing

Outward processing means taking goods from your country outside your own country and processing these goods with a view to benefiting from a lower, or no

duty when the goods are released for free circulation on re-importation into your own country. These duties are calculated on the added value of the processed goods, that is, the processing costs and not the value of the processed product. No duty is due on re-importation where the goods are repaired free of charge or defective goods are replaced. The customs authority specifies the period within which the outward processing

of the procedure is to be discharged. There are types of situations in which outward processing apply to repaired goods:

  • Goods repaired free of charge

  • Prior import of replacement product

Peter, which one of these would be most suitable for what you want to do? Drop us a message to discuss and let's work you what is most suitable for you.


Best regards

Arne




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