Operate after Brexit

Everything you need to know about Rules of Origin

Rules of Origin – moving goods between the UK and the EU

Get to know how Rules of Origin impact your business and follow our five step process to ensure you're following the new regulations.

What are Rules of Origin?

Rules of Origin (RoO) are used to determine the 'economic nationality', which goods and customs authorities use to work out tariffs and restrictions.

There is a distinction to be made between non-preferential and preferential RoO:

  • Non-preferential rules of origin are applied for different types of trade measures such as anti-dumping duties, quantitative restrictions, tariff quotas, origin marking, government procurement and trade statistics
  • Preferential rules of origin are applied when goods are eligible for preferential treatment when traded between certain named countries (reduced or zero customs duty), normally where a Free Trade Agreement (FTA) is in place

GOV.UK guide to Rules of Origin

Government process diagram for RoO on importing from and re-exporting union goods to the EU  

Watch this HMRC RoO webinar which looks at how rules of origin are used to determine where goods originally come from to see if they qualify for a preferential tariff under the Trade and Cooperation Agreement.

Understand what RoO mean for your business and your supply chain

Preferential origin

The UK and the EU have signed a new Free Trade Agreement – the Trade and Cooperation Agreement (TCA) – that began regulating trade between the two parties on 1 January 2021. This agreement can benefit your business by reducing the amount of customs duty you pay for qualifying goods imported from the EU. It may also enable your EU-based customers to pay less customs duty on qualifying goods they buy from you.

The UK-EU FTA does remove tariffs on goods, but to continue trading with the EU tariff-free you must comply with the specific RoO outlined in the agreement.

GOV.UK guidance on Rules of Origin for goods moving between the UK and the EU

Find out how to claim preferential rates of duty on goods covered in the UK's deal with the EU and how to declare goods imported into the UK on your import declaration.

The previous EU trade agreements ended on 1 January 2021 and no longer apply in the UK. RoO seek to reproduce the effects of the previous FTA. This will ensure continuity for UK businesses. Several continuity FTA have been put in place since 1 January 2021, whereby preferential tariffs can be claimed by complying with the specific RoO of each FTA.

If rules cannot be met you will pay the Most Favoured Nation (MFN) tariff, which for certain products can be very high.

Proof of Origin grace periods – UK-EU Trade

There are grace periods to delay sending HMRC full information about goods imported from the EU. This is to reduce the administrative burden for importers and exporters, but you need to start doing this work now and hold proof that the goods comply with the rules of preferential origin.

Importers moving goods from the EU to the UK during 2021 can either make a full customs declaration at the time of import, or choose to delay declarations.

If you opt to use the delayed declarations process, you will have up to 175 calendar days from the date of import to make the supplementary declaration. This declaration will include proof that your goods meet rules of preferential origin, if you are importing EU originating goods and claiming zero tariffs. 

Find further information on delaying declarations for EU goods on GOV.UK.

For exporters, moving goods from the UK to the EU, you may be asked to provide a suppliers’ declaration to your customer to prove that the goods meet the rules of preferential origin. The supplier declaration can be provided at any time, even after the goods have been delivered.

Full guidance on how and when to get proof of origin for your goods can be found on GOV.UK.

Preferential Rules of Origin: Five steps process

1. Understand your supply chains

If you import or export goods to the EU, they will only be eligible for zero tariffs if they acquire ‘originating’ status. You will need to know the status of your materials, where they have come from and what processing on the materials has occurred. This may involve requiring supplier declarations, which detail invoices, delivery notes and other information to identify goods.

2. Check your commodity codes

Commodity codes are used to ensure goods have the correct tariff classification. If you use the wrong codes for your products in customs declarations, you risk paying the wrong tariff and not following the correct trade measures, including rules of origin. You can check your commodity code on the Government’s Trade Tariff site.

3. Check the Product Specific Rule (PSR) for your commodity code

If you export products made exclusively from materials originating in the UK, it will be considered UK originating. If you are using imported content, you will need to have met any processing requirements (determined by the commodity code) in the product-specific rules specified in the UK-EU FTA, and you need to understand how this impacts on your ability to trade and your supply chains.

For goods you import, the exporter should check these requirements before providing you with proof of preferential origin.

4. Complete certification process

You will need to prove to HMRC that you can claim preference for your imported goods, or give the person receiving your goods evidence of preferential origin so they can claim preference. The type of proof can vary. An exporter can make a statement on origin which has enough detail to identify the goods, allowing the importer to claim preference. 

The importer can also claim preference through importer’s knowledge. This means knowledge you have obtained about the goods through, for instance, supporting documents, records or evidence. Further information can be found on GOV.UK.

5. Meet transport requirements

Originating products transported between the UK and EU cannot be further processed in a third country (non-UK/EU). However, transhipment and some operations such as preserving of products can be carried out in third countries under customs control without the good losing originating status (non-alteration).

Get proof of origin for goods

You will need to obtain from the exporter, or provide the receiver of the goods, with the correct form of evidence to prove that your goods are eligible for tariff reductions.

Access more information on GOV.UK

Proving origin when importing goods

For goods to be eligible for preferential tariffs when importing into the UK from countries with eligible preferential trade agreements in place, you will need to claim preference as part of your customs declaration to HMRC. You will also need to prove that the goods you are importing qualify as originating.

For example, under the EU-UK FTA, the claim for preference is made on the basis of either:

  • A ‘statement on origin’ which declares the goods to be originating; or
  • ‘Importer’s knowledge’ that the goods are originating

If you're using a statement on origin, this should be provided to you by the exporter on a commercial document. The text for a statement on origin is in Annex ORIG-4 of the EU-UK Trade and Cooperation Agreement on GOV.UK.

If you wish to use ‘importer’s knowledge’, you will need to obtain sufficient evidence that the goods qualify as originating. This may involve the exporter providing a range of supporting documentation, but there is no specific requirement for the exporter to provide a statement on origin.

Further information on the importer proving origin on GOV.UK.

Other agreements may set out alternative methods for claiming preference. For example, older agreements can require a paper ‘certificate of origin’ to be provided by the exporter.

Proving origin when exporting goods

For your customer to claim preference when they import your goods into their country, you need to ensure that your goods meet the concerning FTA Product-Specific Rules of origin (PSRs).

If your goods do meet the PSRs, you will need to hold evidence of this. You may also require separate declarations from your suppliers. 

You can find further guidance on getting proof of origin for your goods on GOV.UK.

Under most modern agreements, you can self-declare that your goods are originating. Under the UK-EU FTA, you can make out a ‘statement on origin’ on a commercial document and send this to your customer. This is a statement declaring the goods to be originating and can be used by your customer as the basis of their preference claim, for more information, visit GOV.UK. 

Some agreements, including the UK-EU FTA, also allow importers to claim preference based on knowledge they hold (‘importer’s knowledge’), rather than through a statement on origin. Where this option is used, you do not need to provide your customer with a statement on origin, though your customer may ask you to provide them with a range of information about the goods to support their preference claim.

Under some older agreements, you cannot self-certify that goods are originating, and you may need to provide your customer with a ‘certificate of origin’ - a certificate that proves your goods were manufactured or processed in a particular country - obtained through your local Chamber of Commerce or HMRC. 

Read HMRC guidance on getting proof of origin for your goods.

A certificate of origin normally includes:

  • Name and address of the exporter
  • The manufacturer (if different)
  • The importer
  • Description of the goods
  • The origin of the goods

For more information on Certificates of Origin, please speak to your local chamber.

Customs Special Procedures – UK-EU trade

Customs special procedures provide many benefits for business, including:

  • Deferment of tariffs (duties) and VAT until the goods are moved into free circulation (into the domestic economy)
  • Import tariffs (duties) and VAT eliminated upon re-export

Most EU FTAs include a “no drawback” clause meaning tariff preferences cannot be claimed if the exporter has obtained a duty exemption through the use of special procedures. This clause does not exist in the UK-EU FTA, therefore both parties can enjoy preferential treatment.

Most relevant customs special procedures regarding UK-EU trade include Inward Processing (IP) and Customs Warehousing (CW).

Inward Processing of goods

IP means that goods from outside the UK are imported into the UK to be used in processing and manufacturing operations. When imported, those goods are not subject to import duty, VAT and/or excise duty, and commercial policy measures.

Within the UK-EU FTA, this means that goods from 3rd countries may be imported into the UK under IP, and if the further processing of those goods complies with the FTA RoO, the finished goods may be exported into the EU under preferential treatment.

E.g.: A Scottish manufacturer imports raw materials from China, which are subject to further processing in Scotland, and then exports the finished products to the EU.

Scenario A: Both raw materials imported into Scotland (UK) for processing, and the finished goods imported into the EU, follow the standard import/export procedure:

  • When importing into Scotland from China, the importer will have to pay duties and VAT on the raw materials
  • When importing into the EU from Scotland, the imported will also have to pay duties and VAT on the finished products

Scenario B: Raw materials are imported into Scotland under IP, and the processing operations make the finished goods compliant with the UK-EU FTA RoO:

  • When importing into Scotland from China, the raw materials won’t be subject to duties and VAT
  • When importing into the EU from Scotland, the importer may claim preferential treatment under the UK-EU FTA, upon presentation of the relevant proof of origin

More information on Inward Processing can be found on GOV.UK.

Customs Warehousing

Customs warehousing allows the owner to hold imported non-UK goods in the UK, choose when to pay the duties or re-export the goods.

The amount of working or processing allowed on goods held in warehouses is limited to keeping them preserved, with a view to subsequent distribution. However, it is possible to process goods under inward processing or under customs control on the premises of a customs warehouse.

Within UK-EU trade, this means that goods from third countries may be imported into the UK under CW and being held there without payment of duties and VAT, either for the purposes of re-exporting them into the EU, or to release them for free circulation in the UK.

E.g.: A Scottish retailer imports a clothing consignment from China into Scotland, which is meant to be split into distribution within the UK, and the rest to the EU.

Scenario A: The clothing’s consignment imported into Scotland (UK) follow the standard import/export procedure:

  • When importing into Scotland from China, the importer will have to pay duties and VAT on the entire consignment
  • When importing into the EU from Scotland, the imported will also have to pay duties and VAT on that part of the consignment

Scenario B: The clothing’s consignment is imported into Scotland under CW:

  • When importing into Scotland from China, the goods won’t be subject to duties and VAT, and will be stored in the authorised Customs Warehouse
  • The consignment’s part distributed within the UK will have to pay duties and VAT, upon the goods’ release for free circulation into the UK
  • The goods imported into the EU will also have to pay duties and VAT upon entering the EU-market

More information on Customs Warehousing can be found on GOV.UK.

Further guidance

The British Chamber of Commerce recently held a webinar explaining the rules of origin. 

Watch Rules of Origin - the practicalities webinar from the British Chamber of Commerce.

Use this International Trade Centre (ITC) tool to help you find out import duties in foreign markets applicable to your product, available duty savings, detailed rules of origin, and certification procedures. 

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