Last reviewed 2 September 2020
In 2020, the European Commission has published a series of notices aimed at EU businesses and other stakeholders in preparation for the end of the transition period. The notices cover a range of topics with many of them being relevant regardless of whether the UK and the EU manage to sign a trade deal towards the end of 2020. In this article Anna Jerzewska, founder of the Trade and Borders consultancy, advises to check your procedures and prepare now.
The end of the transition period will introduce a new customs and regulatory border between the UK and the EU. The fact that the UK will no longer be a part of the EU’s customs territory will have implications for all areas of customs and trade.
The “Customs, including preferential origin rules” notice, talks about how the end of the transition period will impact customs procedures, authorisations and the status of goods. It specifies the conditions for transitioning of customs reliefs and duty suspensions.
While the notice is aimed at EU firms, it can be an important source of information for UK businesses currently trading with the EU. It clarifies when the new formalities will enter into force. UK companies can use this notice to understand at what point the new rules will become applicable when exporting goods to the EU.
The new customs border means that full customs procedures will be required for goods crossing the UK/EU border. That will include pre-notifications, in the form of entry and exit summary declarations, as well as import and export declarations. Goods brought into the EU on a temporary basis will now need to be placed under temporary admission (for example via an ATA carnet). While these border formalities will enter into force on 1 January 2021, more complex customs procedures will require additional clarification.
Goods placed under special procedures, such as inward processing, customs warehousing or end-use relief located in the UK, might be subject to different procedures depending on when they are discharged from the special procedures. This will be particularly relevant when the goods are brought back to the EU. The notice provides various examples and scenarios.
The introduction of the new border will have other, far-reaching implications. Customs registrations, authorisations and permits issued by the UK customs authorities or by authorities of another Member State in respect of UK’s customs territory will cease to be valid in the EU after the end of the transition period and most likely vice versa. As a result, UK companies are advised to carefully review the notice.
The UK Economic Operators Registration and Identification (EORI) numbers will no longer be valid in the EU. Currently, EU companies can operate under an EORI number issued by one of the Member States. As a result, EU based companies may for various reasons currently have a UK EORI number. In such cases, they will need to re-register with the relevant EU Member State. UK companies with subsidies, branches and those that are part of a VAT group might be particularly impacted by this change.
Companies registered for a comprehensive guarantee where the financial institution providing the guarantee is based in the UK will need to find a guarantor based in the EU for this guarantee to be accepted by any of the EU Member States.
Customs authorisations are one of the areas that will be heavily impacted by the end of the transition period. Authorisations issued by the UK authorities will no longer be valid in the EU. Authorisations issued by authorities in the other Member States in respect of the UK’s territory will also stop being valid or require amending. This relates to various special procedures, authorisations and reliefs that were granted for multiple Member States. Equally, EU authorisations, granted to EU operators who for any reasons have a UK EORI number will also cease to be valid.
Temporary Storage authorisations allowing the owner to move goods to a temporary storage facility in the UK will also require amending.
Approved exporter authorisations granted in the UK will no longer be valid in the EU. Holders of such authorisations will no longer be able to export under EU’s trade deals.
UK companies should review their current customs authorisations, how they are used and the issuing authority and take the necessary actions accordingly.
Advanced customs rulings issued by UK authorities will no longer be binding on Member States and holders. EU companies currently using UK binding rulings should re-apply in another EU Member State. UK companies using EU binding rulings might also need to re-apply in the UK.
After the end of the transition period, UK inputs will no longer count towards the originating status of EU goods. This will have several implications. The notice clarifies when the UK goods or inputs will cease to be considered to originate in the EU. To a large extent, this will depend on where the goods are on 1 January 2021. For example, goods imported into the EU under preferential tariffs and physically in the UK on 1 January 2021 will have to be imported into the EU as if they were third-country goods. Proofs of origin that have already been issued in the EU for goods that include UK content remain valid provided that export procedures have been completed before the end of the transition period.
Companies in the UK and the EU will need to review their supply chains to take account of UK’s and EU’s inputs no longer being considered originating under trade deals with third countries (with the exception of those UK trade deals that include an option to cumulate origin with the EU). Suppliers’ declarations, including long term suppliers’ declarations, will need to be reviewed and potentially updated to ensure that the change in the originating status of UK and EU inputs does not affect the origin of the final product.
Finally, the notice mentions the Northern Ireland Protocol and the border in the Irish Sea. While it does not go into the detail on customs procedures applicable on this border, it confirms that Northern Ireland will be treated as if it were a part of UK’s customs territory while not being a de facto part of UK’s customs territory. Customs controls including checks will apply to goods entering and existing Northern Ireland and guarantees might also be required for both potential and existing customs dept.
The notice provides valuable advice to EU companies and can also serve as guidance for UK firms. Companies trading between the UK and the EU should read the notice in detail and review their customs authorisations and registrations.