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Taxation and Customs Union

Inward processing

This means that non-EU goods are imported into the EU customs territory to be used in one or more processing operations – for instance, for the purposes of manufacturing or repair.  

When they arrive under these circumstances, goods are not  subject to: 

  1. import duty
  2. other taxes related to import, such as VAT/excises.
  3. commercial policy measures. 

The procedure is designed to give businesses the possibility to process goods imported from outside the EU even before they decide, according to logistical, commercial or other conditions, whether to sell the finished products in the EU or outside.  

The procedure can also be used for goods which just have to undergo standard forms of handling intended to preserve them, improve their appearance or marketable quality or prepare them for distribution or resale.

After the processing  

After the processing operations, the products can be either: 

  • re-exported 
  • stored under customs warehousing or in a free zone, or
  • released onto the EU market (‘free circulation’) 
     
    When released for free circulation, the goods holder has to pay import duty and taxes, and comply with any  commercial policy measures that have been imposed.  

Authorisation required 

To use the inward processing procedure, importers need to obtain authorisation from the customs authorities.  

These authorities must specify the period within which the procedure is to be discharged.  

This authorisation can also allow businesses to  export EU products which have been already processed in return for the import of an equivalent quantity of non-EU raw materials.  

How to get authorisation 

You must: 

  1. be established (i.e. have your registered office) in the EU customs territory.  
    Only in exceptional cases can authorisation be granted to a party not established here.
  2. provide necessary assurance that the operations will be properly implemented.
  3. provide a guarantee, if a customs debt or other charges may be incurred.
  4. carry out processing operations on the goods, or arrange for them to be carried out. 

Amount to pay on release 

If the processed products are released onto the EU market, there are 2 options: 

  • The business responsible for them can apply to pay the duties applicable to the imported goods at the time the customs declaration for them was accepted. 
  • If they don’t do this, the duty and import VAT will be calculated according to the rate and customs value of the processed products at the time they are released.