Guidance

Introduction to rules of origin and claiming duties when trading between the UK and EU

Rules for moving goods between the UK and EU under the Trade and Cooperation Agreement.

From:
HM Revenue & Customs
Published
6 October 2021

The UK has a trade agreement with the EU — the Trade and Cooperation Agreement.

This guide will help you to understand how you may be able to pay a reduced rate of Customs Duty (known as a tariff preference).

You will also need to read about:

UK-EU trading relationship

To export tariff-free under the Trade and Cooperation Agreement, goods must meet the UK-EU preferential rules of origin. This means that there must be a qualifying level of processing in the country of export to access zero tariffs. This applies to EU origin goods imported and moving through the UK from an EU member state to another EU member state, as well as goods imported from outside of the UK or EU.

These rules are set out in the Trade and Cooperation Agreement and determine the origin of goods based on where the products or materials (or inputs) used in their production come from. Their purpose is to make sure that a reduced rate of Customs Duty is only given to goods that originate in the UK or EU, and not from countries outside the UK and the EU member states.

For goods that were imported from the EU and are being returned or redistributed in the EU without obtaining UK origin, the importer in the EU may be able to claim Returned Goods Relief.

If goods entered the UK under the internal Transit procedure (T2) and have not been entered into any customs procedure other than Transit or Customs Warehousing, they may be able to keep their EU status. This will mean that EU customs formalities, including duties and taxes, can be avoided.

You can find more information about claiming Returned Goods Relief or Transit. If you’re re-exporting goods back to the EU, you will need to get guidance from the relevant EU customs authority.

Goods that do not meet the rules of origin can still be traded, but they will not be able to benefit from a reduced rate of Customs Duty under the Trade and Cooperation Agreement, and may have to pay the standard — also known as ‘Most Favoured Nation’ — tariffs that the EU and UK apply to imports. For exports to the EU, this will be their Common External Tariff. For imports to the UK, this will be the UK Global Tariff.

For some goods, these ‘Most Favoured Nation’ standard tariffs may be low or zero, but for many other goods they can be much higher.

You will need to decide if it is in your interest to meet (and to prove that you meet) the rules of origin to benefit from the Trade and Cooperation Agreement zero tariffs.

Rules of origin under the Trade and Cooperation Agreement

To be considered originating and qualify for a reduced rate of Customs Duty, products must be sufficiently worked or processed within the countries in the agreement.

Non-originating materials are materials imported from countries outside of the UK and EU. Non-originating may also refer to materials whose origin is unknown or are not possible to determine.

The rules of origin in the Trade and Cooperation Agreement are set out in 2 parts.

General Provisions

These are rules that apply to all products being traded under preference. They include the primary and administrative requirements.

For more information read general provisions for checking your goods meet the rules of origin.

Product-specific rules of origin

These are the specific rules that set out, for every product based on their Harmonised System (HS) code, what the requirements are for that product to be considered ‘originating’.

The HS, or Harmonised Commodity Description and Coding System, was developed by the World Customs Organisation (WCO) to describe and classify groups of goods and is used by more than 200 countries worldwide. Find out how to classify your goods using the Harmonised System and product-specific rules.

More information about the product-specific rules are included in Annex 3 (Product-specific rules of origin) of the Trade and Cooperation Agreement.

Originating products

The Trade and Cooperation Agreement contains provisions allowing the UK and the EU to cumulate origin. This means materials originating from the:

  • EU (as well as production carried out within the EU on non-originating materials) may be considered as originating in the UK
  • UK (as well as production carried out within the UK on non-originating materials) may be considered as originating in the EU

This process is known as bilateral cumulation.

Once a product has gained originating status, it is considered 100% originating. This means that if that product is incorporated in the production of a further product:

  • its full value is considered originating
  • no account is taken of the materials from a different country that have been used

For example, if a UK-manufactured engine contains 30% of materials from a different country but meets its rule of origin, if that engine is used in the production of a car in the UK or EU, 100% of the value of that engine can be counted towards the originating content of the car.

There are 2 ways a product can be considered originating.

Wholly obtained

These are goods that have been exclusively obtained or produced in the territory of one country, without using materials from any other country. The goods must not have been manipulated or changed in another country, apart from certain minimal processes to keep them in good condition, examples of wholly obtained goods include:

  • minerals extracted from the soil of a single country
  • live animals born and raised in a single country
  • goods produced in a single country from materials sourced exclusively from there — that is, all materials used in a product are wholly obtained

Substantially worked or processed

These are goods that have been substantially worked or processed in line with the relevant product-specific rule. There are 3 basic rules used to decide if goods are sufficiently transformed worked or processed:

  • the ad-valorem, or ‘value added’ rule
  • the change of commodity code used to classify your goods
  • manufacture from certain products or through specific processes

Annex 3 of the Trade and Cooperation Agreement sets out the rule that applies for the product you’re importing.

Easements for business under the Trade and Cooperation Agreement

For goods imported from the EU to Great Britain (England, Scotland and Wales) between 1 January 2021 and 31 December 2021, traders in Great Britain will have up to 175 days to submit a full customs declaration and pay any necessary tariffs. This also includes declaring any proof of origin. This does not apply for goods exported from Great Britain to the EU.

Claiming preferential treatment under the Trade and Cooperation Agreement

To benefit from preferential tariffs (a reduced rate of Customs Duty) when importing into the UK or EU, you will need to:

  • claim preference on your customs declaration
  • declare you hold proof that the goods meet the rules of origin

A proof of origin is used by the importer to show that the goods qualify as originating and are eligible to claim preference. In the Trade and Cooperation Agreement this proof can be either:

  • a statement on origin completed by the exporter on an invoice, or any other document including a commercial document
  • knowledge obtained and held by the importer that the goods are originating

Read more about the different proof of origins for the Trade and Cooperation Agreement.

If you’re an importer

You must have proof of the originating status of the product before claiming preference.

This may be a statement on origin from the exporter on an invoice or other document, including a commercial document, that describes the goods, the text of the statement would be included in the agreement — this is known as an invoice or origin declaration.

It could also be supporting documents and records if you’re claiming preference using your ‘importers knowledge’. If you’re using importer’s knowledge you must get enough evidence that the goods qualify as originating. This may involve the exporter providing a range of supporting documentation. If you cannot get that evidence, then the exporter may be able to give you a statement on origin.

If a supplier declaration is needed, the exporter must hold this, or other evidence, to prove the originating status of the goods before they issue a statement on origin to you.

You must also:

If you’re an exporter

You must:

  • hold evidence that the goods meet the relevant rules of origin before issuing a statement on origin
  • understand if you need to get a declaration from your supplier — for trade between the UK and EU, if you did not have a supplier declaration for any proof of origin issued before, you may be asked to provide one retrospectively
  • maintain records for at least 4 years

You must hold a supplier declaration (when needed) at the time you issue a statement on origin.

If you do not have a supplier declaration, or other information to show the originating status of the goods, for any statements on origin you’ve issued during the easement period (1 January 2021 to 31 December 2021), then there is an obligation on you to let your customer know.

If you’re subject to a request for verification and you cannot provide evidence to show that the goods you exported to the EU originate in the UK, your EU customer will be liable to pay the full rate of Customs Duty.

You must also give your customer (the importer) one of the following:

  • a statement on origin on an invoice or any other document, including a commercial document, that describes the goods — the text of the statement would be included in the agreement, this is known as an invoice or origin declaration
  • supporting documents and records if your customer is claiming preference using their ‘importers knowledge’

Duty Drawback in the Trade and Cooperation Agreement

Under the Trade and Cooperation Agreement, businesses can use duty drawback schemes (such as Inward Processing Relief) as well as benefit from preference under the Trade and Cooperation Agreement.

Relevant rules of origin definitions

Article 38 on pages 53 and 54 of the Trade and Cooperation Agreement lists definitions for important concepts used throughout the rules of origin text.

Annex 2 (Introductory notes to product specific rules of origin) of the Trade and Cooperation Agreement also has relevant important definitions for the purposes of applying the product-specific rules.

These concepts of the product-specific rules are introduced in the rules of origin for goods moving between the UK and EU, but you should check the full agreement for relevant definitions.

More information

There’s other official detailed guidance on GOV.UK available:

Updates to this page

Published 6 October 2021

Sign up for emails or print this page

Contents

Related content