Why am I still paying import duties despite the Brexit deal?
- Marco van Hagen
- 24 Apr 2023
- Edited 14 Nov 2022
- 3 min
- Managing and growing
After the deal was struck between the EU and the UK, everyone breathed a sigh of relief. Companies can continue to import and export goods between the UK and the EU without having to pay import duties. However, there is a catch relating to the origin of your products.
Only goods of preferential origin are exempt from import duties. Products that meet these origin rules are entitled to reduced import duties. Read this article to find out what preferential origin means and why you still have to pay import duties in some cases.
In the Brexit deal between the EU and the UK, the countries involved agreed to reduce or even grant exemption from import duties on each other's products. This is called 'preference'. Only goods of preferential origin qualify for reduced import duties or a total exemption from import duties.
Whether your goods meet the rules of origin is determined by the trade agreement between the EU and the UK that sets out the rules for the preferential origin of products. You can find these rules in Chapter 2 on page L149/60. Specific rules for individual products can be found in Appendix 3 starting on page L149/1032. The notes to these specific roles are also very important. The notes can be found in Appendix 2 and start on page L149/1015 of the Brexit agreement. Alternatively, you can use the ROSA tool from the European Commission's Access2Markets database. You find the rules for your product based by entering the so-called HS code.
Imports from the UK
To qualify for exemption from import duties you need to prove to customs that your products meet the rules of preferential origin with a Certificate of Origin provided by your UK customer. Without this proof, you pay the import duty for so-called "third countries," countries outside the EU. How much import duties you pay depends on the product you are importing.
The UK is not an EU member state. When you import goods, you pay handling fees in addition to any import duties. Handling fees include costs for making the import statement, inspections on goods of animal origin (in Dutch) and vegetable products (in Dutch), longer storage and administrative work. The costs incurred by a forwarder, importer, or carrier for pre-notifying the import shipment in Portbase (in Dutch) are also covered by the handling fees. Many terminals (in Dutch) require shipments to be pre-notified.
Your carrier may have introduced a 'Brexit surcharge'. You will generally have to pay for clearing and handli costs incurred by your carrier or package delivery company. These costs vary by carrier. Whether you or your supplier pays the cost of customs clearance and handling depends on what you have agreed. You should always specify the agreements made on the quotation with Incoterms®
Exports to the UK
If you export products to the UK, your customer in the UK pays import duties, unless your products are of preferential EU origin. Your customer gets an exemption if you demonstrate with a statement on your invoice that your products meet the preferential origin rules. This invoice statement is called a Statement of Origin. On the UK government website, search how much import duty your UK customer would have to pay without an invoice declaration.
For shipments worth €6,000 or more, you need a customs registration number. This so-called REX registration (in Dutch) means that you are known to Dutch Customs as a registered exporter. Specify your REX registration number in the text of the invoice declaration. You do not need a REX registration number for shipments worth less than €6,000.
How to avoid double import duties
Consider how Brexit will affect your flow of goods, import duties, and logistics processes. Taking stock of all the extra costs and paperwork involved can help you decide whether you will have to make different choices. If you are getting a shipment of clothing from China, for instance, it might be cheaper to have it shipped directly to the UK without having Dutch Customs clear it first, as you would avoid paying double import duties. This strengthens your competitive position, and also saves time and money.
By storing goods in a bonded warehouse (in Dutch) you avoid unnecessary costs. When you store goods from non-EU countries in a bonded warehouse, they stay 'under customs control' when they arrive in the Netherlands and are not officially imported. While your shipment stays under customs control, you do not have to pay import duties, excise duty, anti-dumping duty and VAT.
You import clothing from China. The shipment from China arrives at the port of Rotterdam. After it has been cleared by Dutch Customs, you pay import duties and VAT. Next, you export the clothes to various customers in the UK and to buyers in the US and Canada. Because you store the clothing in a bonded warehouse, you do not have to pay import duties and VAT in the Netherlands. Instead, your buyers pay import duties and VAT when they import the clothing into the UK, US, and Canada.