EU Customs Post

Customs Union and Single Market

The European Economic Community and the European Union into which it evolved, is a customs union. There are no custom duties on good passing between European Union Member States.  Custom duties arise when goods are imported into the European Union or when they are released into free circulation from a customs control process.

In 1993, the Single European Act came into full force creating a single European market without frontiers. The European Communities was renamed the European Union. This meant the removal of all duties and restrictions as well as procedural barriers and checks by customs administration at internal frontiers.

On 1st January 1995, the European Union was further expanded to include Austria, Finland and Sweden.  On 1st May 2004 the European Union expanded to include another eight countries in Eastern Europe as well as Malta and Cyprus. Romania and Bulgaria became full members in 2007.

Intra-EU Trade

Trade between European Union States is fundamentally different to trade with countries outside the EU.   Within the European Union, most goods are in free circulation and they can be moved across borders without any special taxes or paperwork, subject to only to excise, licensing and inspection requirements that apply in relation to some narrow categories of goods.

Movements of goods in the EU are called “acquisitions” when received in one EU state from another and “dispatches” when sent from one EU state to another.   The terms “import” and “export” are used when goods are moved in and out of the European Union.

Acquisitions from other European Union countries are not subject to custom duties. However, VAT and excise duty may apply. If goods traded with EU states exceed an certain annual value, it  is necessary to complete an Intrastat (statistical)  declaration.

If goods are received from inside the EU by a business, the VAT value and details must be entered in the firms’  VAT return.  The VAT can then be reclaimed, if the goods are supplied by a business in the UK.

Free Circulation of Goods

Goods in free circulation can move freely throughout the European Union. “Free circulation” in the European Union is a crucial concept.  Goods which have been wholly produced or originate in the European Union are in free circulation. Imported goods, on which all import formalities have been complied with and on which any custom duties and other charges have been paid and not reclaimed, are also in free circulation.

Once goods are put into free circulation in one European Union State, they can generally move freely throughout the European Union without further customs charges or control. Goods originating in the EU are in free circulation unless a common agricultural policy export refund or other refund has been claimed on them.  The Single Administrative Document, which is used throughout the European Union and European Free Trade Area countries, assists in proving the status of goods.

There are various procedures under customs legislation under which goods can be suspended from customs duty liability under certain conditions. The goods are not in free circulation, until the relevant procedures are followed to release them. Under certain conditions, goods may be processed or dealt with in the EU and then re-exported, without ever being in free circulation.

Some Controls Remain

Although the Single European Union Act removed frontiers between EU States, VAT, excise duty, certain health controls and statistical collection of information may take place upon movement of goods between European Union States.  See our chapter in relation to licences on particular types of goods such as defence goods, cultural items, chemicals, and medicines.

Special considerations apply in respect of animal health and food safety. See our chapter in relation to the considerations that apply in this field. VAT is no longer charged at EU frontiers. However there are special VAT rules in relation to trade within the EU. There are obligations to make statistical returns. Excise goods raise particular considerations.  See our chapters on these issues.

EU Exports

Goods exported out of the European Union must be entered under an export procedure and declared to customs.  The document used to do this is the Single Administrative Document.  It is a multi-functioning form which also functions as the export declaration.  It may also serve as the transit declaration and import declaration.

The Single Administrative Document (SAD) formerly consisted of paper form in multiple parts.  Paper customs declarations must be signed where they are still used.  The signature declares the accuracy of the return.  Revenue operates an electronic system, which processes export declarations electronically, removing the need for a paper SAD. Declarations can be made to the customs authorities directly or through agents or representatives.

When goods leave the EU, it is generally required that they are declared at the customs office of export.  Where they travel through another Member State, they are declared at the final customs office of exit.  Once a declaration is lodged at the customs office of export, it will advise the customs office of exit that the goods are being exported.

EU Imports

Customs Duties are taxes on the import of goods. They are one of the oldest forms of taxation. Prior to joining the European Union, Ireland and the UK each had their own separate customs duties which applied on imports into each country. On joining the European Economic Community in 1973, Ireland and the UK abolished their own customs duties.

The European Economic Community and the European Union into which it evolved, is a customs union. There are no custom duties on good passing between European Union Member States.  Custom duties arise when goods are imported into the European Union or when they are released into free circulation from a customs control process.

Single Administrative Document

The Single Administrative Document is recognised internationally by customs authorities. Many of the boxes in the SAD require information from other paperwork such as valuations, invoices and shipping documents. A completed SAD must detail what the goods are, the movement of the goods, the good’s commodity good and the customs procedure code. It is now completed in electronic form in nearly all cases.

In order to complete the SAD, it is necessary to use the Common Customs Tariff.  The Tariff lists the codes which must be put in each box.  The most important boxes are for classification of the goods and the customs procedure code.  The code determines what duty is owed.   The custom procedure refers to a number of possible procedures which may be opted for in particular circumstances, some of which involve deferral of Customs Duty.

Three copies of the SAD and supporting documents must accompany the goods through customs in the country of export.  Two copies are retained by customs and the third copy is returned to the exporter. If the goods are going through other Member States before leaving the EU, this copy needs to be presented at the customs office of exit to verify the export and certify its departure.  Once the consignment has been exported, the customs stamped third copy should be retained by the exporter in its records, as evidence of export for VAT and customs duty purpose.

SAD Particulars

The SAD comes in eight parts for use at different points in the trading process. t is not completed in electronic form in nearly all cases.

Parts 1,2,3, and 4 are for exports. Parts 6,7 & 8 are for imports. Parts 1, 4, 5, & 7 are for transit. Traders should use the part 3 of the tariff to complete the boxes. There are 54 boxes in the SAD that are grouped as follows:

  • Status of goods
  • contact details
  • Duties and tax
  • Description of goods
  • Additional information
  • Reference details for agents
  • Valuation details
  • Preference
  • Delivery, Transport and Description of Goods.

Simplified Procedures

The normal procedure for exporting goods outside the European Union is that a full Declaration is required detailing the goods before shipment either in paper format or electronically. Simplified procedures allow for swifter clearance or reduced information at the time of shipment.  These procedures are not available for dutiable or restricted goods.  The exporter or its agent must be authorised.

The simplified declaration procedure requires a minimum of information to be transmitted electronically to customs prior to export by using an electronic pre-shipment advice) and then submitting an electronic supplementary declaration providing full details of the actual export.  Goods are then presented to Revenue and their system will provide a notification of whether they are to be examined. The supplementary declaration must be made electronically within 14 days of acceptance by customs of the initial simplified declaration. The second declaration is more detailed and requires 24 items of data.

Local Clearance Procedure

This simplified procedure is only open to authorised traders and allows declarations to be made from authorised inland premises. Customs must be notified about the shipment via electronic communication. After permission has been given, goods can be removed from the LCP Premises.  Details of goods must be correctly entered into the system and be presented at ports and customs control before they can be cleared for export. There will be electronic confirmation for both arrival and departure of consignment.

The exporter is assigned a unique consignment reference for the consignment. This is quoted in the initial pre-shipment declaration transmitted to the  system. The goods can be transported to the port or airport and the customs systems at these locations automatically inform customs when they have arrived.  The supplementary declaration providing details of the export must be transmitted to customs within 14 days.  This is transmitted electronically.

If a local clearance procedure is used, Revenue must be informed electronically efore goods arrive in the port or terminal.  A unique number is allocated to the consignment included in the entry.  The system will inform Revenue of the arrival of the goods and will be informed of the clearance status, which is then passed to the carrier or agent.  Revenue will send a permission to board which allow goods to be loaded.  When the goods are given permission to progress, Revenue sends a message to the community system which passes information to the port terminal carrier and agent.

Customs Administration and Procedure

The creation of the European Customs territory led to consolidation of the Customs Code and its implementing regulations.  The Customs Code and Tariff applies as direct legislation in all EU Member States. Breach of customs law constitutes a criminal offence.  Significant penalties can apply.  Revenue can seize and forfeit offending goods under certain circumstances.

In the case of imports from outside the European Union, it is necessary to make an Import Declaration to customs. Customs duty and import VAT must be paid. Excise duty may also apply. Certain duty suspensions or relief may be available which are mentioned below.  There may also be also restrictions on imports such as quotas and other controls.

Imports from outside the European Union are declared by way of the Single Administrative Document.   This can be submitted electronically through the CHIEF system or manually.  To make the declaration correctly, it is necessary to identify the goods from the Customs Tariffs.

The declaration explains what is happening with the goods e.g. where they are being purchased, brought into free circulation or are being brought in for a temporary period etc.  The commodity code determines the rate and type of customs duty that is charged.  An agent such as a freight forwarder, frequently makes the customs declaration on behalf of the importer.   A freight forwarder can obtain authorisation to make electronic declarations, thereby speeding up the process.