Many companies are now having to try to understand Customs and Trade legislation for the first time with the potential requirement to lodge Customs Declarations on purchases and sales with the UK.
The purpose of this article is to look at the key essentials to consider.
The first thing to remember is that Customs Duties and Customs Declarations are required each time you cross an International Border. Therefore on sales to the UK for example, you will need to lodge an export declaration from Ireland and an import declaration into the UK.
The same requirements currently exist for all International Trade between Ireland and any non-EU country.
In preparing your customs procedures you will need to look at your requirements from both a customs compliance perspective and a cost savings perspective.
You will also need to look at your type of imports e.g. whether it is capital equipment, raw material/parts or excisable goods. There can be different rules and cost-saving opportunities for each type of transaction and it is best to review this well in advance of importing as Customs Authorisations can take some time to secure.
Firstly, in order to be able to import into Ireland from outside the EU, or export out of Ireland, you will need a customs registration known as an EORI number.
The EORI is a unique EU Customs Registration which enables you to interact with Customs in each Member State.
- Import Procedures
There are generally two options for importing into Ireland from a customs administration point of view.
These are as follows:
- Authorise your freight/clearance agents to pay the import duty, import VAT on your behalf and invoice this back to you.
- Pay the duty directly to Customs – ideally with a deferred payment account authorisation to enable one monthly payment rather than individual payments each time your goods cross the border.
A deferred payment account will however require provision of a Guarantee and we would recommend allowing three months to obtain this authorisation and guarantee.
Along with establishing a method for importing and exporting you will also need to look at the duty costs associated with importing goods.
One of the most important aspects of this is being able to determine the duty rate applicable to your goods. This is based on what is known as the tariff code.
The tariff code for imports is a 10-digit number which equates to a description of the item. Each tariff code has a separate duty rate. Therefore it is critical to classify your products under the right tariff code in order to ensure the correct duty is paid. If you pay too much you will be disadvantaged financially. If you pay too little you are likely to have to pay an additional amount later, when you have a Customs audit. In addition the tariff code must be correct as this is critical security information for Customs.
Determining tariff classification will often be one of the biggest projects a company has to take on.
Along with the duty rate you will also need to determine the origin of goods and whether the country you are importing from has a preferential trade agreement with the EU. This will be critical in the context of any new UK-EU Free Trade Agreement. It is currently a huge benefit for companies trading with Canada or South Korea, for example, where accurate determination of origin can yield significant duty reductions.
Finally you will need to look at ensuring the correct value is given to Customs for the goods.
These aspects of Customs should all be drafted into a Procedure Manual to ensure compliance and to support ongoing management of Customs – a critical issue in our post-Brexit world.
If you are likely to be impacted by additional costs you will then need to review opportunities for duty and costs savings.
This will be the focus of our next article.
For further information or to arrange a meeting please contact Carol Lynch.
For more information about the partnership between BDO and Irish Exporters Association, click here.