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EU Autonomous Tariff Suspensions Scheme

10 January 2020

As an importer/exporter are you aware of the EU Autonomous Tariff Suspensions Scheme?

The EU Autonomous Tariff Suspensions scheme allows companies to request a 0% duty rate to apply to their import, where they can show these imports are necessary for manufacturing operations in Europe and are not available from EU suppliers.

The scheme is available to companies who are involved in the manufacturing and processing industries particularly in the chemicals, pharmaceuticals and electronic sectors. Participation in this scheme has the potential to increase competitiveness by reducing exposure to customs duty liability. 

‌The scheme presents opportunity for significant financial and cost-saving benefits if you have to import your products due to lack of EU supply and are, as a result, forced to pay an additional customs duty charge. 

 

What is an Autonomous Duty Suspension?

A company that operates in the manufacturing or processing industries may apply to the European Commission, through the Department of Business, Employment and Innovation, to have the Customs duty levied on a raw input material suspended or quota rate introduced.

Suspensions are proposed after a thorough examination of the economic reasons on which the requests are based and where they seem likely to benefit the European Union economy.

An autonomous duty suspension is granted subject to a number of conditions including:

  • The product to be imported is a raw material or semi-finished product.
  • A finished product cannot avail of the suspension. 
  • The raw material is not available in the EU in sufficient quantity (quota) or at all (total duty suspension).

 

How can this scheme benefit your company?

Customs duties, unlike other indirect taxes are not refundable. Consequently, Customs duties can be an extra cost to be factored into the final price of a product. 

An Autonomous Suspension, if granted can remove this cost related drag on competitiveness and help increase the profitability of a company.

 

Worked Example

Company A is based in Ireland and manufactures an active pharmaceutical ingredient. Company A use a specific high purity grade of methanol as a raw material in their synthetic process.

At present, Company A imports this methanol from China, as it cannot be commercially sourced in the EU or Turkey. Upon import, this product attracts Customs duties of 5.5%.

Company A’s application under the scheme was thoroughly examined by the Economic Tariff Questions Group at the European Commission and was accepted on the basis of the following:

  • This specific high purity grade of methanol or suitable alternative is not manufactured in the EU or Turkey.
  • This specific high purity grade of methanol is used only as a raw material.
  • Company A does not have an exclusivity arrangement with the manufacturers of this specific grade of methanol.

As a result of the Autonomous Duty Suspension, this raw material will now be imported at 0% duty. This relieves the 5.5% Customs Duty liability that would otherwise be levied. This tariff suspension is valid for up to 5 years.

Note – An autonomous suspension has already been granted for Methanol (CAS RN 67-56-1) with a purity of 99.85 % by weight or more. See TARIC code 2905 11 00 10.

 


What can BDO do for your company?

BDO can draw upon its extensive experiences in participating in the Autonomous Tariff Suspensions Scheme to guide your company through the application process and liaise on your behalf with the Department of Business, Enterprise and Innovation (DBEI) to achieve the desired outcome.

The latest round of applications for the Tariff Quotas and Suspensions has been announced by DBEI and the closing date is 31st January 2020

The suspension of duties on these applications, if they are successful, will come into effect from 1st January 2021.

‌If you think your company could benefit from this scheme, please contact David Savage, Manager, Customs and International Trade Services on [email protected] or directly to +353 1 470 0371.