Customs procedures: free circulation, warehousing, processing, temporary admission

The main procedures of the Union Customs Code

• Release for free circulation: imported goods become Union goods; duties are paid and, generally, import VAT too (release for home use)
• Export: goods leave the customs territory of the Union; the declaration supports the VAT exemption
• Special procedures: transit, storage (customs warehousing, free zones), specific use (temporary admission, end-use) and processing (inward or outward)

The procedure code in the declaration

The declaration states a 4-digit procedure code: the first two digits give the requested procedure, the last two the previous procedure. For example, 4000 is release for free circulation with no previous procedure, 4071 is release for free circulation of goods leaving a customs warehouse, and 1000 is a permanent export. A procedure code inconsistent with the direction of the flow is a common error, which the free check detects.

Transit

Transit lets non-Union goods move from one point of the customs territory to another without paying duties, for example from the port of arrival to the clearance office near the importer's warehouse. It is handled in the NCTS system and requires a guarantee covering the duties at stake. Transit must be discharged at destination within the set time limit.

Customs warehousing

Non-Union goods can be stored in a customs warehouse without paying import duties or VAT. These only become due when the goods are released for free circulation, and not at all if they are re-exported. The procedure improves cash flow for importers who sell their stock gradually or ship part of the goods outside the EU. It requires an authorisation.

Inward and outward processing

• Inward processing: import materials or components with duties suspended to process, repair or assemble them in the EU, then re-export the resulting products
• Outward processing: temporarily export Union goods to have them processed or repaired outside the EU, then re-import them paying duties only on the value of the operation carried out abroad

Both procedures require prior authorisation, stock records and discharge of the procedure within the set time limit.

Temporary admission

Temporary admission allows goods intended for re-export in the same state to be imported with total or partial relief from duties: professional equipment, samples, goods shown at trade fairs, packaging, means of transport. The ATA carnet simplifies formalities for these operations in the countries that accept it. Re-export must take place within the time limit set by customs.

Points to watch

• Most special procedures require an authorisation and a guarantee
• Every special procedure must be discharged: re-export, release for free circulation or placement under another procedure
• A procedure not discharged in time gives rise to a customs debt, with duties and VAT to pay
• Goods under a special procedure cannot be sold or used freely like Union goods

Frequently asked questions