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Understanding Custom Procedures

The custom department plays an essential role in international trade. Hence, it aims at controlling the regularity of international trade and exchange. At the European level, the promulgation of a Single Act of 1993 has removed the Custom controls from the internal frontiers of the countries within the European Economic Community. Today, the custom rules for export as well as import no more concern (except in exceptional cases) exchanges between these countries. But they do concern exchanges with third countries only. In order to take advantage of the facilities offered and to develop their presence on the international scene, the companies stand to gain by fully understanding the custom rules and regulations and by knowing the services and procedures followed by the customs departments.

Intra-Community Trade and Exchange | EU-Third Countries Agreements | The custom clearance modalites | Custom declaration | Determining custom duties | Procedures of customs clearance | Types of custom arrangement

Intra-Community Trade and Exchange

The Single Act of the EEU has defined free circulation of persons, goods, capital and services among the member States.

The Greek companies who ship merchandise to the destinations of other companies operating in another member State, do not have to prepare statement of declaration of shipping and they carry out deliveries exempted from VAT. Similarly, the Greek companies who receive goods from another member State do not also make any declaration of introduction of merchandise and do not pay VAT except at the time when the goods actually enter the Greek territory. The VAT is then paid to the General Import Tax Arrangement Office in the same conditions as the internal VAT is paid. The intra-community Trade and Exchange implies the concept of delivery - acquisition. Hence, the delivery takes the place of export and the acquisition takes place of the import. The VAT is due in the country of destination. There is no custom formality involved and the goods circulate freely. Free circulation does have some limits. In fact, certain products do not circulate freely on the territory.

Finally, a certain number of products are still subjected to special rules and regulations in terms of which they are subject to control by custom dealing with intra-community trade and exchange. For instance, such products are subjected to a phytosanitary control and these include medicines, firearms, works of art or products subjected to excise duties. ( eg. wines, mineral water, etc.)

The custom department within the framework of the European Union distinguishes the countries with which it maintains privileged relations. Within the framework of associated countries, the custom duties are eliminated or reduced in the case of certain products. (Please refer to the Table of preferential agreements).

EU-Third Countries Agreements

The European Union has implemented many agreements with non-european countries. In order to obtain a complete list of EU agreements with Third Countries, please click here.

The custom clearance modalites

The modalities of passing through the Customs include the presentation of merchandise to a Custom Office and to subject the same to a custom regulation. The administration of these custom offices admits only some persons for effecting the passage through customs. These are :

• Merchandise owner
• The professional declarant : The authorised custom commissioner who is in-charge of execution of custom formalities for his clients.
• The forwarding agents are often called in for this function.
• The other declarants are : those entitled to an authorisation to effect custom clearance.

Submitting to Custom Department

After import, the goods are received, whatever maybe the mode of transport used, by a brief declaration of the goods (the manifest of the goods for air and maritime transport, Way Bill , Counterfoil of the TIR book for Road Transport), unloading (depositing in the warehouse) and taking into charge by the customs authority.

On export, the declarations of the goods must be registered right from the point of arrival of the goods at the office or in the premises indicated by the custom department. The presentation to the custom office is here carried out by registration of the declaration in detail or a simplified declaration of export.

Storing or warehousing

After presentation to the custom office, the goods are either passed through the custom or warehoused and they are warehoused or put in the area of custom clearance. One has to take into account two types of merchandise for this procedure :

Goods in waiting

After import : the operators are bound to assign within 3 clear days a custom regulation for the merchandise in the custom office. This period being short, the Stores and Areas of Custom Clearance (temporary) are put at the disposal of the officials (MADT).
After export : as a compliment to MADT, there are warehouses and areas of export (MAE)

Questionable merchandise

These are warehouses which concern the merchandise under special supervision. The entrepot warehouses are public and create expenses inherent to merchandise. The maximum duration of their stay is 4 months and manipulations are done at the risk and peril of the owner.

Custom declaration

Although the custom formalities are eliminated at the intra-community frontiers, the Single Administrative Document (DAU/SAD) is maintained as a support document registering customs declarations with third countries.
In order to give effect to this declaration, the companies must compulsorily do the following :

The Single Administrative Document comes in the form of a booklet of 8 pages delivered by the Chamber of Commerce or by the Customs Department. It can be divided as per the formalities that are desired to be observed by the operators of the booklet. Example : for a single export, one should use the folios 1, A, 2, 3

Other documents will be presented at the time of the operation of customs clearance such as:

• trade Invoice
• transit papers covering transport
• certificates of circulation and origin (to obtain permission from the customs department)
• the certificates of circulation: EUR1, EUR2, ATR
• T2L document

Determining custom duties

Custom duties are different according to the value declared to the Custom. The parts of the declaration that are necessary for charging are value, the type of tariff and origin of the goods.

The value declared to the Custom

Majority of the imported products are taxed on an "ad valorem" basis, i.e to say , calculated on the basis of reference which is the transaction value of the merchandise at the time of entry into EU. The importer must also get information on the existence of ceilings or tariff suspensions and also regarding eventual opening of tariffs and quotas.

Type of tariff

The imported or exported merchandise is classified into the types of tariffs attracted by them under the international nomenclature of "harmonised system of description and codification of merchandise" (code of 12 digits + 1 letter).
The latter is going to define the rate of Custom Duty, the rate of VAT, additional charges, application of quotas, sanitary norms and controls.
Determination is at times very complex because one must know the exact composition of the product. In case of doubt, the company consults the Customs Office and gives a written application on a form which is called Restrictive Tariff Information (RTI).

Origin

It is the country from where the merchandise is considered to have originated, and this should not be confused with the source of supply. Merchandises declared as having its origin in the country of fabrication. If, the fabrication took place in several countries, one has to take into account the country where the last processing of the goods took place.(certificate of origin)

Procedures of customs clearance

Administration of Custom Offices lays down several procedures of Custom Clearance :

The procedures of common duty

For better and faster services to the people dealing with the customs offices, a new system for electronic submission (and checking) of the required documents has been developed :

ICIS - Integrated Customs Information System.

Today many of the custom offices are equipped with this system, which started functional operation by the end of 2000. This is an automated processing of declarations among companies or the forwarding agent and the nearest Custom Office. This system makes it possible to have very quick Custom Clearance and the ability to check validity and/or completion of the required documents before arrival to the customs. The ICIS is introduced to the rest of the customs offices.

Custom Clearance Procedure at Domicile

This procedure is applied to companies having regular flow of import and export trade. It saves time for them since the formalities of custom clearance are observed within the beneficiary institutions. The Custom Clearance procedure at Domicile is reserved for those companies which have a minimum of 50 declarations per year. The company must take advantage of this procedure by offering financial guarantees and having at their disposal a goods removal credit. On the other hand, the products shall not be subject to a licence and belong to the framework of specific products.

Simplified Custom declaration procedure

The simplified customs declaration procedure has recently replaced the simplified procedure in the office.
It allows safe and quick custom clearance of the merchandise. It has such advantages as lightning of custom formalities and quick removal of the merchandise. These advantages are connected to the fact that the parts of the simplified custom clearance procedure are regrouped in a convention between the operator and the custom department. Custom declaration is simplified because it has only 12 basic parts allowing identification of products and finally a declaration of regularisation is supplied subsequently in the form of a summary declaration or item by item declaration. This procedure is especially meant for small and medium companies.

Types of custom arrangement

The merchandise that circulates or that remains at a given place gives rise to an application for different types of custom arrangement. The custom arrangements are going to allow one to determine the itinerary of merchandise and the custom duties which are going to be levied. Certain types of merchandise are liable to custom duty , while others are in suspension. In all there are 16 different types of custom arrangement.

General Types of Arrangement

Arrangement of Introduction

It consists of exporting or importing merchandise with the intention of leaving the same abroad.
Within the framework of the EEC, the Custom duties are eliminated and the payment of VAT is made in the importing country.
If the importer does not belong to the community, the custom duties and VAT shall be paid, except if the country under consideration has signed the preferential tariff agreements.
Use of liberal practice
This arrangement allows one to import merchandise directly from a third country and let it circulate like EEC merchandise after having been cleared from customs at any place on the EEC territory.

• Payment of custom duty and VAT among the countries of EEC and the third countries
• Payment of VAT in case of transit through EEC territory (cf. the types of arrangement of transit).

Availability for consumption

The final point of this type of arrangement is free availability of goods imported from the National Territory.

The types of economic arrangement of custom

Warehousing after Import

This type of arrangement allows warehousing of foreign merchandise coming from a third country. This allows one to store the merchandise and sell it as and when possible.
Suspension of custom duties and VAT until the time of departure from the warehouse.

Warehousing before Export

These types of arrangement allow one to store under the control of the custom department the goods that are meant for export. The storage takes place on the national territory.

Exemption from VAT

Maximum duration of storage : 2 years

Temporary type of economic arrangement

Arrangement of Returns

This type of arrangement allows one to re-import the previously exported merchandise in a single exit but, the return of which results from a fortuitous case (defective material) or due to cancellation of contract.

• Partial or total suspension of custom duties and VAT
• Calculation of custom duties on temporary prorata basis (by months of utilisation)

Type of Arrangement of Samples

This is the type of arrangement which facilitates temporary import or export of the merchandise meant for being utilised in the State (eg : International Fairs). This temporary admission requires a VAT notebook

(combination of Temporary Admission - and french words "Admission Temporaire"). The ATA Convention brings together hundreds of member countries.

The duration is limited to 3 years / Exemption from custom duties

The types of custom arrangement allowing processing of merchandise

Active Finishing in suspension

This type of arrangement consists in importing raw materials from a third country in order to subject the same to processing. At the end of this type of arrangement, the goods or finished products are re-exported outside the community.

- Exemption from custom duties and VAT.

Active finishing for compensating

In this type of arrangement, the spare parts forming part of the product are imported from a third country and assembled in a country of EEU.

The products obtained are sold on the EEC territory and outside. This type of arrangement presumes the use of free practice and simultaneous consumption of merchandise which remain within the Community.

The finished products which remain inside the EEC are not exempted from Custom Duty nor VAT. On the other hand, in the case of products exported outside the community, a reimbursement of custom duties charged on spare parts shall be allowed.

Passive Finishing

The type of arrangement of passive finishing allows processing or repair of temporarily exported goods outside the community, but in view of the re-import of the products obtained within the community. This type of arrangement benefits from differential taxation which consists in deducting from custom duties imposed on finished products the amount of custom duties imposed on raw materials.

Import of products obtained as partial or total exemption of custom duties
(Principle of differential taxation).

Type of Arrangement of Standard Trade and Exchange

This type of arrangement is used in the case of repair or standard exchange of merchandise(defective merchandise).
Partial or total exemption from custom duties and VAT. The merchandise substituted gets the benefit or differential taxation.

The types of Arrangement of transit

National transit

This type of arrangement consists in importing products from a third country. These latter circulate afterwards under transit on the National territory up to the site of the addressee company.
Suspension of custom duties and VAT for merchandise circulating on the National territory. This type of Arrangement is convenient for all types of transport.

EEC transit

This type of arrangement aims at regulating the operations within the community. The true transit inside EEC makes it possible to import merchandise from a third country and allow them to circulate in transit inside the EEC territory.

Suspension of custom duties and VAT. This type of arrangement is suitable for all types of transport.

Common transit

Is the same principle as in the case of transit within EEC but between the European Union and European Free Trade Association (EFTA).

International transit

This type of management relates to the operations which take place between at least two countries. International transit came on the scene with railway transport, then air transport and finally road transport. As for the road transport the International Convention provides for use of a single document accompanying the merchandise. This document is a TIR/ IRT booklet(International Road Transport).
- The truck must carry the TIR registration plate indicating suspension of custom duties and VAT.

Services

Emporiki-Trade proposes to you to find the customs' classification number of your product of a given product; once this number is known, Interex Services can indicate custom duties applied to this product at the point of entry into the country of your choice.