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Save Money: How do I get a customs guarantee and reduce it, too?

On-Going Support subscriber and new Customs Manager Angela asks how to cover customs debt by a guarantee. This is what we said


Angela,


Thanks for this question, which we get a lot. Thanks to your ongoing support, subscription, we are pleased to respond in detail and support you in getting one, swiftly and efficiently.


A guarantee is a deposit used to cover debts arising from customs duty, import VAT and excise. It is often required when duty is not paid at the time of import or export. A guarantee may also be needed when the value of import duties is unknown or disputed. If you do not pay the duties or charges when they are due, your guarantor becomes liable for them.

A customs guarantee for import can be required or necessary when you wish to defer duty, operate a duty relief scheme, or use transit. Some countries do not require it, for example, there is no need for a guarantee to use customs special procedures or duty deferment accounts in Great Britain.


Freight forwarders and customs brokers can also manage these procedures and provide a guarantee for you. We can talk you through what you need to discuss with them,


Customs Comprehensive Guarantee

If you require a guarantee it may make sense to think about getting what's known as a Customs Comprehensive Guarantee (CCG) which requires authorisation but allows multiple customs procedures to be covered by one guarantee from a bank or insurer (see below).


In the EU, the conditions to authorise the provision of comprehensive guarantee (Art. 95

UCC) is:

  1. Established in the customs territory of the Union

  2. Fulfilment of criteria "absence of any serious infringement or repeated infringements of customs legislation and taxation rules, including no record of serious criminal offences relating to the economic activity of the applicant" (Article 39 (a) UCC)

  3. Regular user of customs procedures involved or operators of temporary storage facilities or fulfilment of criteria "practical standards of competence or professional qualifications directly related to the activity" (Article 39 (d) UCC)

The rules in the UK are very similar.


What for?

You may need a customs guarantee when importing goods and using certain customs special procedures:

  • Inward Processing

  • Outward Processing

  • Temporary Admission

  • Custom Warehouse

  • Authorised Use


You may need a customs guarantee to move goods to, from, through or between common transit countries which includes the UK and all EU member states without the need to complete customs declarations or pay import duties. If you regularly move goods using transit procedures, you can apply for authorised consignor status, which allows you to start the movement of goods at your own premises rather than at a customs office. This may mean that you need to have such a Customs Comprehensive Guarantee before you can apply.



How large does my guarantee have to be?

Your guarantee amount must be sufficient to cover the full value of all duties and taxes that may be due for all goods in customs processes at any one time.


It's a little tricky but establishing the reference amount works, usually, like this:

  • If an amount can be established with certainty at the time when a guarantee is required: reference amount = amount of debt payable

  • If the amount cannot be established with certainty at the time when a guarantee is required

A) incurred customs debt: reference amount = (future) amount payable

B) Potential customs debt – reference amount will vary according to the time necessary to discharge the procedure


We can discuss in a call how to establish that.


Can I get the amount reduced?

You may be able to qualify for a reduction of some or all of the amount of duty that needs to be guaranteed, subject to meeting financial solvency tests. Again, we can talk you through it.


Possible levels of reduction in the EU:

  • Potential debts: reduction to 30%, 50% or 100% of reference amount –

  • no need to be AEO to apply for these reductions

  • Incurred debts: reduction to 30% of reference amount – only for AEO

Just schedule a free consultation using the booking function.


Can I get a waiver?

We may want to check if you can benefit from a guarantee waiver approval. Conditions may vary.


In the UK, for example, there are 2 types of guarantee waiver approvals possible:

  • approval for a guarantee waiver to defer customs duty, import VAT and excise up to £10,000 per month

  • approval for a guarantee waiver to defer customs duty, import VAT and excise up to a specified amount over £10,000 per month

There are conditions to meet, like:

  • no serious or repeated infringements of customs or tax rules in the past 3 years

  • no record of serious criminal offences related to your business activities in the past 3 years

  • held positive net assets (excluding goodwill) at the date of your application and for the past 3 years (or, if shorter, for the period you have been trading)

  • positive net assets (excluding goodwill) greater than the value of the waiver you are applying for at the date of your application, and at your most recent balance sheet date, to qualify for a guarantee waiver for an amount over £10,000

  • You must also be established in the UK.

If you are an Authorised Economic Operator for Customs (AEOC and AEOF) you may qualify for a guarantee waiver, too. Let's talk about it.


In the EU, Article 89 (7) and (8) UCC

  • No guarantee required for states, regional and local government authorities

  • Goods carried on the Rhine, Rhine waterways, Danube or Danube waterways, carried by fixed transport installation

  • Specific cases temporary admission procedure

  • Union transit procedure using simplification and carriage by sea or air between Union ports or Union airports

  • Article 89 (9) UCC: the possibility for customs authorities not to require guarantee – statistical value threshold (1000 €)

There are more conditions and opportunities, but this may need to be discussed in a talk.


Can I deposit cash?

In the EU, the provision of a guarantee

  • By cash deposit

  • By an undertaking given by a guarantor

  • By another form of guarantee which provides equivalent assurance

The UK does not allow a cash deposit. In the EU, there is a free choice of form of guarantee but customs authorities may refuse where the form is incompatible with the proper functioning of the customs procedure concerned.


How do I find a guarantor?

Formally, the guarantor is a third-person established in the customs territory of where you are. The approval of a guarantor is usually required by customs authorities except for credit institution, financial institution or insurance company accredited in your country. So, you may need to get a guarantor for your customs guarantee. Your guarantor will be liable for any duties or charges you do not pay, so they must have sufficient resources and stability. We can advise on banks and insurance companies that have the approval to act as a guarantor.


Angela, we hope that this reply is useful to get you started. Please remember that there is lots of information regarding duty saving opportunities and transit on our expert blog pages that may also be very useful for you: https://www.customsmanager.org/customs-global-trade-blog


Download

EU Presentation on Guarantees

EU customs guarantee
.pdf
Download PDF • 575KB





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