Reduce import duties with EUR.1 and EUR-MED

Agreements on reducing import duties can be found in the trade agreements the EU concluded with various agreement countries. The rules on preferential origin are also in these agreements.

On a EUR.1 and EUR-MED you put the description and preferential origin of your products. And the name and address details of the exporter and customer. In the Netherlands, the KVK approves the origin on a EUR.1 and EUR-MED with a digital stamp and signature. Then Dutch Customs validates these export documents

When is a EUR.1 or EUR-MED document required?

The official name for a EUR.1 and EUR-MED is 'Movement certificate EUR.1' and 'Movement certificate EUR-MED'. They are preferential proofs of origin. The certificates are not mandatory. You can also import and export products without EUR.1 and EUR-MED. You only apply for them for products of preferential origin where you get a discount on import duties.

Benefit

An EUR.1 or EUR-MED benefits you or your customer, because it gives you a reduction or exemption from import duties. When you import products from a contracting country (a country with which the EU has a trade agreement), ask your supplier to send an EUR.1 or EUR-MED with the shipment.

If you are exporting to a contracting country, you can request an EUR.1 or EUR-MED from The Chamber of Commerce, KVK. KVK checks if the goods you export are of preferential origin. Long before you deliver the products, check whether your products are eligible for a EUR.1 or EUR-MED.

Difference between EUR.1 and EUR-MED

You use an EUR.1 certificate for most countries with which the EU has a trade agreement. A EUR-MED certificate is a variant of the EUR.1. It is only valid when trading with countries covered by the Pan-Euro-Mediterranean Agreement (PEM). This agreement allows raw materials and products of preferential origin from several countries to count towards the determination of origin through so-called 'cumulation'. In this case, cumulation means that a product is made in different countries. You add up all those production steps and thus arrive at 1 preferential origin of a product.

On an EUR-MED you have the option to name the countries where part of the production process took place. You do not have this option with the EUR.1 document.

Exports and imports

This article is mainly about using EUR.1 and EUR-MED documents when exporting. When importing, your supplier provides a EUR.1 or EUR-MED.

What is preferential origin?

'Preferential' in this context means that your products have a privileged position. You pay fewer or no import duties for a product of preferential origin. This is subject to conditions that the EU agrees with its contracting countries, the rules of origin for preferential origin. To apply these rules of origin, you first need the HS code or commodity code of your product. An HS code (Harmonized System code) is a code that customs worldwide use to classify products. Each product has a different HS code.

Preferential rules of origin are divided into 'wholly obtained' and 'product-specific operation rules'.

Wholly obtained

Origin is the land where a product is extracted from the ground, grown and harvested, caught, or born. Think of minerals, crops, or animals. This is called 'wholly obtained'. You can easily determine the origin of wholly obtained products.

In trade agreements, some products must meet additional conditions before they are wholly obtained. To check this, view the rules in the trade agreement with the country with which you are going to do business.

Example: Origin of sea fish

For sea fish to acquire preferential EU origin, it must have been caught within EU territorial waters. When you catch the fish outside these waters, you must meet these additional conditions:

• The ship must sail under the flag of an EU Member State.
• The ship must be registered in an EU Member State.
• At least 50% of the ship's owners must be based in the EU.
• At least 50% of the people on board must be EU residents (this last rule does not appear in all agreements).

Product-specific processing rules

If you make products in which you process raw materials and components from different countries, you determine the preferential origin of a product in a different way. An end product acquires preferential EU origin if you 'thoroughly process' EU raw materials and parts such as semi-finished products into a new product. This new product can obtain preferential EU origin in 4 ways. This can be done by:

1. value addition;
2. change in heading;
3. specific manufacturing or processing operations;
4. a combination of the above methods.

1. Value addition

A final product may contain raw materials and components that do not have a preferential EU origin, often up to a maximum percentage. This can be a percentage of the price or of the weight of the final product. When it comes to price, you mean the price that a product has when it leaves your workshop or factory, without transport costs and insurance costs. This is called the Ex Works price.

Example

In the trade agreement between the EU and Egypt, the following requirement applies to outboard engines with a cylinder capacity of less than 325 cm³ (HS code 8407 21): 'manufacturing where the value of all the materials used does not exceed 40% of the Ex works price of the product '. This means you may use parts from outside the EU, if the value of those parts does not exceed 40% of the Ex works price.

The import duty on these outboard motors in Egypt is 10%. You do not pay any import duties with a preferential proof of origin.

2. Change in heading

Headings are the first 4 digits of a commodity code (HS code). When you edit a product so that it shifts from one heading to another, the edit complies with the 'change in heading' (CTH) origin rule. 

Example

For artificial flowers (HS code 6702 10 00 00), the EU-Serbia Trade Agreement requires: 'Manufacture from materials of any heading, except materials of the same heading as the product'. This refers to a change in heading. It does not matter where the raw materials and parts come from, as long as they fall under a heading other than 6702.

Within the EU, a 'more than inadequate processing' must take place. This means that there is a production process within the EU. Just assembling something, for example, is insufficient and is not seen as a production process.

The import duty on these artificial flowers in Serbia is 20%. With a proof of preferential origin this is 0%.

3. Specific processing rule

Some specific components of a product must be of preferential EU origin.

Example

In the free trade agreement between the EU and Tunisia (PEM country), the origin requirement for wooden pallets (HS code 4415 20 20 00) is 'manufactured from boards not cut to size'. This means that the planks you use must be cut to size within the EU or in another PEM agreement country.

The import duty on wooden pallets in Tunisia is 30%. With a preferential proof of origin this is 0%.

4. A combination of the above

There are products for which a combination of the rules of origin mentioned above applies. The product acquires preferential EU origin if you comply with the change of heading and you also use specific raw materials up to a maximum percentage.

Example

In the trade agreement between the EU and Norway, the combined rule of origin for chocolate bars applies (HS code 1806 32 10 00). The bar gets preferential EU origin if all raw materials you use fall under a heading other than 1806. In addition, an extra rule applies to raw materials from Chapter 17, these are the ingredients sugar and confectionery. You may use sugar or confectionery of non-preferential EU origin, up to a maximum value. In this case, a maximum of 30% of the Ex works price.

The import duty on chocolate bars in Norway is 7.69 Norwegian Kroner (€ 0.68) per kilogram. You do not pay any import duties with proof preferential of origin.

Additional rules

If your product does not meet the requirements for preferential origin, you can apply additional rules, in addition to the rules of origin described for the CN codes. These are contained in the articles of the free trade agreement. There may be a few remedies that will give your product preferential origin. Such as the cumulation rule and tolerance rule.

Cumulation

Does the final product you produce not quite meet the preferential origin requirement? Then cumulation sometimes offers a solution. With cumulation, you also use, for example, raw materials that have the preferential origin of the country to which you export. The other raw materials will then have EU preferential origin. KVK can assess for you whether a product gets preferential origin through cumulation.

Tolerance

With tolerance, you may use a raw material of non-preferential origin up to a value of 15% of the Ex-works price.

Regulations preferential origin

You need regulations to assess the preferential origin of products. You will find the rules of origin that apply to your product in the trade agreements of the EU. Use the European Commission's ROSA tool to assess whether your product meets the preferential origin rules.

Preferential origin checks by KVK

As an exporter or supplier, you can now have exporters’ invoice statements and preferential supplier's declarations checked by KVK to confirm the preferential origin of products. This way, you can be sure that a statement is correct. For supplier's declarations of preferential origin, the supplier must be established in the Netherlands.

When exporting to countries outside the EU, you regularly need the preferential origin of products. The rules for this are complicated and often differ per country. The correct preferential origin is not always listed. As a result, an importer may still pay import duties and the shipment becomes more expensive than they expected.

How do you apply for an EUR.1 or EUR-MED?

You request an EUR.1 or EUR-MED digitally from KVK for each export shipment. You have 2 options for your digital application. You arrange this online through an intermediary or you engage a logistics service provider.

What do you need with your application?

You can apply for an EUR.1 or EUR-MED certificate digitally if you are a producer, trader or logistics service provider. You demonstrate the preferential origin with specific supporting documents.

• If you are a producer, you must demonstrate that your product meets the conditions in the trade agreement with the exporting country. To do so, please contact KVK. Make sure you have the correct commodity/HS code for your product at hand.
• If you are a trader, you can request a supplier's declaration of preferential origin 2015/2447 from your supplier. You can also provide the purchase and sales invoice to KVK.
• If you are a logistics service provider, the burden of proof is the same as for the producer or trader for whom you handle the shipment. Also provide an authorisation from your client.

Watch this video for an explanation of export documents.

Validating

When KVK validates the EUR.1 or EUR-MED, you will receive 2 copies back. 1 copy for Dutch Customs that validates the document, and 1 original. This validation is called an endorsement. Customs will place an endorsement on the original (in Dutch: visering). After this, you send the original along with your shipment. Discuss whether your logistics service provider will arrange validation with Customs for you.

Alternative to EUR.1 or EUR-MED

In specific cases, you can also get a reduction or exemption from import duties without EUR.1 or EUR-MED. Some countries do not use EUR.1 or EUR-MED, but only an invoice declaration. You add these preferential origin declarations, or invoice declarations, to your own sales invoice.

What does an EUR.1 or EUR-MED cost?

The costs for an EUR.1 or EUR-MED consist of different components. Depending on the chosen application method, KVK will send you a monthly collective invoice for the issue costs, the so-called fees. In the tariff overview you will find the costs. In addition, an intermediary or logistics service provider charges a fee for their services.