Customs Duty reduction strategies and COVID measures | Indirect Tax Matters May 2020
As the COVID 19 pandemic grips the world, it is more critical than ever that medical equipment and other essential goods can move without restrictions and additional costs.
The European Commission (EC) and Member States customs authorities have put certain measures into place to help facilitate the movement of goods.
We have outlined the key measures below:
1. Duty and VAT exemption
Under Commission Decision (EU) 2020/491, the EC have designated that products designed to combat the effects of COVID-19 may be imported from outside the European Union (EU) without the payment of Customs Import Duty and VAT until 31 July 2020.
In order to qualify for this relief, the goods must be imported to combat the effects of COVID-19 and be imported by one or on behalf of the following organisations:
- State organisations including State bodies, public bodies and other bodies governed by public law
- Disaster Relief Agencies
- organisations approved by Revenue including organisations regulated by the State and involved in the care, support and treatment of people at risk of COVID-19
The goods should be intended for one of the following uses:
(i) distribution free of charge to the persons affected by or at risk from or involved in combating the COVID-19 outbreak by the bodies and organisations referred to above;
(ii) making them available to the persons affected by or at risk from or involved in combating the COVID-19 outbreak free of charge while the goods remain the property of the bodies and organisations referred to above.
2. Customs authorisations – new and existing
In order to ensure the free flow of essential goods, the EC has recognised that some traders may require the approval of customs authorisations to be expedited. It is advised that traders only apply for essential customs decisions and make as much information as possible available to the customs authorities so that they can desk-check the criteria remotely.
From a Revenue perspective, all existing customs authorisations that were due for renewal have been extended until 31 May at which point the situation will be reviewed further.
3. Temporary admission
The EC has declared the COVID 19 pandemic as a ‘disaster’ under the terms of the existing EU Customs law (the Union Customs Code). Therefore, all goods to be brought into the EU customs territory to counter the effects of the ‘disaster’ such as ambulances or medical equipment should be eligible to be declared for temporary admission with total relief from import duty. The legislation provides that the goods can de declared by lodging an oral declaration or by ‘any other act’ e.g. by the sole act of crossing the border.
The same approach can apply to the temporary admission of medical, surgical and laboratory equipment.
4. Border management measures
The EC have also introduced guidelines for border management measures to be implemented in order to protect health and ensure the availability of goods and essential services. These include the following:
- Transport of goods and services
- Guarantee the free circulation and supply of essential goods, in particular products such as medicines, medical equipment, essential and perishable food products and livestock
- Facilitation for safe movement of transport workers
- Provision for the reduction and removal of transport-related restrictions such as waiving of weekend bans on the movement of goods
- Requiring that no additional certification is imposed on goods legally circulating within the Single Market
To ensure the continuous flow of goods across the EU and avoid bottlenecks at key internal border crossings, the EC has proposed designation of the most important border-crossing points as “green lanes”.
This applies to for land (road and rail), sea and air transport and requires that ‘Going through the “green lane” border crossings, including any checks and health screening of transport workers, should not exceed 15 minutes on internal land borders'.
Facilitating Air Cargo Operations
As the number of flights operating throughout the EU has reduced significantly, this in turn has reduced the capacity for air cargo for critical goods. Air Cargo is vital in the fight against the pandemic and EU and global supply chains rely on continued and uninterrupted cargo services for the movement of urgent and perishable goods.
The EC has indicated that Members States should:
- grant without delay all necessary authorisations and permits for air transport from outside the EU
- temporarily remove night curfews and/or slot restrictions at airports for essential air cargo operations
- ensure that open airports maintain sufficient air cargo handling capabilities to ensure timely treatment and delivery.
5. Export of certain medical protective products subject to an export authorization
In order to combat the Coronavirus outbreak and to retain vital stocks within the EU, the EC made the exportation of certain personal protective equipment from the EU subject to an export authorization. These controls came into force on 26 April 2020 and will apply for a period of 30 days. The list of products that require export authorisations are certain types of Personal Protective Equipment (PPE) specifically, protective spectacles and visors; mouth-nose protection equipment; and protective garments. The legislation also requires Member States to swiftly grant authorisations for exports for humanitarian purposes.
The necessary export authorizations are issued by the Trade Licencing and Control Unit of DBEI in Ireland. In principle, Member States may continue to grant export authorizations if there is sufficient availability of personal protective equipment in the Member State in question or elsewhere in the EU.
Customs measures in Ireland
In addition to the measures proposed by the EC, the Revenue Commissioners (Revenue) have also adopted local measures to ensure continuity of trade for importers and exporters.
1. Temporary zero rating for VAT of supplies of medical equipment
Revenue will allow the supply of PPE and medical equipment to the HSE, hospitals and other health care facilities to be zero-rated for VAT provided it is used for the treatment of patients with COVID 19.
Suppliers of these goods should ensure that their customer is entitled to receive zero-rated supplies and should keep appropriate records to reflect this.
2. Importing critical goods
Critical pharmaceutical products and medicines will be allocated a Customs ‘green routing’ on import to facilitate uninterrupted clearance and supply.
3. Presentation of documentation
Customs regulations generally require that the originals of certain documents be presented to Revenue to allow customs clearance of goods.
However, in the circumstances of the current COVID-19 restrictions, Revenue have advised that a scanned copy of original documents (apart from quota licences) submitted through MyEnquiries will be accepted in the clearance of consignments.
They stress however that the original must be retained by all declarants and made available for inspection by Customs if requested or during a post-clearance check.
We continue to monitor the ongoing situation and if you have any questions on this or any other customs matter, please contact our Customs team or your existing Deloitte contact.