Sending goods to the EU — problems and solutions


12th January 2021

A number of exporters to Europe have faced problems with sending their goods to the EU. Many lorries have been turned back at the border and over 150 have incurred fines in Kent for the failure to have complete paperwork.

There have been problems at the Irish land border with lorries being turned away. This is leading to shortages of items in Ireland and the Irish authorities have responded by temporarily allowing exporters from the UK to use an emergency movement reference number (MRN) to board ferries if they cannot complete all of the required paperwork. This is only a temporary measure and the Irish authorities will expect hauliers and exporters to have the proper paperwork imminently. It has, however, been agreed that no tariffs apply for goods entering the EU from the UK, that are proven to be of UK origin and a request for preferential treatment has been included on the customs declaration.

The problems with paperwork have also prompted the French authorities to check the documents of all vehicles bringing goods to France instead of the usual sample of vehicles. This is leading to delays in the export of goods into France. The issues most frequently found are:

  • failing to fill out departure declarations properly

  • changing the end destination (so documentation is incorrect)

  • failing to provide correct notifications for agricultural goods and foods

  • the lack of original export health certificates.

Clearly to facilitate trade, exporters and hauliers need to ensure they have the correct documentation. There are, however, a number of misunderstandings that also need to be addressed.

The Percy Pig Problem

Many have heard the problem outlined by Steve Rowe, the Chief Executive of Marks and Spencer. He has said “The best example I can give you of that is Percy Pig. Percy Pig is actually manufactured in Germany. If it comes to the UK and we then send it to Ireland, in theory it would have some tax on it.” This is correct if the goods are sent direct to Ireland from the UK without utilising the available reliefs. A tariff relief for goods originating in the EU when it is sent from one EU member state to another EU member state, even if it leaves the EU in transit, is available and is called returned goods relief. The Irish rules regarding this are at Using this relief would mean that there is no additional tax. This highlights the need to understand the reliefs that are available and to ensure you use the correct documents to get the relief. Customs duties (tariffs) are very bureaucratic and failure to have the correct documents at the correct time will mean extra costs. Once an item is entered for customs it is rare that retrospective paperwork will allow a relief to be claimed. Once a declaration has been made, it is usually final.

Origin rules

One document that is vital for exports to the EU is the certificate of origin document. For goods to claim to be of UK origin the goods must wholly originate in the UK. Alternatively, it may be necessary to provide proof of origin in another country to obtain a relief. In the Percy Pigs example, a certificate of origin form Germany would be useful. If the goods are from a developing country there are often preferential rates of duty applied, so a certificate of origin from that country would be required.

Frequently goods contain components or parts that are sourced from other countries. There are rules that determine how to determine if the goods still originate in the UK or another country. This is an important point to ensure that goods can move tariff-free to the EU from the UK. The deal with the EU is that goods of UK origin can transfer tariff-free. Goods that do not originate in the UK will be subject to EU duties. If they had previously been imported into the UK and UK duties paid, the UK duty can be reclaimed subject to the usual rules.

It is, of course, straightforward to determine the place of origin for goods produced wholly in one country. Frequently, however, there are components in a product that originate in several different countries. Where two or more countries are involved in the production of goods, the goods are deemed to have originated in the country where they were last substantially worked or processed. The following three rules are used to determine if goods are sufficiently worked or processed.

  • The ad-valorem or value added rule — this sets a limit on the value of the non-originating goods in the finished product before the finished product is not considered originating in the country of final production. The amount of added value differs for different products.

  • The change in tariff classification rule — if the tariff classification changes due to processing of the components this is usually a good indication of being sufficiently worked or processed.

  • The manufacture from certain products or specific processes can determine that the goods are sufficiently processed.

It should be noted that simple assembly is insufficient for the processed to be regarded as sufficiently worked or processed to change the place of origin.

The determination of origin of items that originate in different countries is a complex issue and it may be necessary to get professional advice. But, as can be understood it is vital to ensure the goods are of UK origin to ensure that they can be moved to the EU tariff free.


The EUR1 (also known as the movement certificate) enables importers to import goods at a reduced or nil rate under the UK/EU trade agreement. This document is vital to support any claim for preferential treatment (such as tariff-free entry) in the country the goods are being exported to. This includes the EU and any other country the UK has a trade agreement with. EU EUR1s should not be used from 1 January 2021, and UK (UK EUR1) versions are available at suppliers of EUR1s. This includes all Chambers of Commerce. The format of the UK EUR1s will be the same or similar to the old EU versions. HMRC Customs Notice 827 (section 11) describes how to complete an EUR1.

Selling to consumers and not businesses in the EU - VAT

When selling to EU businesses the supply will be zero-rated for UK VAT. The EU business (on the assumption they are the importer) will account for the local VAT on the import.

There are different rules that apply to selling to individuals and non-VAT registered businesses or entities in the EU. Prior to the end of the transition period a UK business selling goods to individuals in the EU, would charge UK VAT on the value of the goods. When, however, the ‘distance selling threshold’ (usually 35,000 Euros) was exceeded there was a requirement to register for VAT in the country where the goods were supplied to. This does not need to be discussed as since 1 January 2021 UK businesses cannot use this facility. The EU is also changing its rules from 1 July 2021 for such imports.

From 1 January 2021 the UK business can zero-rate the supply to the EU non-business customer. The problem that then arises is that the EU customer will have to account for VAT in the EU on their purchase, usually through the postal service or courier. This may be found to be a disincentive for the EU customer to purchase from the UK business. An alternative would be for the UK business to register for VAT in the country the goods are going to and act as the importer. It would then pay the import VAT and claim this back on the VAT return of that country and then charge local VAT to its customer. This may mean that the UK supplier will have to register for VAT in all countries it trades in. It could, alternatively, create an establishment in one EU country and hold stock in that EU country and make use of the distance selling thresholds for supplies to all other EU countries. This may also have direct tax consequences.

A further issue is that the EU is changing its rules for supplies across national boundaries in the EU. From 1 July 2021 the EU is removing the distance selling rules for e-commerce businesses. It is creating what is called a one-stop shop (OSS) where one VAT return will be completed for all sales within the EU (but using the VAT rate for each of the individual states where the goods are sold). For a UK business to make use of the OSS system it would need to register as a ‘non-Union’ VAT payer in one EU member state of its choosing. This will create a solution for supplies made to the EU from 1 July.

Currently the EU does not apply VAT to low value imports. The low value threshold is between 10 Euros to 22 Euros depending on the member state in the EU.


The rules regarding the sale and purchase of goods are complicated — but these rules applied to sales and purchases prior to 1 January for transactions with countries outside the EU. Most of the rules (Northern Ireland excepted) already existed but applied to imports and exports from countries that were not in the EU (such as the USA, Australia, Brazil etc). These existing rules now apply to trade with the EU. Businesses that will face difficulties are those that have not imported or exported previously or have only traded with the EU. Making mistakes with customs documentation can cause considerable delays for the shipment of goods and the payment of unnecessary fees and taxes. It is one of the areas of business where it is worth taking advice to ensure transactions proceed easily and until knowledge is built up.

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