Inward Processing
Inward Processing - Reference Amounts
When goods are placed under the Inward Processing procedure, a comprehensive guarantee must be provided to cover the potential customs debt and other charges that may arise. To establish the level of coverage required, reference amounts must be calculated. These reference amounts represent the maximum potential customs debt that could become payable at any given time during the authorization.
For Inward Processing, the customs debt is calculated on the basis of:
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Import duties (customs duties based on the tariff classification and customs value of the goods),
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Excise duties, where excise goods are concerned,
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Import VAT, where applicable.
The calculation of reference amounts is therefore based on the customs value of the goods, the relevant duty rates, excise rates, and VAT liability. This ensures that the comprehensive guarantee adequately secures the financial interests of the customs authorities while reflecting the operator?s specific business activities under Inward Processing.
The following section sets out the reference amount calculations and accompanying explanatory notes. These form the basis for determining the guarantee required for the authorization.
Note on Calculation Method
Reference amounts must be established on the basis of the CN code of the goods, as this determines the applicable customs duty, excise duty, and VAT treatment. For practical purposes, goods that fall under different CN codes but are subject to the same duty rate and excise/VAT treatment may be grouped together in the calculation. The operator must, however, be able to demonstrate the detailed breakdown per CN code if requested by the customs authorities.
Reference Amount for the Authorization Period
The reference amount must reflect the maximum potential customs debt that may arise during the entire validity of the authorization. Normally, an authorization for Inward Processing is granted for a period of five years. However, because the goods concerned include ethanol, classified as an agricultural product, the maximum period of validity is limited to three years.
Accordingly, the calculation of the reference amount must cover the total quantity of goods expected to be placed under Inward Processing during this three-year period. This ensures that the comprehensive guarantee secures the customs authorities against the maximum possible exposure for the entire duration of the authorization.
- The quantities are based on the input of the customer;
- The quantity estimates are provided in Metric Tons Vacuum (MTV). The basis of customs duties in case a specific right applies and/or excise duties may require Liters (volume at 15 or 20 degrees) as Unit of Measurement (UoM). Typically the volume is bigger then the weight because of the density being below 0, however, because the quantities are estimates on the higher side, the quantities in weight are regarded as volume as well for the sake of the calculations;
- The values (prices) are based on market prices publicly available, where USD prices are regarded as EUR prices and rounded up. Given the exchange rate at the tie of the calculation the price in EUR would be lower. By regarding the USD as EUR prices and rounding the prices up the estimates are on the higher end and on the safe side.
