The EU-UK Trade and Cooperation Agreement (“TCA“) is good news for trade between the EU and the UK insofar as it removes customs tariffs on imports of “originating” goods (i.e., goods that wholly originate in or are substantially worked or processed in the UK or EU) and serves as a foundation for future EU/UK trade.
However, as of 1 January 2021, there is also a new relationship between Great Britain (“GB“) and Northern Ireland (“NI“) (both part of the UK).
Before the conclusion of the TCA, the EU and UK agreed the NI Protocol, which formed part of the Withdrawal Agreement. The purpose of this NI Protocol is to protect the Good Friday Agreement by preventing a hardening of the border between NI and the Republic of Ireland (“ROI“) (part of the EU) by keeping NI in the EU’s Single Market for goods
(i) NI to ROI and/or EU
This means that goods shipped from NI to the ROI or wider EU are not subject to customs controls, therefore no customs declarations are required and no customs duties are payable for these movements.
(ii) GB to NI
However, because NI is treated as being in the EU Single Market for goods, it must apply the EU customs border at its ports. This means that:
- customs declarations are required for shipments from GB to NI; and
- EU customs duties are potentially payable, although only on so-called “at risk” goods; i.e. goods at risk of onward shipment to the EU. This is to prevent NI effectively becoming a “back door” for goods to be shipped from GB to NI and on to ROI or the wider the EU market in avoidance of EU customs duties.
What goods are not “at risk”?
In summary, there are two main ways that goods shipped from GB to NI can be declared as not “at risk” and therefore not subject to EU customs duties on shipment to NI:
- the applicable EU duty rate is 0%. This includes goods which “originate” in the UK under the TCA rules of origin, meaning traders can claim a preferential rate of duty on import into the EU; or
- the goods are for sale to, or final use by, end consumers located in the UK (not the EU) and are brought into NI by a “trusted trader”, i.e. a trader authorised under the UK Trader Scheme (“UKTS“).
The UKTS is a scheme agreed between the EU and UK in December 2020 which authorises traders to self-declare that goods brought into NI are not “at risk” of moving to the EU, and therefore not subject to EU customs duties. Traders can register for the UKTS on the UK Government’s website.
Once authorised, traders will need to keep supporting documentation for five years as evidence that imports into NI are not “at risk”. Such evidence can include commercial contracts, commercial or delivery receipts, VAT invoices, and/or proof that the goods meet the relevant rule of origin under the TCA (if preference is claimed).
(iii) Third country to NI
For goods which are imported into NI from third countries (i.e. from outside the EU and UK), UK customs duties are payable at the NI border, unless the goods are “at risk” of onward shipment to ROI or the wider EU.
What goods are not “at risk”?
There are two ways goods can be deemed not “at risk” for shipments from third countries into the EU:
- the applicable UK duty rate is the same as, or higher than, the applicable EU duty rate; or
- the goods are for sale to, or final use by, end customers located in NI and are brought into NI by a trusted trader (evidenced, for example, by proof that the goods will be sold in retail stores in NI, or purchased by end customers for their own use in NI).
(iv) NI to GB
No customs declarations will be required for goods moving from NI to GB, and no customs duties will be payable either.