A supplier’s declaration is an important information and reference document used by suppliers to provide their customers with details on the preferential originating status of their goods. In Germany and the EU, it serves as a preliminary proof for obtaining a preference document (EUR.1 or EUR-MED movement certificates or a preferential origin declaration), which in turn forms the basis for preferential customs treatment in the country of destination.
In many cases, customers require their suppliers to provide a supplier’s declaration or a long-term supplier’s declaration. Goods having preferential origin status often qualify for a preferential duty of 0%.
The supplier’s declaration is hence a supporting document suitable to prove tax-relevant facts. Great care should be taken when issuing a supplier’s declaration because an incorrect declaration constitutes a minor tax fraud, i.e. a regulatory offense, that may be subject to a fine of up to EUR 5,000 per false document.
In addition, the issuer may have to face recourse claims from the user of the incorrect supplier’s declaration as the preferential customs treatment may be withdrawn from the user even retroactively if, subsequently, it turns out that the respective goods did not qualify for preferential treatment. Furthermore, a user, who knows that the supplier’s declaration is incorrect, will be prosecuted for tax fraud.
While the export of goods is mostly free of duty and tax, the preferential originating status becomes relevant in the context of the import following the goods’ export.
The EU has concluded preferential trade agreements permitting the preferential treatment of bilateral imports of goods with around 50 countries. Whether or when a good has preferential originating status is subject to the so-called rules of origin laid down in the respective preferential trade agreement.
Prior to issuing a supplier’s declaration, the manufacturer must check whether the mandatory rules of origin (complete manufacture or sufficient working or processing according to the so-called “list requirements”) are fulfilled.
The German customs authority’s internet portal provides free information on the rules of origin that may apply to a product under the applicable preferential trade agreement. The portal can be accessed via wup.zoll.de, with “WuP” meaning “Warenursprung und Präferenzen” (origin of goods and preferences).
In order to avoid recourse claims and fines, it is advisable to have calculations relating to preferential origin double checked by an German customs attorney. The (German) customs authorities and the recipient of the goods may, at any time, demand a verification of a supplier’s declaration. In such case, suppliers must apply to their competent customs office for information certificate INF 4. We will be pleased to assist you in all matters concerning supplier’s declarations and customs law.
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