Customs procedure of release for free circulation
Release for free circulation shall entail the following:
- the collection of any import duty due;
- the collection, as appropriate, of other charges, as provided for under relevant provisions in force relating to the collection of those charges;
- the application of commercial policy measures and prohibitions and restrictions insofar as they do not have to be applied at an earlier stage; and
- completion of the other formalities laid down in respect of the import of the goods.
Articles 201–209 – scope and effect, commercial policy measures and relief from import duty: returned goods and sea-fishing and products taken from the sea(EU) 2015/2446
Article 135 – oral declaration;
Article 138 – declaring by acts;
Articles 155–160 – authorisation for the drawing up of banana weighing certificates; goods considered to be returned in the state in which they were exported
Articles 251–257 – submission of the information required for relief from import duty, INF 3
Non-Union goods which, having been exported as Union goods from the customs territory of the Union, are returned to that territory within a period of three years and declared for release for free circulation will, upon application by the person concerned, be granted relief from import duty.
Relief from import duty apply even where the returned goods represent only a part of the goods previously exported from the customs territory of the Union.
The application for relief from import duty is made according to the completion of the customs declaration for release for free circulation. This means that additional procedure codes F01–F05 are used.
Additional procedure codes:
- F01 – relief from import duty applied to returned goods (Article 203 of the Customs Code);
- F02 – relief from import duty applied to returned goods (special measures laid down in Article 159 of Delegated Regulation (EU) 2015/2446 on agricultural products);
- F03 - relief from import duty applied to returned goods (special measures laid down in Article 158 (3) of the Delegated Regulation (EU) 2015/2446 (treatment or handling);
- F04 – processed products which were originally re-exported from the customs territory of the Union subsequent to an inward processing procedure (Article 205 (1) of the Customs Code);
- F05 – relief from import duty, value added tax and/or excise duty applied to returned goods (Article 203 of the Customs Code and Article 143 (1) (e) of Directive 2006/112/EC). This additional procedure code is used where the exporter and the importer of the goods are the same person.
If the customs declaration for export of the goods was lodged in Estonia when the goods were exported and the same person will re-import the goods, procedure 6123 can also be used for the return of the goods.
Relief from import duty is granted if the goods are returned in the same state in which they were exported. Goods are considered to be returned in the state in which they were exported where, after having been exported from the customs territory of the Union, they have not received a treatment or handling other than that altering their appearance or necessary to repair them, restore them to good condition or maintain them in good condition.
In order to qualify for relief from import duties, information proving that the conditions for granting the relief have been fulfilled must be submitted. The information is submitted at the time where the declaration for release for free circulation is lodged, this means that it is required to make a reference to the export declaration or submit a printout of the export declaration from the information system certified by the customs authorities or the information sheet INF3 issued by the customs authorities as a supporting document ((EU) 2015/2447).
Where, prior to their export from the customs territory of the Union, the returned goods had been released for free circulation duty-free or at a reduced rate of import duty because of a particular end-use, relief from duty on returned goods is granted only if they are released for free circulation for the same end-use.
Where the end-use for which the goods in question are released for free circulation is no longer the same, the amount of import duty will be reduced by the amount collected on the goods when they were first released for free circulation.
Relief from import duty is not granted to goods, which have benefited from measures laid down under the common agricultural policy involving their export out of the customs territory of the Union.
In a specific case, relief from import duties is possible only if all of the following conditions are met:
- Goods which benefited from measures laid down under the common agricultural export refunds or other amounts paid under the measures provided for under the common agricultural policy have been repaid or prevented or other financial advantages have been withdrawn;
- the goods were in one of the following situations:
- they could not be put on the market in the country to which they were sent;
- they were returned by the consignee as being defective or non-contractual;
- they were re-imported into the customs territory of the Union because they could not be used for the purposes intended owing to other circumstances outside the exporter's control;
- the goods are declared for release for free circulation in the customs territory of the Union within 12 months of the date of completion of the customs formalities relating to their export or later where allowed by the customs authorities of the Member State of re-import in duly justified circumstances.
See more: Import customs declaration processing system Impulss (in Estonian).
Pursuant to subsections 17 (2¹) and (2² ) of the Value Added Tax Act it is possible to place goods under the customs procedure of release for free circulation (procedure code 42) exempt from value added tax.
In order to use procedure code 42, the following conditions must be met:
the importer of the goods is an Estonian taxable person. If the importer is a person of another Member State of the European Union (hereinafter referred to as a Member State) who is not a taxable person for VAT in Estonia, the procedure can be used if the importer is indirectly represented by a customs agency which is liable to VAT in Estonia.
If the importer is a person in Estonia, the procedure can only be used if the importer is registered for VAT purposes in Estonia.
After release, the goods must be delivered to another Member State without delay in the same state to a taxable person registered for VAT purposes in that State (hereinafter referred to as the final consignee).
Goods are considered to be in the same state if they have not received a treatment or handling other than that necessary to repair and restore them or maintain them in good condition.
Without delay means that the goods must be delivered to another Member State immediately. Only temporary interruptions related to the repair or restoration of goods and movement (e.g. loading of goods from one means of transport to another) are allowed.
Upon placing goods under the procedure, the declarant must prove his intention to convey the goods to another Member State to the final consignee by accompanying documents.
When placing goods under the procedure, the declarant has to submit a security to cover value added tax due related to the incurrence of the customs debt pursuant to subsection 120 (1¹) of the Taxation Act . The calculation of the amount of security is regulated by the Regulation of the Minister of Finance "Bases for determining and calculating the amount of security required to ensure payment of taxes other than customs duties due in connection with the incurrence of customs debt" (in Estonian) established on the basis of Subsection 120 (4) of the Taxation Act.
After the goods have been delivered to the final consignee in another Member State, the declarant has to provide a confirmation to the supervising customs office. The confirmation may be an accompanying document or a copy of it bearing the original marking added by the final consignee proving the receipt of the goods.
In order to complete supervision, you need to open +mark at 94000 – Monitoring procedure 42 – on the summary page of the customs declaration and attach a document certifying that the goods have been delivered to the country of destination. Then confirm that supervision has been completed.
If the confirmation of delivery of the goods to the final consignee has been provided for the discharge of supervision, the supervising customs office will end the supervision of the declaration and release the security.
If confirmation of the delivery of the goods to another Member State has not been submitted after the expiry of the time limit set for that purpose (generally 30 days of the acceptance of the customs declaration) or if the declarant is unable to prove to the satisfaction of the customs authorities that the goods have been transported to another Member State, the supervising customs office will require payment of VAT on the goods previously exempted.
The transfer of goods to another Member State creates the intra-Community supply of goods.
If the importer of the goods is an Estonian taxable person, the intra-Community supply must be declared on the value added tax return (hereinafter the VAT return) and on the report on intra-Community supply. If the importer is a person of another Member State who is indirectly represented by a customs agency registered for VAT purposes in Estonia, the intra-Community supply of goods carried out on behalf of another person is declared by the customs agency only on the report on intra-Community supply, there is no need to declare it in box 3 of the VAT return among the operations and transactions subject to the 0% rate of taxation.
If, as a result of subsequent verification, it appears that, despite the confirmation of delivery of the goods to the final consignee in another Member State submitted for the purpose of releasing the guarantee, the goods are still not delivered to another Member State, the previously exempted goods will be subject to VAT.
If, as a result of subsequent verification, it is established that the intra-Community supply of the goods has arisen as a result of the transfer of the goods imported under procedure code 42 to another Member State, or the intra- Community supply has been carried out on behalf of another person by indirect representation and the transaction has not been declared on the report of Intra-Community supply, persons who failed to perform their obligation have to declare the intra-Community supply of the goods in accordance with the provisions of the Value Added Tax Act.
When completing a customs declaration for placing goods under the customs procedure for release for free circulation under code 42, the following specifications are to be taken into account:
in one customs declaration, you can declare only goods sent to one person (one final consignee) in one Member State;
country of destination 1603000000 must be a member State (except EE);
taxable persons 1316031000 (Role) and 1316034000 (Value added tax number) must be selected and indicated as follows:
- FR1 Importer (Estonian VAT payer) – any person or persons designated or recognised as liable to VAT by the Member State of importation in accordance with Article 201 of Directive 2006/112/EC;
- FR2 Client (VAT payer of another Member State) – a person designated or recognised as liable to VAT by the Member State of importation in accordance with Article 200 of Directive 2006/112/EC;
- FR3 Tax representative (customs agency that is VAT payer in Estonia) – a tax representative designated by the importer. The tax representative is liable for payment of VAT in the Member State of import.
When using procedure 42, it is possible to show the role of a taxable person on the customs declaration in the following combinations:
- FR1 and FR2 are used if the importer has an Estonian VAT number. FR1 is for marking the importer's Estonian VAT number and FR2 is to indicate the VAT number of the final consignee of goods in another Member State;
- FR3 and FR2 are used if the importer is a person of another Member State who does not have a VAT number in Estonia. FR3 is used for indicating the Estonian VAT number of a customs agency that is an indirect representative of the importer and FR2 is to indicate the VAT number of the final consignee of goods in another Member State.
The Regulation established a Community system to prevent, deter and eliminate illegal, unreported and unregulated fishing. Pursuant to Article 12 of the Regulation, fish and fishery products may only be imported into the Community when accompanied by a catch certificate.
Pursuant to Article 12 (4) of the Regulation, the catch certificate may be validated and submitted by electronic means. When fishery products falling within the definitions set out in Article 2 of that Regulation are imported and re-exported, catch certificates can be uploaded in the data processing system Complex as supporting documents to the customs declaration.
In case of electronic submission of the catch certificate, the customs declaration supporting documents should be filled in as follows: code C673 of the catch certificate is inserted in box 44AA, the number or numbers of catch certificate in box 44AB, and the scanned catch certificate(s) together with attachments are inserted in box 44BC.
Pursuant to Article 22 of the Regulation, originals of the catch certificates submitted for importation, the catch certificates validated for exportation and the validated re-export sections of catch certificates must be maintained for a period of three years. Economic operators also have the option of submitting catch certificates on paper, but to speed up customs clearance, we recommend submitting catch certificates electronically.
The Regulation establishes the rules for checking the net weight of fresh bananas, which provide for that economic operators authorised by the customs, i.e. "authorised weighers" must determine the net weight of fresh bananas by weighing, and draw up a relevant weighing certificate.
The banana weighing certificate must be attached to the customs declaration for release for free circulation.
As of 22 March 2021, the Tax and Customs Board has authorised two companies to weigh fresh bananas: SGS Eesti AS and Inspectorate Estonia AS.
The European Commission updated the guidance documents on customs operations at the end of the Brexit transition period and henceforth.
The guidelines can be found in the document "Withdrawal of the United Kingdom and EU rules in the field of customs, including preferential origin".
Please pay attention to point 9, which describes the most important change. It provides that, as of 1 January 2021, when declaring non-Union goods that were in temporary storage or under a special procedure (processing, storage, specific use) for free circulation (including the end-use procedure) before the end of the transition period, code Y067 must be inserted in box 44 of the supporting documents of the customs declaration.
It is not necessary to add the code if goods in temporary storage or under a special procedure at the end of the transition period are placed under the transit procedure after 1 January 2021.
The amendment concerns all imports irrespective of their relationship with the United Kingdom.
Code Y067 must be inserted if the Chinese goods are placed in a customs warehouse in Estonia on 1 September 2020 and declared for free circulation in Estonia on 3 September 2021.
Code Y067 need not be inserted if the Chinese goods are placed under the inward processing procedure in Estonia on 6 January 2021 and declared for free circulation on 2 February 2021.
Code Y067 need not be inserted if the Chinese goods are in temporary storage as of 31 December 2020 and on 5 January 2021, the goods are placed under the transit procedure, which is terminated on 6 January 2021 by moving the goods to another temporary storage facility and subsequently releasing for free circulation.
Article 138 of Regulation (EU) 2015/2446 (Delegated Regulation) is supplemented by a new point (h). According to point (h), organs and other human or animal tissue (including bone marrow) or human blood suitable for permanent grafting, implantation or transfusion may be declared for release for free circulation using another act.
Pursuant to Article 141 (1) of the Delegated Regulation, any of the following acts shall be deemed to be a customs declaration:
- going through the green or ‘nothing to declare’ channel in a customs office where the two-channel system is in operation;
- going through a customs office which does not operate the two-channel system;
- affixing a "nothing to declare" sticker or customs declaration disc to the windscreen of passenger vehicles where this possibility is provided for in national provisions.
This amendment (i.e. Articles 138(h) and 141(1)) has been included in the Regulation amending the UCC Delegated Act adopted by the European Commission on 3 April 2020. The amendment applies retroactively from 15 March 2020.
Last updated: 28.03.2022