What Is Inward Processing and What Are the Benefits?
Inward processing refers to importing goods into the EU, processing these, and hereafter exporting these out of the EU. One common inward processing example is when a product is imported for repair or maintenance and is later exported to be returned to its owner.
What was the procedure before Inward Processing?
Let's examine the former process based on an example of one of our clients.
Our client is a company that calibrates and repairs precision measuring equipment in the Netherlands. They have customers worldwide who send their devices to the Netherlands for repairs. After the necessary adjustments are made, the equipment is send back to the respective owners.
Before the Inward Processing Permit existed, substantial import duties and VAT payments were required for each device arriving at our client's facility. These charges were particularly significant, given the high value of the equipment.
The former process led not only to financial costs, but also to time delays, because a Detailed Value (DV) declaration had to be submitted for every individual unit. This often posed challenges when the equipment did not include proper export documentation.
The solution: Inward Processing Permit
The Customs and Tax authorities can grant a special permit to companies in the EU and UK that process goods from outside the respective countries and export these again - the Inward Processing Permit.
The permit allows a simplified import procedure and eliminates the requirement to pay import duties or VAT. The product is processed or repaired under customs control. Therfore, import duties are suspended, and upon re-export, the suspended duties are cleared.
Inward Processing Guidelines
To receive the permit for temporary importation and processing of products, Dutch Customs and Tax Authority have established strict guidelines:
- Robust administrative procedures, including order numbers and serial numbers that can be easily traced by the Customs Authority
- Clarity regarding the Tax Base, which requires the use of the Harmonized System (HS) Code, customs value, and the origin of the goods
- Mandatory submission of a bill of discharge
The Benefits of Inward Processing
Companies can save time and costs by utilising Inward Processing. The immediate advantage of not having to pay import duties positively impacts the cash flow.
Reduced administrative complexities and customs documentation, not only result in time and cost savings, but also enhances the quality of service provided to your customers.
Lets come back to our client who was facing both financial costs and time delays due to importing the products for repair and then exporting the processed products. We supported our customer with the application for an Inward Processing Permit which has led to the above benefits.
Customs Support: Empowering Global Trade
Custom Support helps improve customs efficiency by assisting with the request for an Inward Processing Permit. Before requesting a customs Inward Processing Permit, we analyse your shipment details. This helps us determine the number of non-EU shipments that are eligible for Inward Processing.
The process of applying for inward processing is an investment from a financial and time perspective. However, it can quickly result in improved efficiency and reduced expenses.
Contact one of our specialists if you have any questions regarding Inward Processing or the procedure of acquiring an permit. We assist you in analysing the feasibility of Inward Processing for your specific needs and provide support throughout the permit application process.