The European Union has concluded preferential agreements with a large number of countries and groups of countries. These preferential agreements strengthen trade relations and the exchange of goods between the countries involved by reducing tariffs and other trade barriers. In order to benefit from a preferential agreement when exporting to an agreement country, the goods in particular must meet special requirements. These requirements must be documented in a formal proof of preference (e.g. movement certificate EUR.1) and, if necessary, be able to be proven to the customs authorities.
The presentation of the proof of preference at the time of the import customs declaration in the country of destination, in turn, forms the basis for the preferential import processing.
A vendor declaration is a document in which the vendor provides the buyer/recipient with information on the preferential originating status of the delivered good(s). Vendor declarations are used almost exclusively for deliveries of goods within the European Union. The legal basis for issuing vendor declaration in the EU is essentially the Union Customs Code (UCC) and its implementing regulation. Supplier's declarations are not subject to any formal requirements and can be submitted as a stand-alone document or as a declaration on an invoice, delivery bill or other commercial document relating to the business transaction. However, their exact wording is bindingly regulated in the Implementing Regulation (EU) 2015/2447 and compliance is mandatory. Even minor deviations may lead to non-recognition by the authorities. There is no legal obligation to issue a vendor declaration, but a vendor may be obligated to issue one by (purchase) contract.
Vendor declarations for goods without preferential originating status do not conform to the recipient the preferential originating status of the delivered goods themselves, as this has not (yet) been fully achieved. Instead, they provide information on the origin of the input materials used, which are usually procured externally. In practice, however, this form of vendor declaration is rarely used and is therefore not considered further in this article.
Another possible distinction is which delivery(s) are referred to in a vendor declaration.
If the vendor declaration relates to exactly one delivery of goods, it is often referred to as an individual declaration. This form is particularly suitable for transactions where, from the outset, no regular delivery of the goods in question to the recipient is planned, or the goods delivered are of such a nature (e.g. custom-made, configured goods) that regular delivery is unlikely or impossible.
The counterpart to this is the long-term supplier's declaration (LLE). This declaration can be issued for future deliveries for a period of up to 24 months. The issuer of the declaration undertakes to regularly review the underlying facts and to revoke the long-term supplier's declaration in the event of changes that lead to a deviating preference statement.
Long-term vendor declaration must include the following information:
The information on preferential origin from a vendor declaration can apply equally to exports to a preferential country and to deliveries within the EU. The following scenarios are relevant:
vendor declarations initially document the preferential status of materials procured from EU-based third parties. If the purchased materials are resold and delivered in unchanged condition (e.g. in the case of merchandise or frequently in the case of spare parts), then the matter is relatively simple: the vendor declaration of the own vendor is valid 1:1 as preliminary evidence for the subsequent declaration. The preferential status can be taken over directly.
The situation is somewhat more complicated for manufacturers and producers. Here, intermediate products flow into a final product during the manufacturing process and are absorbed into it. To achieve preferential treatment, the preferential agreements provide for dedicated rules or conditions that can be assigned to a final product via its commodity code, or more precisely its HS code. The most common form of preferential rule is the value rule.
In addition, there are other rules, such as tariff jump rules or rules that prescribe a certain type of processing in the production process. In addition, there are also mixed forms that combine certain conditions. In the pure value rule, the ex-factory price of the final product is put in relation to the non-preferential inputs. The total value of the non-preferential inputs may only account for a certain percentage (according to the preference rule) of the final product. If this percentage is exceeded, the end product loses its preferential status. If the percentage remains below the threshold, the end product as a whole receives the tariff preference.
The process of evaluation is called Preference determination.
