1. General information

Processing traffic allows goods to be temporarily imported or exported without having to pay import duties. While goods cannot be freely traded during the processing procedure, they may be processed or repaired. If the goods are re-imported afterwards, import duties are not payable in full. Processing traffic therefore enables greater flexibility in the organisation of production and supply chains.

The processing operation consists of the treatment, processing or repair of goods. Processing traffic is essentially divided into two types: inward and outward processing (Art. 255 ff. UCC).

2. Inward processing

Inward processing allows non-Union goods to be brought into the customs territory of the European Union in order to undergo treatment, processing or repair. After these activities have been completed, the resulting processed products can either be re-exported or released for free circulation.

Companies can import non-Union goods under the inward processing procedure without incurring import duties. Processing within the Union constitutes the inward element of processing traffic. Union goods may also be used for the processing operations and combined with the processed product.

If the goods are subsequently re-exported, the import remains exempt from import duties. Goods may also be released for free circulation from inward processing, in which case import duties are payable.

Inward processing must be completed within a period specified in the relevant authorisation. A security must be provided for goods imported under the inward processing procedure. If the parameters set out in the authorisation are exceeded, import duties become due. The provision of security is intended to cover this eventuality.

3. Outward processing

Outward processing is the counterpart to inward processing. In this case, Union goods are temporarily exported from the Union and processed in a third country. They may then be re-imported into the Union, either fully or partially exempt from import duties. With outward processing, processing operations are carried out abroad on Union goods.

Here too, the necessary authorisation sets a deadline by which re-importation must take place.

In the context of outward processing, it is also possible to re-import replacement products. Replacement products must be in the condition that the processed product would have been in if processing had taken place (so-called standard exchange). When imported, replacement products are treated in the same way as processed products. Partial or full exemption from import duties may also be claimed for replacement products.

If only partial exemption from import duties is granted, the customs value is determined according to the processing carried out in the third country.

4. Authorisation procedure

Both inward and outward processing require formal authorisation from the customs authorities. Authorisation may be granted either as a single permit for a specific operation at the time of import or export, or as a standing permit for ongoing operations of the same type. For business models that regularly make use of processing procedures, it is worthwhile applying for a standing permit.

Authorisation requires a comprehensive explanation of the company's internal customs processes. In particular, practical and professional competence to comply with customs procedures must be demonstrated, usually by means of an internal work instruction.

The authorisation sets out the main terms for the processing procedure. The nature and scope of imports or exports, as well as the planned processing activities, must be described. Proof of the identity of the goods is especially important here. Proof of identity demonstrates that the processed products are those that were previously subject to the processing procedure.

If customs obligations arising from the authorisation or other regulations are breached, practical and professional competence may be called into question. In this case, the authorisation may be revoked.