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How to Avoid Customs Duty and VAT with Returned Goods Relief (RGR)

Updated: Jun 24

(rgr) Returned goods relief
trade Phlo

Avoid Customs Duty and VAT with Returned Goods Relief (RGR)

Re-importing goods into the EU without incurring additional customs duties and VAT is a valuable strategy for businesses. Returned Goods Relief (RGR) offers a solution to avoid these costs, ensuring smoother and more cost-effective re-importation processes. This guide delves into the intricacies of RGR, covering eligibility, necessary documentation, and how to efficiently manage the process with digital tools like CAS.

What is Returned Goods Relief (RGR)?

Returned Goods Relief (RGR) is a customs procedure that allows goods previously exported from a specific territory to be re-imported into that same territory without additional customs duties or taxes. This relief is particularly beneficial under the EU-UK Trade and Cooperation Agreement, especially for businesses dealing with frequent cross-border trade.

Importance of RGR in International Trade

The ability to re-import goods without additional costs can significantly impact a business's bottom line. RGR ensures that businesses do not face double taxation on goods that temporarily leave the EU. This is particularly relevant for industries where goods may need to be shipped out for repairs, testing, or exhibitions.

Eligibility Criteria for Returned Goods Relief

Qualifying Goods for RGR

To benefit from RGR, the following conditions must be met:

  • The goods must have originally been Union goods that were exported from the EU.

  • They must be re-imported into the EU within three years of exportation. This period may be extended under special circumstances.

  • The goods should be returned in the same state as they were exported.

However, certain treatments are allowed:

Permissible Treatments for RGR

  1. Repairs and Maintenance: Treatments necessary for repair or to keep the goods in good condition.

  2. Aesthetic Changes: Handling or treatments that only alter the appearance of the goods.

  3. Unintended Treatments: Other treatments done to the goods that were later found to be unsuitable for the intended use.

Impact of Value Addition on RGR

If the value of your goods increases due to treatment abroad, you might be liable for duty based on outward processing rules. However, if you can prove that the treatment was unforeseen and necessary for the goods to be used as intended, full relief can be granted even if the value has increased.

VAT Relief Specifics

VAT relief under RGR is applicable only if the goods are re-imported by the same economic entity that originally exported them. This ensures that the entity that benefits from the VAT relief is the same as the one that bore the initial VAT cost.

Special Considerations for SPS Goods

Goods subject to Sanitary and Phyto-Sanitary (SPS) requirements will be treated as imports from a third country upon their return to the EU. They will undergo full import formalities, including risk analysis, examination, and the presentation of necessary licenses.

Documentation Required for Returned Goods Relief

Proving the Origin of Goods

To qualify for RGR, specific documentation must be provided to prove the goods' origin and their unchanged state since exportation:

Key Documents for RGR

1. Export Declaration: An original or a certified photocopy of the export declaration. Copies must be authenticated by the competent authorities in the exporting EU Member State.

2. Returned Goods Information Sheet (INF3): This form, issued by the competent authorities in the exporting EU Member State and stamped by customs, is essential. It may be completed at the time of export if the exporter anticipates the need for re-importation.

3.Proof of Unchanged Condition: Documentation such as inventory records or other tracking systems showing the goods have not been altered must also be provided.

Special Procedures Module

For re-imports to the Republic of Ireland, Irish Revenue has confirmed that the audit trail housed in the CAS Special Procedures module meets their requirements for RGR. This module retains a certified copy of the export declaration, eliminating the need for an INF3 form. This method may also satisfy RGR requirements in other EU Member States.

Steps to Prepare for Returned Goods Relief

Self-Filing Requirement

To qualify for RGR, self-filing is mandatory. This process cannot be executed by a customs broker and must be managed within a single system that tracks all relevant data. Utilizing a digital platform like CAS can automate this process and ensure compliance with customs authorities' requirements.

How CAS Supports RGR

CAS facilitates the RGR procedure comprehensively, from initial export from the EU, through import/export to and from the UK to the final import back into the EU. Here’s how CAS streamlines the process:

End-to-End RGR Process with CAS

1. Linking Declarations: CAS connects your original export declaration with the import declaration, maintaining an audit trail of goods' movement from the EU to the UK and back.

2. Document Storage: Certified export declarations and proofs of exit are housed in CAS, linked to the declarations, and provide necessary proof for RGR qualification.

3. Batch Tracing: Products can be traced by batch within CAS, providing a detailed audit trail.

4. Declaration Management: Export declarations for shipments from EU plants to GB are uploaded and processed in CAS and import declarations in the UK are produced using preferential treatment for goods with proof of preferential origin.

5. INF3 Documentation: CAS facilitates the request and upload of INF3 documents, manually adding the INF3 reference number to export declarations.

6. Automated Declarations: For shipments from GB to the EU, export declarations are processed in CAS, and import declarations with the RGR procedure are automatically produced in the EU.

Maximizing the Benefits of Returned Goods Relief

strategic Use of RGR

Implementing RGR can provide substantial cost savings and operational efficiency for businesses engaged in international trade. Here are some strategies to maximize the benefits:

  • Regular Audits: Conduct regular audits of your inventory and export/import processes to ensure compliance and identify areas for improvement.

  • Training Staff: Ensure your staff is well-trained in RGR procedures and documentation requirements to avoid errors and delays.

  • Leveraging Technology: Use advanced digital platforms like CAS to automate and streamline the RGR process, reducing manual errors and ensuring accurate record-keeping.

  • Staying Updated: Keep abreast of any changes in customs regulations and RGR procedures to ensure continued compliance and optimization of benefits.

Conclusion: Re-Imports with RGR

Returned Goods Relief is an invaluable tool for businesses engaged in cross-border trade, allowing them to avoid additional customs duties and VAT on re-imported goods. By understanding the eligibility criteria, maintaining proper documentation, and utilizing digital tools like CAS, businesses can seamlessly navigate the RGR process and maximize their cost savings. Stay informed and proactive to fully leverage the benefits of RGR in your international trade operations.

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