At a glance
- What it is
- Preferential origin gives the right to reduced or zero duty under free trade agreements. Non-preferential origin is the “Made in” of the goods, which determines duties, trade measures and certificates of origin.
- Who it is for
- Companies exporting to countries with EU agreements, declaring origin on invoices or certificates, or manufacturing with components from different countries.
- How CSD helps
- We analyse bills of materials and production processes, identify the rules that apply to the product’s tariff heading and check they are met, so your origin declarations rest on solid ground.
Preferential origin
Preferential origin is a status of the goods that grants the right to preferential tariff treatment, meaning a reduced duty or a duty exemption under specific free trade agreements signed between the country of export and the country of destination.
To prevent trade deflection and reward only products actually manufactured within the territory of the participating countries, these agreements include protocols listing the criteria for determining preferential origin, and in particular the processing considered sufficient to confer preferential origin (also known as list rules).
Non-preferential origin (Made in)
Defining the non-preferential origin of goods is necessary to apply the EU Common Customs Tariff (the duty applicable to goods from non-EU countries), to apply non-tariff measures laid down by specific EU provisions on trade in goods, and to complete and issue certificates of origin.
Non-preferential origin means the place where the goods were produced or where they underwent their last substantial processing or transformation.
To establish the origin (the so-called MADE IN) of a product, you first need to identify the applicable rule (or rules) and then check whether the production process complies with it.
There are two basic criteria that determine the non-preferential origin of a product:
- Goods wholly obtained in a country always originate in that country
- Where the last substantial processing or transformation took place
This criterion applies to goods processed in two or more countries or made with materials or components not originating in the EU. It is mostly used for industrial goods such as machinery or plants. Under this criterion, goods originate in the country where the last processing or transformation took place, which must be substantial: it must result in a new product with specific composition and properties it did not have before. In practice, it must lead to a change of tariff heading, meaning the first 4 digits of the customs nomenclature code must change. Alternatively, it must represent an important, economically justified stage of manufacturing that adds value, carried out by a company equipped for that purpose.
A list of the processing considered substantial for certain products can be found in Annex 22-01 to Delegated Regulation (EU) 2015/2446, organised by customs classification. The annex contains:
- Primary rules linked to the tariff heading (first 4 digits of the nomenclature) and, in some cases, primary chapter rules (first 2 digits) that may be applied as an alternative to the heading rules
- Residual rules for each chapter (first 2 digits of the nomenclature), based on the origin of most of the materials, calculated by weight or value depending on the case
If there are no primary rules for the heading (4 digits) or chapter (2 digits), the residual rule of the chapter can be used.
For OTHER products not mentioned in Annex 22-01, the so-called list rules can be used, although they are not currently updated; they are available on the European Commission (TAXUD) website.
A residual criterion laid down in the Customs Code can also be used: the country or territory of origin of the goods is the one where most of the materials originate, determined on the basis of their value.