Origin of Goods, Preferences and Supplier's Declaration

The origin of goods is their economic nationality. It is not the same as the country of dispatch, nor the same as "Made in" on the label. Customs law has two concepts of origin, which follow different rules and serve different purposes. Anyone who confuses them can easily issue incorrect proofs.

Two types of origin

Non-preferential origin: It is decisive for commercial policy measures such as anti-dumping duties, additional duties, import restrictions and sanctions, and for certificates of origin issued by the Chambers of Industry and Commerce. The legal basis is Articles 59 to 63 of the Union Customs Code (UCC): goods originate where they were wholly obtained or underwent their last substantial processing or working.
Preferential origin: It determines whether goods can be imported at a reduced or zero rate of duty under a free trade agreement or a unilateral preferential scheme of the EU (Article 64 UCC). The rules are set out in the respective agreement and are often stricter.

Goods can therefore have German non-preferential origin and still not be EU preferential originating goods.

Rules of origin in free trade agreements

Each agreement has its own protocol on rules of origin. The main building blocks are similar:

List rules: For each product, a list sets out which processing is sufficient, for example a change of tariff heading, a maximum share of non-originating materials in the ex-works price or a specific processing step. The correct tariff number is therefore a prerequisite; see the article Tariff number and binding tariff information.
Cumulation: Materials originating in the partner country or in other participating countries may be treated as the exporter's own originating products.
Tolerance: A small share of materials that do not meet the list rule is harmless, usually 10 to 15 per cent of the price or weight, depending on the agreement and the product.
Minimal operations: Repacking, labelling or simple assembly never confer origin.

In the Pan-Euro-Mediterranean zone, the transition period ended on 31 December 2025. Since then, only one set of rules applies between any two contracting parties. With the vast majority of partners the EU applies the revised Convention, and only in relations with Algeria and Lebanon does it continue to apply the old one. This is decisive for cumulation, because diagonal cumulation is only permitted if the same set of rules applies between all parties involved.

Proofs of origin

Which proof applies is determined by the agreement:

Statement on origin: The exporter declares the origin itself on the invoice or another commercial document. In more recent agreements, such as those with Canada, Japan or the United Kingdom, this is the usual route.
Importer's knowledge: The same agreements allow the importer to base the preference claim on its own knowledge of the originating status, without proof from the exporter. This requires reliable information from the supplier and shifts the risk to the importer.
REX: For consignments with a value above EUR 6,000, the exporter must be registered as a registered exporter under these agreements and state its REX number.
EUR.1 and origin declaration on the invoice: In older agreements, above all in the Pan-Euro-Mediterranean zone, customs endorses the movement certificate EUR.1. Invoice declarations above EUR 6,000 there require an approved exporter.

The supplier's declaration

An exporter knows the origin of purchased goods only from the information provided by its suppliers. Within the EU, this is done by means of supplier's declarations under Articles 61 et seq. of Implementing Regulation (EU) 2015/2447.

For regular supplies there is the long-term supplier's declaration under Article 62. It states three dates: the date of issue, the start date and the end date. The start date may be no more than twelve months before and no more than six months after the date of issue, and the end date no more than 24 months after the start date. Anyone who issues a declaration retroactively therefore uses up part of the period of validity.

If the origin changes, the supplier must inform the customer without delay. The customs administration may ask the exporter to have the information confirmed by the supplier by means of an information certificate INF 4 (Article 64). The supplier applies for the INF 4 at its customs office, which issues it within 90 days. This deadline explains why a verification request quickly becomes tight.

Risks of incorrect proofs

Post-clearance recovery from the customer: If the origin turns out to be incorrect, customs in the country of import reclaims the preference from the importer, often for several years. The importer can rely on the protection of legitimate expectations only within narrow limits (for imports into the EU, Article 119 UCC).
Liability: The customer will claim the damage from the exporter, and the exporter in turn from the supplier whose supplier's declaration was incorrect.
Criminal liability: Anyone who deliberately issues incorrect proofs risks proceedings for tax evasion or aiding and abetting it. Recklessly issuing incorrect proofs can be punished as endangerment of tax revenue (Steuergefährdung) under Section 379 of the Fiscal Code (Abgabenordnung, AO). Whether and how German criminal law applies to duties of third countries depends on the individual case.

Audits and verification requests

Customs in the country of import can have the proofs verified subsequently. It then sends a verification request to the customs administration of the country of export, which requests the origin calculation, bills of materials, supplier's declarations and purchase documents from the exporter. The response deadlines are short, and if the origin cannot be proven, the preference is refused. Preferences are also a standard topic in customs audits at your own premises; more in the article Customs audit: procedure and preparation.

What is changing now

Four developments should currently be kept in view:

United Kingdom: The relaxed rules of origin for batteries and electrified vehicles expire on 31 December 2026. From January, the stricter permanent rules of the agreement apply. Without an extension, the standard duty rate of ten per cent will apply. An extension has been requested but not decided.
Mercosur: The agreement has been provisionally applied since 1 May 2026. Exporters with consignments above EUR 6,000 need a REX registration; an authorisation as approved exporter is not sufficient there.
Pacific states: Since 1 September 2026, REX has replaced the approved exporter in trade with Samoa, Fiji, Papua New Guinea and the Solomon Islands. The EUR.1 is no longer accepted there.
Generalised Scheme of Preferences: The new GSP Regulation applies from 1 January 2027. Kenya and Indonesia lose their beneficiary status, and the lowered graduation threshold may cause further sectors to drop out of the preference.

How to proceed

Identify the agreements. Establish which countries you supply and which agreements and forms of proof apply there.
Calculation per product. Check the list rule for each item and record the calculation in writing with bill of materials, tariff numbers and prices.
Maintain supplier's declarations. Request them in good time, check their content and validity and monitor end dates.
If in doubt, no preference. If the origin cannot be proven, do not issue a proof, even if the customer presses for it.
Retain and update. The agreements usually require three years; for tax purposes, the Fiscal Code requires six or ten years. The longer period is decisive. Review again whenever the product, supplier or price changes. With complex supply chains, advice on the individual case is advisable.