Preferential origin determines whether your product can be imported abroad at reduced customs duties. You can use the preference calculation to check whether your goods are eligible for preference. This article shows which rules and data are required for this and how the calculation works. You can also find free Excel templates for preference calculation and other helpful resources here.
Free Excel templates for preference calculation
Template for preference calculation (only in german)
as of Excel 2007
Template for preference calculation (only in german)
Excel 97-2003
What is a preference calculation – and why does it affect your company?
A preference calculation determines whether your product can benefit from tariff concessions when exported. This advantage is a relevant competitive factor for many companies – especially if you export to countries with which the EU has concluded free trade agreements. The most important questions on the subject of origin of goods and preference calculation answered:
What is a preference calculation?
Preferential calculation is a calculation method that you can use to determine whether a product meets the requirements for preferential origin. The result shows whether you or your customer can save on customs duties when importing into a third country with an EU free trade agreement. The basis for determining a possible preferential tariff is the raw materials used in the production/processing of the goods, their origin and the respective processing rules of the relevant agreement.
What are tariff preferences?
Tariff preferences are concessions such as reduced or completely eliminated customs duties. They apply if a product has been sufficiently worked or processed within the meaning of a trade agreement. These benefits arise exclusively on the basis of contractually agreed origin criteria between the EU and the respective partner country.
What is preferential origin of goods?
Preferential origin of goods means that the origin of a product or the place of its main processing is defined as “preferred” for trade between the partner countries as part of an EU trade agreement. The import of goods with such a “preferential” origin is promoted through tariff concessions.
Preferential origin exists if the goods were either manufactured entirely in a contracting state or processed there to a sufficient degree. The so-called list rules define which processing steps are recognized. They differ depending on the product and partner country.
Is it worth calculating and using tariff preferences?
Yes, calculating and claiming tariff preferences has decisive advantages for all companies involved:
- Customs savings for the customer: Products can often be offered more favorably abroad.
- Stronger market position: Preferential goods are more competitive internationally.
- Price advantages in purchasing: Suppliers with preferential status enable more favorable import conditions.
- Legal certainty when exporting: Many business partners require proof of preference.
For whom is the topic of preference calculation relevant?
Checking for possible goods preferences is worthwhile for almost all manufacturing or internationally trading companies, provided preferential agreements exist for the relevant goods. With an individual preference calculation, they can then determine whether customs concessions can also be used for their goods when importing.
When does a preference calculation make sense?
Whether a preference calculation makes sense depends on whether your goods are listed in an EU preferential agreement with the importing country and whether you have all the evidence required for the calculation. The basic rule is: only if an agreement is active and applicable to your product can a preference calculation lead to an advantage.
So which customs agreements are relevant?
The EU has concluded trade agreements with numerous partner countries that provide for reduced or waived customs duties on the import of certain goods. You can find out what these are in our overview of current EU free trade agreements.
Individual rules on processing stages, tolerances and value shares apply to each agreement.
Calculate preferences with BEX template – how it works
What is the basis for calculating whether a product is eligible for preferential treatment?
Eligibility for preference can be determined on the basis of the respective list rules (i.e. requirements for the goods) in the trade agreement. These conditions follow one of three basic methods, which are individualized in the agreement. The three possible principles behind the list rules are:
- Change of position: the tariff number of the product must change as a result of processing.
- Specific processing steps: Specific manufacturing processes must have occurred.
- Value-added rules: A maximum proportion of non-preferential materials must not be exceeded. → This is the method most frequently used in EU trade agreements.
What do I need for a correct calculation of the tariff preference?
A preference calculation requires the following documents and information to be available:
- Parts lists: Lists of all materials and parts from which the goods to be tested were created
- Supplier’s declaration: document from the supplier describing the origin of the goods
- Purchase prices of the primary materials: how much the materials and parts installed/used cost
- Customs tariff number: code from the EU customs tariff that describes the end product
- Ex-works price of the end product: how much the end product is sold for to your customer.
Note: This information is helpful to have at hand, regardless of whether the trade agreement calculates preferences based on changes of position (changed customs tariff number), specific processing steps (certain changes to the goods) or value-added rules (maximum proportion of non-preferential materials). This is because information such as prices is necessary at the latest when you want to calculate the possible customs savings in concrete terms.
Instructions: How do I carry out a preference calculation manually? (video only in german)
Step 1: Check whether there is a trade agreement between the EU and the target country. You can use the EU application Access2Markets to do this.
Step 2: Gather all the necessary documents and information. Also research the correct customs tariff number for the end product. You can find instructions in the free BEX guide to customs tariff classification.
Step 3: Check which list rules (i.e. conditions for preferential authorization) apply to the respective trade agreement: a change of customs tariff number, certain steps in the processing of goods or a percentage maximum of non-preferential materials?
Step 4: Check whether your goods meet the conditions for preferential entitlement. Depending on the agreement, you may need to compare the customs tariff number of the individual parts with that of the end product, compare the production steps carried out with the requirements in the agreement or calculate what percentage of the goods originate from non-EU countries. You can use our Excel template for this. It is best to calculate with the most pessimistic figures in order to compensate for possible price fluctuations (worst-case method) when estimating eligibility for preferential treatment.
Step 5: Record the result of your calculation in writing and archive the documents – preferably for 10 years.
Free download of preference calculation template (only in german)
We have put together a free template for you to calculate your preference calculation. It is suitable for agreements that require percentage rules (value-added rules) for preference calculation. The document consists of 3 pages:
- Page 1: Work instructions, material information, product information, calculation and the preference result
- Page 2: Overview of the valid proofs from your suppliers
- Page 3: Instructions on change options and general information
In the header, you can replace the stored sample address (Lieferanten AG…) with your own company address and insert your company logo.
Simply enter your e-mail address here to request the Excel file. You can then use and save the document without any restrictions.