Taxation and Customs Union

Free circulation

Article 23 EC Treaty stipulates free circulation for Community goods throughout the European Community (EC). This principle applies not only to goods made in the Community but also to imported goods which have been released for free circulation after payment of the import duties to which they are liable.

What is the purpose and scope of the procedure of release for free circulation?

The purpose of release for free circulation is to fulfil all import formalities so that the goods can be sold on the Community market like any product made in the EC. Release for free circulation thus confers on non-Community goods the status of Community goods. Article 79 (2) Customs Code (CC) clarifies that release for free circulation entails:

  • both the collection of import duties where goods are liable to them according to the Community Customs Tariff and no duty relief is applicable,
  • and the application of commercial policy measures (such as the presentation of an import authorisation for goods subject to quotas) and any other formalities laid down in respect of the importation of such goods (such as the presentation of a health certificate for certain animals).

Which special arrangements exist under this procedure?

The Customs Code (CC) provides for a number of special arrangements permitting more favourable or simplified conditions at release for free circulation, among which the favourable tariff treatment by reason of the nature or end-use of the goods deserves special consideration.

How are goods entered for the procedure?

Imported goods are entered for the procedure by means of a customs declaration.

The time of acceptance of the customs declaration for release for free circulation (Articles 67, 201 (2), 214 CC) determines, in principle, the date to be taken into account for calculating the amount of import duties if the goods are liable to duties (as well as value added tax and, if applicable, excise duty). This applies both to the nature, customs value and quantity of the goods as well as the duty or taxrate to be applied.

For certain cases in which goods have been placed under another customs-approved treatment or use before being released for free circulation, an earlier date may be taken into account.

Do Community goods keep their status forever?

No, goods released for free circulation, like goods made in the Community, may lose their status as Community goods. This is notably the case where Community goods leave the EC customs territory (Article 4 (8) CC). However the effect of this principle may be avoided, e.g. by resorting to internal transit provisions or requesting issuance of a proof of Community status.