Inward processing (IP)

What is inward processing customs? Definition

Inward processing is a customs procedureA customs procedure is the set of administrative steps, formalities, and obligations imposed by the customs authority fo… [+] allowing the import of products, raw materials or components intended for processing within the European Union, with suspension of customs duties and taxes. The suspended duties correspond to the difference between the re-exported finished product and the imported elements used; this is the compensation system that characterises this procedure.

Unlike a standard import, inward processing authorises intermediate transformation. The company imports the raw material, processes it, then re-exports the finished product. The suspended duties only apply to the added value created locally.

The regulatory framework, harmonised within the European Union, requires prior authorisation, a compensation account, specific declarations and a financial guarantee. The procedure is aimed at companies involved in processing cycles and requires precise administrative and accounting control.

Context for using this special customs procedure

Inward processing applies to many industrial sectors where the processing of imported products generates added value for export:

• Processing and assembly industries: import of semi-finished parts or components, local assembly, then re-export of the assembled product;
• Raw material valorisation: import of raw or partially processed materials, treatment and finishing, then re-export;
• Finishing improvement: import of raw products, application of specific finishes, coatings or treatments;
• Light processing: cutting, sorting, packaging, labelling or industrial preparation.

Practical challenges of inward processing customs

Inward processing involves significant administrative responsibilities :

• Complex calculation of compensation: an error in the calculation of customs compensation engages the declarant’s responsibility and generates regularisations.
• Prior authorisation: the procedure requires prior authorisation from the customs authority and a detailed file describing the processing.
• Rigorous stock accounting: each import, processing and re-export must be precisely recorded. Missing items and breakages must be documented and justified.
• Yield coefficient: the procedure allows for normal losses during processing (scrap, defects, evaporation). This coefficient must be documented.
• Import/re-export traceability: each imported batch must be traceable until its re-export to prove the destination link.
• Risk of losing benefit: if the products are not re-exported, the suspended duties become payable with interest.

How Conex customs software simplifies inward processing?

Our CUSTOMS via conex™ software automates and secures the entire process:

• Automated calculation
• Integrated stock accounting for inbound and outbound flows
• Automated declarations
• Archiving and compliance

With CUSTOMS via conex™, inward processing management becomes seamless. You control your processing flows; we manage the customs complexity.

Related terms

• Temporary admissionTemporary admission is a special customs procedure allowing the import of goods into the territory of the European Union… [+]
• Re-exportation
• Outward processingOutward processing is a customs procedure allowing the temporary export of Union goods for processing, repair, assembly … [+]
• Special proceduresSpecial procedures are specific customs regimes that allow for the differentiated treatment of imported or exported good… [+]