How to handle (long-term) vendor declarations (LTVDs)

The vendor’s declaration (VDs) is one of the most frequently issued commercial documents in the European Union. The most common is the supplier’s declaration for goods with originating status. It is an important information and proof document and is required, for example, when applying for or issuing proof of preference. Supplier’s declarations are repeatedly the subject of audits by the customs administration within the framework of preference and customs audits.

Supplier’s declarations may be issued by the manufacturers and trading partners of the goods concerned. Companies often ask themselves the question whether they are obliged to issue such a supplier declaration for their customers, because the issue of supplier declarations involves a high level of documentation and considerable costs.

Companies are also required to provide supplier’s declarations, even though these would not have been necessary for their specific business. Therefore we would like to clarify the most important points around the topic of the supplier declaration to you once.

Supplier declaration – what is it?

Supplier’s declarations are simple declarations made between two contractually related persons. These declarations are issued independently by the supplier, without the cooperation of the customs administration or the Chamber of Commerce and Industry (IHK).

There is no legal obligation to issue supplier declarations. However, as a vendor of goods, you may be contractually obligated to issue a vendor declaration. For suppliers, issuing a supplier’s declaration always involves some difficulties, as they must independently check whether the conditions for issuing such a declaration are actually verifiable.

Supplier’s declarations issued without verification of originating status

In practice, the problem often arises that the rules of origin in force are not sufficiently well known. Supplier’s declarations are then issued without verification that the goods have actually undergone sufficient processing.

This is often the case when a customer insists on the issuance of a vendor declaration and the vendor does not want to annoy or lose that customer. However, it should always be borne in mind that the unauthorised making of supplier’s declarations may result in civil and fiscal penalties.

Companies should therefore beware of issuing declarations without first having checked the preferential origin of the goods themselves. In individual cases, the consequences weigh considerably heavier than a single disgruntled customer. If an authorised exporter issues a supplier’s declaration without justification, it is also possible to revoke the authorisation as an authorised exporter.

Possible claims of the customer arising from incorrect supplier declarations shall be enforced by civil law. Ideally, the contract between the supplier and the buyer of the goods already contains provisions on the extent to which compensation should be paid if a false supplier’s declaration is issued. Damages to the customer may occur, for example, if customs duties are subsequently levied or fines ordered. In this area, the existence of conditional intent is sufficient for the facts to be realised.

Who needs supplier declarations?

The supplier’s declaration is primarily an information and verification document. This declaration may be a definitive document proving the preferential origin of goods. In addition, supplier’s declarations are also the prescribed and, according to the requirements of the implementing regulation of the Union Customs Code (UZK-DVO), the only existing proof in the chain to be documented, from the processing or treatment establishing origin to the issue of a formal proof of preference at export.

If pure commercial goods are to be exported on preferential terms, all intermediaries involved in the supply chain must have a valid supplier’s declaration. Only the manufacturer who has carried out the processing of the goods for the first time can then for his part dispense with the supplier’s declaration for his own purposes. Nonetheless, as a manufacturer, he must ensure that the companies following in the supply chain can provide proof of a preferential source of primary material purchased from him, i.e. a corresponding supplier declaration.

What must the supplier’s declaration contain?

The wording of supplier’s declarations or the recognition of supplier’s declarations shall be binding. The mandatory wording is prescribed by Annexes 22-15 to 22-15 to the UZK-DVO. A supplier’s declaration can be made on a form (available, for example, from the Chamber of Industry and Commerce) or on an invoice, an associated delivery note or other commercial document. In the declaration, the goods must be described so precisely that the reference to the goods is clearly identifiable (identity).

It should also be noted that a supplier’s declaration must always be signed by the original exhibitor. An original signature is only exceptionally not required if both the supplier’s declaration and the invoice are created electronically. In this constellation, the declaration can then also be certified electronically, whereby the form of authentication must be agreed between the supplier and the recipient.

If the supplier declaration is only certified electronically, then at least the issuing / processing employee must be identified from the declaration. It must also be ensured that the supplier assumes full responsibility towards the recipient of the declaration if that declaration identifies him as if he had signed it by hand.

The declaration shall be made out without official participation. Accordingly, the supplier of the goods bears full responsibility for the correctness of the declaration made, both to the recipient and to the customs authorities.

Please note that, as a rule, both the issuer (declarant) and the recipient of the declaration must be located in Germany or at least in another member state of the European Union. However, declarations made by a declarant from a third country in the name or on behalf of an EU supplier may also be accepted. However, supplier’s declarations made by third-country trading companies are not recognised

Special regulations must also be observed with regard to the storage and archiving of supplier declarations.

You may also issue supplier’s declarations subsequently. However, there are also a few points to consider when drawing up these declarations later on.

The different forms of supplier declarations

For goods deliveries within the EU there are the following types:

• Vendor declarations for goods with preferential origin
• Supplier’s declarations for goods without preferential origin (operations already carried out in the EU)
• Long-term supplier’s declarations (LTVD) for goods with preferential origin
• Long-term supplier’s declarations (LTVD) for goods without preferential origin

In its most common form, the supplier’s declaration is a declaration of the preferential originating status of a product that has already been achieved. In this context, one also speaks of a supplier’s declaration for goods with preferential originating status. Such a declaration can be issued as an individual supplier for a specific individual delivery or as a long-term supplier declaration (LTVD) for the purchase of goods within a longer overall period.fff

Much less known than the supplier’s declaration for goods with preferential originating status is the supplier’s declaration for goods without preferential originating status. A supplier’s declaration for goods without preferential originating status declares to the consignee that certain working and processing operations have been carried out but which, taken individually, have not yet been sufficient to obtain preferential originating status. In practice, it is indeed the case that this type of supplier’s declaration plays a rather subordinate role, because with the disclosure of the various working and processing steps, the value and source of the input materials used will also have to be declared on a regular basis. However, many suppliers are not willing to disclose their sources of supply and prices. Such declarations can usually be used meaningfully when there are deliveries between two companies.

How to ensure the correct issuance of supplier declarations

• a supplier’s declaration may only be issued if the manufacturer of the goods has assured himself in the preferential agreements (processing lists) that the goods have been treated or processed in such a way as to establish their origin
• a commercial enterprise may only issue a supplier’s declaration if it is in possession of a valid previous document from the previous supplier (supplier’s declaration, movement certificate, declaration of origin)
• Supplier’s declarations issued in a third country are invalid and serve only as information that the supplier is supplying preferential goods – the actual proof of preference in these cases is the movement certificate EUR.1 issued for the respective delivery or the declaration of origin
• Exhibitors and recipients must be domiciled in Germany or in another EU member state; a customs and tax registration of a company domiciled in a third country in the EU is not sufficient – but: possibility of being represented by a company domiciled in the EU
• The wording to be confirmed by the issuer of the declaration assures the recipient of the preferential origin (usually in the European Community) of the goods. It is therefore indispensable to familiarise oneself in detail with the applicable rules of origin. The concept of ‘originating product’ is defined in the Protocols to the respective Agreements. In general, it can be said that in fact all agreements are always based on central criteria. Means that the concept of ‘originating product’ may mean, for example, complete production or sufficient working or processing of the product, or even the acquisition of origin within the framework of cumulation
• The legal basis is the Implementing Regulation (EU) 2015/447 UZK – this regulation specifies the exact wording of the supplier’s declaration (Annexes 22-15 and 22-16). In the event of deviations, recognition may be refused and it is therefore advisable to adhere verbatim to the prescribed wording
• A supplier’s declaration may be made on a form available from IHKs or form publishers, or on the invoice, a delivery note accompanying the consignment or any other commercial document. The goods must be identified in such a way that they can be uniquely identified. However, it is not compulsory to indicate the customs tariff number
• Both the company and the responsible employee must be clearly stated in the declaration
• In the supplier’s declaration only the origin “European Community/ Union” is mentioned. It is also possible to indicate the origin of a particular EU Member State e.g. European Community/ Union (France)
• The use of country abbreviations is allowed in principle, but it must be ensured that the abbreviation EG (or EC) for European Community (European Community) is not used, as these are listed in Iso-Alpha-Code 2 for Egypt and Ecuador, with the risk of confusion – there remains the possibility to write out the designation of origin or to use one of the following abbreviations (EEC, CEE or CE.EU)
• It is also possible to declare preferential origin for goods that have previously been imported from a country with which the EU has concluded a preferential agreement (e.g. Switzerland) with a proof of preference – in such cases, the supplier’s declaration must state the country of origin specified in the corresponding proof of preference
• However, certification of origin other than EU origin only makes sense in trade with the countries of the Pan-European Preferential Zone (EC, EFTA, Turkey and Mediterranean countries), since these countries have concluded identical preferential agreements with each other and thus form a single preferential area
• A supplier’s declaration then lists the countries with which the rules of origin for preferential trade have been checked and complied with (checking is carried out by the manufacturer) – if the goods do not comply with the processing list in a particular agreement, this country may not be listed on the supplier’s declaration
• The naming or number of the preferential transport countries to be listed in the supplier declaration has a decisive influence on the required scope of inspection. For example, a full review of the declaration will require access to all the origin protocols of the countries concerned (agreements). All these Protocols have been published in the promulgating gazette of the European Community.
• The interactive application WuP online (WuP = origin of goods and preferences) also offers practice-oriented access. In individual cases it is also possible to inspect the regulations at the local chambers of industry and commerce or the customs offices. In addition, there is the possibility of the so-called e-VSF (electronic collection of financial management rules), which additionally contain the associated administrative rules (service rules).

Rules of origin – Examination scheme

In simplified form, the originating characteristic of a product can be determined using the following inspection schema.

Most common errors in the issuance of supplier declarations

Long-term supplier declarations – what you should know

With a long-term supplier’s declaration, the supplier proves the origin of goods that have been procured within a certain period of time. This declaration is valid for and with the recipient as long as he still has goods from the specific delivery period. The longest possible validity period for a long-term supplier declaration is two years. Please note that here the date of issue of the declaration is decisive for the calculation of the deadline. Within the maximum validity period, however, the validity period can then be determined for the concrete individual case.

In addition, a long-term supplier declaration can also be issued retroactively in accordance with Art. 62 UZK-DVO. If such a declaration is to be issued retroactively, it must be noted, however, that this is only possible for deliveries that have taken place within a period that lies no longer than one year before the date of issue of the long-term vendor declaration. For deliveries that are further back, only the execution of supplier’s declarations for each individual shipment is permissible.

Unfortunately, it is not possible to combine two overlapping time periods when issuing long-term supplier declarations, because the validity period of a long-term supplier declaration relating to deliveries already made ends on the day of its issue

Dieser Artikel wurde am 10. January 2019 erstellt. Er wurde am 23. June 2020 aktualisiert. Die fachliche Zweitprüfung hat Rechtsanwalt Dr. Tristan Wegner durchgeführt.