Customs Guarantee: What It Is, When It Is Required and the Types

Enlarge

What a customs guarantee is

A customs guarantee, referred to in the legislation as security, is a financial instrument that protects the customs authority against the risk that customs duty, VAT and excise relating to goods will not be paid. The Union Customs Code (Regulation (EU) No 952/2013, UCC) regulates it in Articles 89–100 UCC, in the chapter on security for a potential or existing customs debt. The security may relate to a customs debt that has already arisen (e.g. after clearance with deferred payment) or to a debt that may only arise (e.g. during a special procedure, before the goods are accounted for).

When a customs guarantee is required

The obligation to provide security arises primarily when goods are placed under a special procedure or when payment of charges is deferred. In practice this applies to:

• Union and common transit procedures (T1/T2, NCTS) – security for a debt that may arise during the carriage of non-Union goods through the customs territory;
• special procedures, e.g. customs warehousing (Article 211(3)(c) UCC);
• temporary admission and inward processing;
• deferred payment of charges (Article 110 UCC) – security for an amount that is to be paid at a later date;
• temporary storage of goods before they are assigned a customs-approved treatment or use (Article 148(2)(c) UCC).

The customs authority may waive the requirement for security if the amount of charges does not exceed the statistical threshold (Article 89(9) UCC). The holder of an authorisation for a comprehensive guarantee may also obtain a reduction in the amount or a waiver of security under Article 95 UCC (described below).

Types of guarantee

Individual guarantee

An individual guarantee covers one specific customs operation – e.g. one transit movement or one declaration placing goods under a special procedure. Under Article 92 UCC the security may take the form of a cash deposit, an undertaking by a guarantor, or another form providing equivalent assurance.

Comprehensive guarantee

A comprehensive guarantee allows a single guarantee to cover many customs operations and several types of customs debt at the same time. It requires an authorisation from the customs authority (Article 95 UCC). Facilitations are possible:

• for potential debts – a reduction in the amount of security to 50% or 30% of the reference amount, or a waiver of security (Article 84 of Delegated Regulation (EU) 2015/2446); the condition is meeting the criteria in Article 39(b) and (c) UCC, not holding full AEO status,
• for existing debts (e.g. with deferment of payment) – a reduction in the amount of security, available to AEOC holders.

Customs guarantee in transit

In the transit procedure (Union T1/T2 and common transit under the Convention on a common transit procedure, whose parties are: EU-27, Iceland, Norway, Liechtenstein, Switzerland, Türkiye, North Macedonia, Serbia, the United Kingdom (from 1.01.2021), Ukraine (from 1.10.2022), Georgia (from 1.02.2025), and Moldova and Montenegro (from 1.11.2025)) the guarantee is registered in the NCTS system and linked to a specific principal. A carrier or a customs agent acting as principal must hold a valid GRN (Guarantee Reference Number) for the guarantee – comprehensive or individual – before opening a transit operation. Without a valid guarantee the NCTS system will not allow the movement to begin, and the goods will not leave the office of departure.

The UK side: Customs Comprehensive Guarantee (CCG)

In the United Kingdom the equivalent of a comprehensive guarantee is the Customs Comprehensive Guarantee (CCG). According to HMRC guidance, a single CCG authorisation can cover deferment of payment (deferment account), transit, temporary storage and special procedures. AEOC holders automatically benefit from a 30% reduction in security for deferment of payment. Businesses without AEO status apply on form CCG1F, enclosing 3 years of financial statements. Businesses operating on both sides of the Channel should remember that EU and UK guarantees are separate instruments – a guarantee provided in the EU does not cover operations under the UK customs system, and vice versa.

How to obtain a comprehensive guarantee

An application for authorisation to use a comprehensive guarantee is submitted to the competent customs and tax office (in the EU) or to HMRC (in the UK), stating the expected reference amount of the customs debt and the proposed guarantor. The authority verifies the applicant’s financial reliability and issues an authorisation with a specified reference amount, which the business must monitor on an ongoing basis – exceeding the limit blocks the opening of further customs operations until the security is topped up or the limit is raised.

The reference amount is not set arbitrarily – the customs authority estimates it on the basis of the planned number of operations, the value of the goods and the duty and tax rates applicable to the most heavily charged items in the business’s portfolio. In practice it is worth submitting realistic, slightly overestimated volume forecasts, because a reference amount that is too low means the limit is frequently “clogged” and further declarations have to be held back until it is released after earlier operations are settled.

The guarantor and the form of security

In the EU the guarantor is a third party established in the customs territory of the Union and approved by the customs authority – unless it is an accredited bank or insurer (Article 94 UCC). The guarantor undertakes in writing to pay the secured amount of the customs debt. HMRC sets the requirements for guarantors for a CCG. The alternative is a cash deposit made directly to the customs authority’s account – a solution that is simpler administratively but less flexible financially, because it freezes the business’s working capital for as long as the security is in force.

Most common mistakes with customs guarantees

In the practice of customs agents three problems recur most often: first, businesses do not monitor how much of the reference amount has been used and learn it is exhausted only when a declaration is rejected; second, the guarantor’s undertaking (e.g. a bank guarantee) expires and the business does not renew it in good time; third, businesses assume that security established for one procedure (e.g. transit) automatically covers other operations – whereas the scope of the security and of the reference amount follows from the content of the authorisation.

Release and discharge of the security

The security is released when the customs debt is extinguished, paid in full, or the customs authority establishes that it will not arise (e.g. the transit procedure ended with proper discharge at the office of destination). Until the operation is formally closed – e.g. confirmation in NCTS that the goods have reached the office of destination – the security remains blocked, even if the goods have physically already reached the consignee. That is why timely settlement of transit documents (arrival confirmation, closure of the procedure) directly affects how quickly the business regains availability of its guarantee limit for further operations.

The cost of security and a business’s liquidity

For many small and medium-sized importers/exporters, the cost of maintaining a comprehensive guarantee – the guarantor’s commission, usually calculated as a percentage of the reference amount per year – is a significant element in calculating whether regular use of special procedures pays off. It is worth comparing the offers of several banks and insurance companies specialising in customs guarantees, and considering whether meeting the criteria in Article 39(b) and (c) UCC or obtaining AEOC status (and the associated possibility of a reduction or waiver of security) would be cheaper in the longer term than paying for a full comprehensive guarantee year after year.

The role of a customs agent in relation to guarantees

Businesses that do not want to establish a comprehensive guarantee themselves can use the guarantee of a customs agent acting as an indirect representative – the agent is then answerable to the customs authority for the customs debt under its own authorisation, and the client settles with the agent on the terms set out in the cooperation agreement. This solution is particularly popular among businesses that clear goods only occasionally or on a small scale, for whom obtaining their own comprehensive guarantee authorisation would not be worthwhile administratively or financially. It is worth checking, however, the scope of liability provided for in the agreement with the agent, because the client ultimately still bears the economic burden of the charges, even if the formal debtor to the authority is the representative.

See also related guides

• T1 customs transit from the UK to Poland
• How to calculate duty and VAT on imports from the UK
• How to calculate the customs value of goods

If you need help working out whether your operation requires customs security, contact us.

Frequently asked questions