The Carnet de Passage is the document needed to take your bike over many borders, removing the need to pay import and export duty as you cross them. There have been some recent changes to the way the document is processed by the UK issuing agency – the RAC – including the withdrawal of the bank guarantee system. We catch up with the RAC to find out more about the process. and the changes that have been made….
Why do we still need the Carnet system?
A Carnet de Passages en Douanes (CPD) is an internationally recognised customs document assisting the holder to temporarily import a vehicle duty-free into certain countries, these would normally require a deposit against import charges. (generally countries outside Europe).
The CPD Carnet is used within the framework of the United Nations Customs Convention of 1954 and 1956 which covers the temporary importation of private and commercial road vehicles and provides security for the payment of any customs duties and any import taxes chargeable should the vehicle not be re-exported. These duties can vary massively which is why the RAC, as the UK’s only issuer of CPD Carnets in the UK, has to have adequate financial security in place to cover all liabilities should a vehicle not be re-exported.
These liability costs can vary considerably depending on the country being visited and the value of a vehicle. If you do not have a Carnet, you could be declined entry into a country and/or have to undergo lengthy and complicated import procedures.
What role does the Carnet play?
The Carnet is issued under the auspices of two international touring organisations – the AIT and the FIA. Major automobile and touring clubs throughout the world are affiliated to one or both of these organisations and a number are authorised to issue Carnets within the AIT/FIA customs documents network.
This includes RAC who are affiliated with the FIA. On issuing a Carnet, a motoring organisation becomes directly responsible for the payment of customs duties and taxes if the regulations concerning temporary import are infringed. The Carnet document allows you a smoother passage on entry and exit over the borders of affiliated countries.
What are the annual number of applicants for Carnet de Passage?
The RAC now issues around 800 Carnets a year.
Are the numbers going up or down, particularly with regards motorcyclists? Numbers remain steady year on year and particularly for motorcyclists, however, world events and ‘trends’ in the way people travel can result in marginal increases or decreases.
How far in advance should people start to plan and apply for their Carnet?
Planning for a trip abroad with your vehicle is often the most important part of the journey and we have invested in our Carnet team to ensure we are able to react quickly and in line with customer demand. This has included making changes to the Carnet service in the last 24 months to make it simpler and quicker to apply for documents whilst still strictly adhering to the Carnet Convention guidelines.
We ask for four weeks’ notice once the completed application form and all required documents are provided to allow for processing/ issue of a Carnet. When the application has been processed a no-obligation quotation will be provided detailing the total cost of the Carnet.
Could you confirm the requirement for needing a Carnet in South America?
It is not required, however, it is advised.
When is the quietest period for applying for a Carnet?
Generally, the quietest periods for applying for a Carnet are between October and March, there is now less of a summer peak for the issue of Carnets compared to the historical trend.
How do you calculate the value of the bike? Is there any way of contesting that figure?
The vehicle is valued using the make and model found on the v5 logbook only, regardless of any modifications that have made. You must always assume that the vehicle condition and mileage is ‘average’. The minimum vehicle value we can accept is £1,000, if the vehicle is valued lower than this the quote will still be based on £1,000.
The claim amounts are calculated on the make and model of the vehicle, rather than the vehicle’s condition or mileage, therefore, our quotes need to be based on this. Values can always be contested however, we will always adhere to the above-detailed process and if required can provide the customer with details of how we arrived at the valuation.
Likewise, we are happy to review customer valuations from a recognised source. However, the valuation will be at our discretion as we need to ensure this will adequately cover RAC’s liability should a claim be made.
As part of the RAC’s 2013 review of its CPD process, we changed the way we value vehicles to ensure our valuations are more accurate and in line with any potential claims. These are now based on industry-accepted guides such as Glass’s and CAP.
What happens if you lose the Carnet document during your travels?
If your Carnet is lost or stolen while on your trip you must notify the RAC immediately and officially report it in the country you are in and obtain a police report, this ensures if the Carnet is misused or forged there is official evidence to show it has been lost or stolen. We can provide a replacement Carnet with the same date range as the original in these circumstances. An administration charge of £50 plus the Carnet Document fee and any associated courier costs would be charged for this.
What happens if your bike gets stolen or broken beyond repair?
If your bike is lost or stolen whilst on your trip you must notify the RAC immediately and officially report it in the country you are in and a police report gained, this ensures if the Carnet is misused or forged there is official evidence to show it has been lost or stolen. If the bike is broken beyond repair then we need official scrap confirmation by customs officials in their designated area. It is always best to contact us for advice before taking any action.
If you need to replace the engine mid-trip, are you able to do so and amend the carnet details re engine number?
We can issue a letter of confirmation at a charge of £50 however, this may not be accepted by the country and they may require a new Carnet. We can provide a replacement Carnet with the same date range as the original in these circumstances. An administration charge of £50 plus the Carnet Document fee and any associated courier costs would be charged for this.
Can you apply for a Carnet if you’re already overseas?
Yes as long as the bike isn’t already in a country where there is a requirement for a Carnet as the document needs to be officially stamped in and out of each country where it is required.
What if you wish to travel for longer than a year; are you able to extend the Carnet on the road, and if so, what are the chances, and likelihood of being able to do that?
This Carnet document is valid for 12 months however a Carnet can be obtained for a further 12 months by re-applying, but each country has its own rules on the period and the amount of time you can spend in that country. The period of temporary importation is fixed by the laws and regulations of the country visited. It is advised that you check each country’s rules on temporary importation prior to travelling as whilst we endeavour to provide the most up to date guidance, the RAC are not liable for any changes the country makes or if entry is refused.
How long does it take to get the deposit back upon return of the Carnet?
We advise this is done by recorded post. As soon as we have the Carnet document returned to us correctly stamped in and out of each country entered, and we are in agreement a refund is due we can start to process your refund, this can take up to 28 days. If there is any doubt that a claim may be submitted then the refund may be held until the claim period (12 months from expiry) has ended.
The amount of security required depends on the risk of the countries visiting but is always a multiple of the value of the vehicle chassis. E.G. £3,000 value X 250% = £7,500 (South Africa) X 10% = £750 Security to pay plus 6% Insurance Premium Tax
Egypt…………………………………………………………………………..800%
Iran, Pakistan, India, Nepal……………………………………..500%
Sri Lanka, Middle & Far East (eg Singapore) …………200%
South America (Carnet is recommended only) ………150%
Africa ( excluding Egypt) ………………………………………….250%
Japan/New Zealand ………………………………………………….150%
Australia ………………………………150% + £8,000 Vehicle Import
Approval Supplement (cars only)
Travelling on a £10,000 bike through Egypt
£10,000 Vehicle Valuation x 800%
(800% is Egypt’s Risk Rate)………………… £80,000.00
10% of £80,000…………………………………. £8,000.00
+ 6% Insurance Premium Tax…………….. £480.00
+ 5 page Carnet Document…………………. £215.00
+ Refundable deposit………………………… £350.00
Total Cost………………………………………… £9,045.00
To be refunded when Carnet returned correctly stamped out of each country entered:
50% of £8480………………………………….. £4,240.00
Refundable deposit………………………….. £350.00
Total to be refunded………………………… £4,590.00
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Travelling on a £10,000 bike through South Africa
£10,000 Vehicle Valuation x 250%
(250% is South Africa Risk Rate)………………………… £25,000.00
10% of £25,000………………………………………………… £2,500.00
+ 6% Insurance Premium Tax……………………………. £150.00
+ 5 page Carnet document………………………………… £215.00
+ Refundable deposit……………………………………….. £350.00
Total Cost……………………………………………………….. £3,215.00
To be refunded when Carnet returned correctly stamped out of each country entered:
50% of £2,650…………………………………………………. £1,325.00
Refundable deposit………………………………………….. £350.00
Total to be refunded………………………………………… £1,675.00
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The amount of security required by the RAC depends on the rates of customs duty and taxes in the countries visited – it is always a multiple of the value of the vehicle.
What were the reasons for cancelling the bank guarantee system, especially when it is still being operated by other Carnet issuing agencies?
On average, only 4% of CPDs issued each year were secured by a bank guarantee, making it uneconomical to continue with this security option.
This volume of customers did not justify the administrative costs which are specific to bank guarantees.
Additionally, bank guarantees often didn’t offer the level of security that is required.
Why do other countries’ motoring clubs still offer bank guarantees for Carnet de Passage en Douane?
Every Issuing Club has the responsibility to meet their financial obligations in respect of any claim arising through the use of a Carnet in the customs territory and the costs associated with a vehicle not being re-exported.
The low take-up of the bank guarantee option did not justify maintaining this as an option.
Has this increased the cost of Carnets for some travellers?
This very much depends on the individual circumstances, but the removal of this option will not materially affect most customers. Had we not taken the decision to remove this option the associated costs may well have led to increased costs for all Carnets we issue.
What is the justification for the 800% fee for Egypt, which is significantly higher than other issuing agencies? Do you think that figure will be reduced at some point?
We review our country risk rates regularly with our insurer and in line with the claims we have received in the last 12 months.
Egypt is our highest risk country and has been at 800% since before 2010.
Why have you stopped applicants using ADAC (Allgemeiner Deutscher Automobil-Club) as a means of getting their Carnet?
RAC has previously taken a relaxed approach, however, in September 2013, the FIA reminded all issuing clubs that Carnets should only be issued for vehicles registered in the country of the issuing Association. The FIA only allows this to be deviated from in exceptional circumstances.
An exceptional request example would be an application being part of an overall rally application you are issuing Carnets for where it makes sense that you issue all of the Carnets required for the rally.
The FIA’s aim is to promote the development of automobile, tourism and motorsport. Do you see the combination of the Egypt issue and the removal of the bank guarantee option as counter to that remit?
At the RAC we are very proud to be the issuing club for Carnets in the UK and hope to offer the best possible service to our customers. We share the FIA’s aim and the steps that we have taken recently, including offering a simplified application process, are in pursuit of this aim. The increased administrative costs associated with bank guarantees may well have led to increased
costs for all Carnets we issue had the option not been removed. The rate applied for Egypt is a risk-based decision based on our insurance requirements.
Has there been any word on China adopting the Carnet system in order to make the country more accessible than it currently is?
This would be a question the FIA may be able to answer.
CASE STUDY
A few issues back we featured the story of Lisa and Simon Thomas who’d been travelling the world for 11 years and counting. Here they explain how the changes to the Carnet system have effected them…
LISA’S BIKE – BMW F650GSBased on the minimum £1,000 value travelling to Africa (Excluding Egypt) £1,000 x 250%: £2,500.00 Refundable upon returnRefundable deposit: £350.00 |
SIMON’S BIKE – R1100GSBased on the minimum £1,000 value travelling to Africa (Excluding Egypt) £1,000 x 250%: £2,500.00 Refundable upon returnRefundable deposit: £350.00 |
Going by the new system, total costs (after refunds) for the both of us for a carnet valid for a one year period based on the minimum bike value is: £965 (£482.50 + £482.50). Compared to current costs of bank guarantee; bank holds £15,000 for us both in total. We pay £34.00 per quarter for guarantee to be in place: equates £136.00 pa (this amount covers the both of us). So a combined total of £136, as opposed to £965 that it will cost after the recent changes. A massive difference of £829. If however, the RAC deem that the value of the vehicles is to be taken at the full retail value of F650GS (£2,100), R1100GS (£4,250) our costs based on the full retail value of the bikes will be astronomical (incl cost of 25-page carnet) ending up for the total paid prior to refund of; £1131.50 for the F650GS, and £1701.25 for the R1100GS.
After refund, the total paid out for the both of us based on the full retail value would be £1291.38. As opposed to the current amount of £136.00 using the bank guarantee system.
