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What Italian exporters shipping to Brazil must prove at customs from May 2026 — and why Australian-owned subsidiaries face an extra structural test before the first shipment
Your next shipment to Brazil leaves in three weeks. You have not registered your Italian entity in the REX system. Brazilian customs will clear the goods — but at the full Most Favoured Nation (MFN) rate, not the preferential EU–Mercosur rate. On a container of industrial machinery worth EUR 400,000, that difference can exceed EUR 40,000 in a single consignment. The clock started on 1 May 2026. Every shipment without a valid statement on origin is a missed claim you cannot easily recover.
On 1 May 2026, the EU–Mercosur Interim Trade Agreement (ITA) entered provisional application following a Council Decision of 9 January 2026 and the signing of the agreement in Asunción on 17 January 2026. For Italian exporters, this means that goods meeting the rules of origin set out in Chapter 3 of the ITA and its Annex 3-B can enter Brazil at a reduced duty rate instead of Brazil's standard MFN tariffs — which in certain manufacturing sectors have historically exceeded 14%.
The tariff reductions are not uniform and not immediate across all categories. Phase-in schedules run between zero and fifteen years depending on the product. Industrial machinery and equipment (HS Chapters 84–85), pharmaceutical products, wines, and certain agri-food products are among the categories receiving early or immediate reductions. Textiles and clothing face longer phase-ins with safeguard clauses that can suspend preferential treatment if import volumes surge. Automotive products are subject to a separate schedule with regional content requirements that go beyond the standard rules of origin.
One critical boundary: the ITA covers trade in goods only. Services, digital trade, and investment are addressed in separate chapters of the broader EU–Mercosur association agreement that has not yet entered force. If your business sells software licences or professional services into Brazil alongside physical goods, the preferential tariff applies only to the goods component.
Under Chapter 3 of the ITA and the product-specific rules in Annex 3-B, a good qualifies as originating in the EU — and therefore eligible for preferential treatment when entering Brazil — if it meets one of three tests: it is wholly obtained in the EU; it undergoes sufficient processing in the EU (measured by a change of tariff classification, a regional value content threshold, or a specific manufacturing operation, depending on the product category); or it qualifies under cumulation rules that allow processing in multiple EU member states to be aggregated.
For Italian exporters, the practical test usually turns on sufficient processing. An Italian manufacturer using non-EU inputs — steel from Ukraine, components sourced from outside the EU — must verify that the processing carried out in Italy produces a change in tariff heading under the Harmonised System (HS) that Annex 3-B accepts for that product line. A company that merely assembles or re-labels imported components in Italy will not pass this test. The origin is determined by transformation, not by where the exporter is registered.
Lex spectat naturae actus — the law looks to the nature of the act, not its label. Under EU customs law, a commercial label saying "Made in Italy" is not evidence of originating status; it is the documented production process that counts.
Unlike the rules familiar to Australian exporters operating under the AUSFTA (the Australia–United States Free Trade Agreement) or the CPTPP, EU rules of origin under the ITA follow the EU's standard preference methodology set out in the Union Customs Code (Regulation (EU) No 952/2013). There is no general build-down or build-up percentage method as a default. The applicable test is product-specific and must be checked line by line against Annex 3-B. Australian businesses used to a single percentage threshold for qualifying content will find the EU approach more granular and, initially, more demanding.
Registration in the Registered Exporter (REX) system is mandatory before the first shipment on which you claim preferential treatment. There is no retrospective registration. If goods leave Italy before your REX number is active, those shipments do not qualify — full stop.
The REX system is administered in Italy by the Agenzia delle Dogane e dei Monopoli (the Italian Customs and Monopolies Agency). Registration is made through the EU Trader Portal or directly with the competent Italian customs office. The process requires your Italian entity's EORI number (the Economic Operators Registration and Identification number, mandatory for any EU trader in international trade), details of the goods you export, and a declaration that the goods meet the relevant rules of origin. There is no fee and no approval period specified in the ITA itself, though in practice Italian customs process straightforward applications within a few working days.
Once registered, your REX number must appear on every statement on origin you make out. The statement itself follows the model in Annex 3-C of the ITA: it is a declaration by the exporter on the commercial invoice, delivery note, or any other commercial document that identifies the goods. It must include the HS heading of the goods, a statement of origin in the prescribed wording, and the exporter's REX number. Under Article 3.18 of the ITA, a statement on origin is valid for twelve months from the date it is made out. You must keep supporting records — bills of materials, supplier declarations, production records — for at least three years.
This is the point most guides omit entirely, and it is the one creating the most friction in practice.
Annex 3-D of the ITA provides for a transitional period — running for three years from the date of provisional application, so until approximately 1 May 2029 — during which Brazilian customs may accept a certificate of origin issued by an authorised body (such as a Chamber of Commerce) instead of the Annex 3-C statement on origin made out by the exporter. This transitional format exists because Brazilian customs systems were not fully adapted to the self-certification model at the time of entry into force.
In practice, this means two formats are currently in circulation. An Italian exporter using the Annex 3-C self-certified statement on origin (the permanent ITA format) may find that a Brazilian importer's customs broker expects the transitional certificate-of-origin format, and vice versa. Mismatches between what the Italian exporter provides and what the Brazilian importer's CNPJ file (the Brazilian importer's fourteen-digit tax identification number, Cadastro Nacional da Pessoa Jurídica) shows as the declared basis for preferential treatment have led to preferential claims being set aside and goods being assessed at MFN rates.
The practical safeguard: coordinate with your Brazilian counterpart and their customs broker before shipment to agree which format they will declare. Do not assume the format you issue is the format they file.
Brazilian customs require the following to process a preferential tariff claim under the ITA: the commercial invoice with the Annex 3-C statement on origin (or the transitional certificate of origin during the Annex 3-D window), the exporter's REX number on the origin document, the HS classification of the goods as declared by the Italian exporter, and evidence linking the goods on the invoice to the goods physically entering Brazil under the relevant import declaration.
The Brazilian importer must include the preferential tariff claim in their import declaration (the Declaração de Importação, filed through the SISCOMEX system administered by the Receita Federal, Brazil's federal tax authority). Brazilian customs may request a verification of origin directly from the Italian customs authority under the administrative cooperation provisions in Chapter 3 of the ITA. If verification is requested, the Italian exporter must respond with documentation supporting the origin claim within the period specified in the request — and must already hold the three-year record set described above.
An Australian parent company operating an Italian subsidiary as a manufacturing or distribution entity cannot simply instruct that subsidiary to claim EU origin on goods that are assembled or finished in Italy from Australian or third-country components. The Italian entity must itself pass the originating-goods test under Annex 3-B.
This matters because several Australian-owned groups operating in northern Italy use their Italian entities as consolidation or light-assembly hubs, sourcing components from Asia-Pacific and finishing goods in Italy before exporting to Latin America. Under EU origin rules, if the processing carried out in Italy does not produce a qualifying change of tariff classification or meet the applicable value content threshold for that product line, the goods are not of EU origin — regardless of what the entity's Italian company registration (the visura camerale, the Italian company registry extract) says.
The REX registration does not certify origin. It only authorises the exporter to self-certify. The underlying originating status is the exporter's legal responsibility, and a false or incorrect statement on origin can expose the Italian entity to recovery of duties by Brazilian customs plus potential administrative penalties under both Italian customs law and the ITA's administrative cooperation provisions.
In our files, the most common mistake is an exporter who registers in REX promptly but fails to run a product-specific origin analysis before making out the first statement. The REX number is live, the statement is issued, the goods arrive — and six months later a verification request arrives from Brazilian customs that the exporter cannot answer because they never documented the production cost breakdown or the tariff classification shift. The recovery of duties plus interest then falls on the Brazilian importer, damaging the commercial relationship.
The ITA is in force — but only provisionally. Full ratification requires individual approval by all EU member state parliaments and the European Parliament. The European Parliament has referred the broader EU–Mercosur association agreement to the Court of Justice of the European Union for an advisory opinion, a process that could take up to two years. Until the Court of Justice rules and full ratification proceeds, the ITA operates under provisional application.
Provisional application is legally effective: the tariff reductions are real, the origin rules are binding, and Brazilian customs are applying the agreement now. But the agreement could, in theory, be modified before full ratification if the advisory opinion identifies incompatibilities. Italian exporters building long-term supply chain structures around ITA tariff benefits should factor this ratification risk into their planning horizon, particularly for investments with a payback period shorter than the potential disruption window.
My Italian subsidiary assembles goods from components imported from Australia. Do they qualify for EU–Mercosur preferential tariffs into Brazil?
Only if the assembly operations carried out in Italy meet the product-specific rule for your HS heading under Annex 3-B of the ITA. Mere assembly or re-packaging of imported components generally does not qualify. You need a tariff classification analysis for each product line before making any origin declaration.
Can I claim EU–Mercosur preferential treatment retroactively if I shipped before getting my REX number?
No. REX registration must be in place before the shipment on which you claim preference. There is no retrospective mechanism under the ITA. Goods shipped without a valid REX-backed statement on origin are assessed at the standard MFN rate, and that assessment is final for those consignments.
Does the EU–Mercosur ITA reduce tariffs on all Italian goods entering Brazil, or only certain categories?
Only goods meeting the rules of origin in Chapter 3 and falling within the tariff reduction schedules in the ITA annexes qualify. Phase-in periods vary from immediate to fifteen years by product category. Some goods — including certain agricultural products and items subject to safeguard clauses — may see limited or delayed reductions. Check the specific HS heading for your goods against the ITA tariff schedule before assuming a reduction applies.
HREFLANG BLOCK:
Editorial Team — Panato Law Firm Staff
