Tolerance rule

Definition and principle

The tolerance rule (or de minimis rule) is a flexibility provision found in most free trade agreements and origin regulations. It authorises the use of a limited percentage of non-originating materials that do not satisfy the sufficient transformation criterion, without losing the originating status of the finished product.

Legal framework

For EU preferential origin, tolerance is generally set at 10% of the ex-works price of the finished product for industrial goods and at 15% of the weight for agricultural products (HS chapters 1 to 24). The origin protocols of each agreement specify the applicable thresholds. Article 33 of Delegated Regulation 2015/2446 addresses tolerance for non-preferential origin. The EU-UK Trade and Cooperation Agreement (TCA) provides for a 10% ex-works price tolerance.

Practical application

• Tolerance applies to non-originating materials that do not meet the tariff classification change or specific processing criterion
• It does not apply to exceed a maximum value threshold of non-originating materials when the applicable criterion is a value added criterion
• Each tolerated non-originating material is assessed individually against the threshold
• In certain agreements, sector-specific exceptions exist (textiles with weight-based rules, chemicals with specific rules)

Common mistakes

• Applying tolerance to a value added criterion: tolerance does not allow exceeding the maximum percentage of non-originating materials set by an ad valorem criterion
• Incorrectly combining tolerance and origin cumulation
• Not precisely documenting the use of tolerance in the origin calculation