Although the European Union is a customs union with a Community Customs Code and a harmonized tariff system for product classification, customs administration is a Member State activity. As a result some important actions of individual Member State customs authorities are handled differently, resulting in variations from country to country. This report aims to help companies understand the EU’s customs classification and tariffs system, as well as to provide information on customs advocacy.
The Community Customs Code
Regulation 450/2008, known as the Modernized Community Customs Code (MCCC), regulates customs procedures in the EU. This includes: electronic filing of customs documents by traders as the norm; electronic exchange of information among authorities; the introduction of a Centralized Clearance system whereby traders can make declarations and payments in their country of establishment (versus the Member State into which goods are imported); the establishment of the Single Window to which traders provide required data even from the various national authorities that are involved (customs, agriculture, and others). The MCCC also incorporates a one-stop-shop concept for incoming goods, meaning that customs controls are performed at the same time as other surveillance, such as veterinary or environmental, in order to avoid delays.
The MCCC also introduces the Authorized Economic Operator (AEO) program (known as the “security amendment”). This is similar to the U.S.’ voluntary Customs-Trade Partnership Against Terrorism (C-TPAT) program in which participants receive certification as a “trusted” trader. AEO certification issued by a national customs authority is recognized by all 27 EU customs agencies. An AEO is entitled to two different types of authorization: “customs simplification” or “security and safety”. The former allows for an AEO to benefit from simplifications related to customs legislation, while the latter allows for facilitation through security and safety procedures. An AEO can hold both authorizations simultaneously. Shipping to a trader with AEO status could facilitate an exporter’s trade as its benefits include expedited processing of shipments, reduced theft/losses, reduced data requirements, lower inspection costs, and enhanced loyalty and recognition.
In May, 2012, representatives from the EC Directorate-General for Taxation and the Customs Union (DG-TAXUD) and U.S. Customs and Border Protection signed an agreement recognizing the compatibility of AEO and C-TPAT, thereby facilitating faster and more secure trade between U.S. and EU operators. The agreement will be implemented in two phases. The first commenced in July 2012 with the U.S. customs authorities placing shipments coming from EU AEO members into a lower risk category. The second phase will begin in January 2013, with the EU re-classifying shipments coming from C-TPAT members into a lower risk category as well.
Customs Classification and Tariffs
The Combined Nomenclature and the HS Code
The Combined Nomenclature (CN) is the European system of customs classification that is legally binding in its entirety on all EU Member States. It provides a system of customs classification that identifies products being imported into the EU’s customs territory using a numeric code that is eight digits long. The first six digits of the CN are based on the Harmonized System (HS), developed and periodically amended by the Customs Cooperation Council of the World Customs Organization. The last two digits are added under the European classification system. TARIC (see below) adds another two digits to the end of the CN for goods traded with states outside the EU, bringing the total number of digits to ten. These extra two digits are intended to provide additional clarification on a product’s proper classification. Knowing the HS code, or even how a firm’s product is classified in the United States or other markets, is important in identifying the classification a product is likely to receive in the EU.
The TARIC (“Tarif Intégré de la Communauté”) is the EU Integrated Tariff code. The TARIC is directly binding on all EU Member States and duty rates are similar throughout the EU-27DG-TAXUD. The online TARIC is updated daily. The easiest way to determine if a product is subject to restriction is to check the TARIC using the CN for that product and verify if one of the following codes applies: 1. It lays out the various rules applying to specific products being imported into the EU Customs Union or, in some cases, applies to exports from the EU. TARIC identifies the duty to be assessed for each product classified under the CN, and any quotas or other import restrictions that may apply. Many EU Member States maintain a list of goods subject to import licensing. The TARIC can be searched by country of origin, HS code, or product description on the interactive website of
CITES Convention on International Trade of Endangered Species
PROHI Import Suspension
RSTR Import Restriction
Researching a Tariff Rate/Classification on the TARIC
(Some users may need to copy and paste the URLs into their browser)
1. Access the TARIC Homepage at: http://ec.europa.eu/taxation_customs/dds2/taric/taric_consultation.jsp?Lang=en
2. Search by CN Code or by using the other options under the advanced search option.
3. For any questions on using this feature, consult the user manual at: http://ec.europa.eu/taxation_customs/dds2/taric/help/dds_user_guide.pdf
4. Find the European Commission’s most recent Regulation (with Annexes) regarding the TARIC at: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2011:282:0001:0912:EN:PDF. This document can help to match a product description with its respective CN code, duty rate, and supplementary unit.
5. Restrictions and conditions that Member State customs authorities use to mitigate and recommend the application of one classification over another are included in the Explanatory Notes, found here: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2011:137:0001:0397:EN:PDF
Binding Tariff Information (BTI)
A Binding Tariff Information (BTI) is a legally binding classification opinion that is issued by the customs authority of an EU Member State. Under the Community Customs Code, a BTI issued by one Member State is legally binding on all other Member States. For a BTI to be legally binding, it must be invoked with each and every export action. This can be done by making reference to the BTI on import documentation and by ensuring that distributors and agents are aware of its existence and use.
A BTI is generally valid for 6 years, but in certain cases (e.g. the publication of a classification regulation or a change in the interpretation of the nomenclature at the international level), a BTI may cease to be valid. (See the “websites of interest” section at the end of this report).
A company can influence the outcome of the classification opinion by discussing its case with the Member State customs authorities to adopt a preferred customs classification (i.e. one with a lower tariff rate or a greater allowable quota). Companies are advised to consider all possible alternative classifications of their products by researching possible classifications and tariff rates on the TARIC web page, and through the Explanatory Notes by researching any qualifications or conditions needed to receive a given customs classification. The Nomenclature Committee (also called the Customs Code Committee) adjudicates differences in customs classifications among Member States. See the “Customs Advocacy” section below for further information.
Duty Relief: The EU affords a few situations for duty relief as outlined in Regulation 1186/2009. In addition to personal property being imported duty free, educational, scientific and cultural materials may also be exempted. Annexes I through IV of the Regulation contain a detailed listing of exempted products. National authorities must approve entities engaged in scientific and/or educational research for eligibility to import goods duty free.
Tariff Suspensions: Once a good has received either a partial or total tariff suspension, it can freely move within the European Union. This explains why Member States are extensively consulted during discussions on possible suspensions. The rationale is for economic stimulus, therefore affected goods consist of raw materials, semi-finished goods or components not available in the EU. No suspensions are granted for finished products. Suspensions are not granted when items are available in sufficient quantity within the EU or from third countries with GSP preference. Council Regulation 1344/2011 lists all affected products in its Annex.