Customs duties
Also known as: customs duty
Customs duties are the duties Customs charges on import or export. Besides ordinary import duty they include anti-dumping duties, countervailing duties and agricultural charges that TARIC attaches to the code.
What is the difference between customs duties and import duty?
In everyday language customs duties and import duty coincide: the percentage or the amount per unit you pay on import over the customs value. Legally, customs duty is the broader term. Import duties comprise the conventional import duty, charges of equivalent effect, agricultural duties, anti-dumping duties, countervailing duties and certain safeguard measures. Import duty is the ordinary rate. Customs duties are the family. For the declarant that distinction is visible in TARIC. The ten-digit code plus the country of origin yields the third-country rate or a preferential rate. Extra charges hang on additional codes of four characters, often producer- or country-specific. In DMS you see those extra lines as separate amounts, not as a mark-up in the ordinary rate. A consignment can have zero per cent import duty and still carry an anti-dumping duty of tens of per cent. Export duties barely exist in the EU. When someone speaks of customs duties, in practice they mean import. The exceptions are temporary export measures on certain agricultural or commodity flows, and those then stand as a measure at the CN code.
Which extra charges fall under customs duties?
Anti-dumping duties apply when the EU has established that a product from a given country is being imported below the market price. Countervailing duties address subsidies. Both attach to the combination of goods code, origin and often the producer. The rate can differ per producer, and a producer without an individual rate falls to the residual rate, usually the highest. Without the right additional code DMS applies that residual rate. There are also tariff quotas, suspensions and agricultural components. A quota gives a lower rate for as long as the quantity is open, in order of arrival. If the quota is full, the declaration falls back to the full rate. A suspension sets the rate temporarily to zero for a given code, often because the EU does not produce the product itself. Agricultural components are extra amounts per unit, next to or instead of an ad valorem duty. All those extra charges form part of the customs debt.
How does TARIC attach to extra charges?
TARIC is the European database in which the rate and the measures sit per code and per origin. The DTV is the Dutch derivative, supplemented with national data such as VAT and excise. For customs duties TARIC is leading, for the national charges the DTV. A declaration system linked to the DTV sees both at once: the conventional rate, the extra codes, and the national items. Additional codes of four characters drive the extra charges. If such a code is missing, the consignment often falls back to the highest duty. On anti-dumping that can be the difference between zero and more than sixty per cent, depending on the measure. The code belongs on the item line, together with the document that supports the producer or the exemption. An invoice without a producer name is then no support. TARIC changes daily. A measure from last week can today be open, closed or replaced. A table kept by hand is by definition behind.
When does anti-dumping duty apply?
Anti-dumping duty applies when the European Commission has imposed a measure for a product from a given country, sometimes limited to certain producers. You see that in TARIC at the goods code: an extra duty, an additional code, and often a document requirement. Origin here is the non-preferential origin, the country of manufacture. A preferential zero rate on the import duty does not switch the anti-dumping duty off. The producer counts. Two factories in the same country can have different rates, because one cooperated in the investigation and the other did not. On the invoice and on the declaration the producer must be identifiable, with the name that stands in the measure. A trade name or an intermediary is not enough. Without that identification the residual rate applies. Origin issues are extra sharp here. Goods that have undergone a slight working in a third country to evade the measure can still fall under the dumping origin. Customs looks at the last substantial processing, not at the last invoice.
How do you suspend customs duties?
Customs duties are not yet due for as long as the goods stand under a suspension procedure. The classic routes are T1 (transit), customs warehouse, temporary storage, inward processing and temporary admission. Each procedure has its own declaration, its own time limit and its own guarantee. The chain must be watertight: each declaration refers back to the previous one, and a gap raises the question of where the goods went. Suspension is not an exemption. The debt arises when the goods enter free circulation, or when the procedure is not discharged in time. An open T1, a warehouse stock the accounts cannot explain, or a processing whose compensating product was not exported, leads to recovery over the full value. The guarantee covers that risk, until it is released after discharge. Not every extra charge suspends in the same way. Anti-dumping duties follow in principle the same suspension as the import duty, but certain measures have their own conditions. Check in TARIC whether the measure allows the suspension before you send the goods to the warehouse.
How do you correct a wrong charge?
You correct a wrong customs duty with an application for repayment or remission, or Customs corrects it itself with a recovery. The time limit is as a rule three years after notification of the customs debt. The application names the MRN, the item line, the amount charged, the amount that was due, and the documents that support the difference: a BTI, a proof of origin, an additional code, a quota certificate. The most common reasons are a wrong goods code, a forgotten preference, a missing additional code, and a customs value that missed freight or royalties. Each of those errors hits a different part of the triangle of classification, origin, value. An application that only says the rate was too high, without supporting that triangle, is rejected. Interest and penalty hang on the direction. On recovery, interest is due, and in case of gross negligence or intent a penalty. On repayment, interest can work in your favour if Customs takes too long over the decision.