Preference codes
Also known as: preference code, document codes
Preference codes and document codes are the codes on the import declaration with which you record origin, tariff treatment and the accompanying documents. Without the right document behind the code the third-country rate applies.
What do preference codes do on the declaration?
The preference code says which tariff treatment you claim. Third-country rate, a suspension, a tariff quota, GSP or a preferential agreement: each track has its own code. That code hangs on the combination of goods code and country of origin in TARIC. The document code says which document substantiates that claim: a EUR.1, an invoice declaration, a REX statement, an authorisation, a certificate. Code and document belong together. A preference without a document code is a claim without proof. DMS checks whether the codes exist and whether they fit the goods code. DMS does not check whether the document lies in the folder. Customs does that at a document check or at a check afterwards. Put the codes in the article master data, linked to the DTV, not in the declarant's memory. TARIC changes daily. A code that was right yesterday can carry another measure today.
How do you choose the right preference code?
Start from TARIC, not from habit. The code follows from the goods code, the country of origin and the agreement or measure you invoke. What applied last year can be another code this week, because TARIC changes daily. The third-country rate is the residual category: no preference, no quota, no suspension. That is not an error, it is the default. Anyone who claims preference where there is no agreement, or where the product does not meet the list rule, builds a recovery. Quotas are sequential. A tariff quota with a lower rate is gone when it is gone. A declaration that counts on the quota while it is full falls back to the full rate. The code alone reserves nothing. Check the quota on the day of the declaration, not on the day of the order. An order from last week on an open quota is today a full IMA. The code follows the TARIC position at the moment of filing.
How do preference codes relate to the origin documents?
Every preferential claim needs a document. The invoice declaration, the EUR.1, the statement on origin: the document code points to which of those documents you present. The document must belong to the same agreement as the preference code. A mismatch is a classic check finding. The code says Korea, the document says Canada. Or the code says preference and the document is an ordinary commercial invoice without a statement. DMS can let that through. The check cannot. Without a valid document the third-country rate applies, even if origin is right in substance. The right to the lower rate arises only once the proof is there at the moment of filing, or within the time limit for sending on. Keep the document with the file under the same code. At a check the question is not whether there is an invoice, the question is whether the document carries the preference of this IMA. A EUR.1 of another consignment does not.
What are additional codes besides preference?
TARIC has, besides the ten digits, additional codes of four characters, for example for an anti-dumping duty that depends on the producer, or an agricultural component. If that code is missing, the consignment often falls back to the highest rate. Those additional codes are not preference codes, but they sit in the same corner of the declaration: they steer the amount. A forgotten producer code on a dumping measure can be the difference between zero and tens of percent. Document codes for inspections and authorisations sit in the same field type. A CHED, an import licence, an exemption: each has a code. If the code is missing, DMS rejects or the consignment stays under a measure. Check the additional code in the same round as the preference. An IMA that has preference right and misses the producer code is still too expensive. The amount at the bottom is the sum of all codes, not of the preference alone.
What goes wrong with preference codes in DMS?
The first error is a code from memory. TARIC is the source, not the previous consignment. A measure that was open last week can be closed. An agreement that does not apply to this product, even if it applies to the neighbouring article. The second error is the code without a document. The IMA goes through, the folder is empty, and at the check there is nothing to send on that already existed on the declaration date. A statement drawn up afterwards does not cover that day. The third error is confusing non-preferential origin and preference. The country of origin always stands on the declaration. Preference is extra, and only if the agreement and the document join in. Chinese origin via Rotterdam stays Chinese, even with a Dutch invoice. A Dutch invoice does not make Chinese origin into EU origin. Preference follows the place of the last substantial working, plus the document. The route via Rotterdam is provenance, not origin.
How do you keep preference codes in the master data?
Record per article per agreement whether there is preference, which code belongs to it, which document, and until when that was checked. Without that layer every IMA is a manual choice of the declarant. Link the codes to the DTV, not to a spreadsheet that is updated once a quarter. TARIC changes daily. A recorded code from March can carry another measure in April. On a BTI the classification is fixed, not the preference. Binding tariff information says which code the product has. Whether an agreement sits on it follows from origin and document, and that can differ per consignment. An annual round in November catches the GN change. A daily link to the DTV catches the measures. Without that second layer the preference code is a guess, however neat the classification.