The customs tariff number serves to clearly identify goods, it facilitates the application of trade and tax regulations, the compilation of foreign trade statistics and the determination of the applicable customs and tax rates.
The customs tariff number is structured in such a way that its digits define the class of the goods, the chapter within that class, the category within that chapter and the description of the goods within that category. The customs tariff number provides information on the duties, taxes and related procedures, the applicable trade rules, quotas and quotas. It indicates which goods are prohibited for import or export or in which cases a license, official certificate or other special conditions are required.
Incorrect classification can even lead to taxes and duties not being paid correctly. If we do not pay attention to the correct classification of the product, we may fulfill an obligation that we should not fulfill or we may not pay duties or taxes on a product that we should have paid. These types of errors can lead to the payment of additional duties and even penalties.
In our experience, there can be differences in the tariff classification of products between countries. For example, a central tariff code used by the parent company may not be correct in the subsidiary’s country, and the classification used by a business partner in a transaction should not be accepted without checking.
This risk is relatively easy to minimize by checking tariff classifications at regular intervals with the help of a professional.
The European Union has adopted the Combined Nomenclature and the provisions for its application in Council Regulation 2658/87, but since the rules are constantly changing, an amendment to the regulation is published every year. Since the CN contains more than a thousand pages of tariffs and is amended several times during the year, there is an interface, the TARIC system, for tariff numbers to facilitate their practical application. This is an online database with the current tariff numbers and their associated provisions. The database not only lists and names the customs tariff positions, but also contains the EU-wide customs, trade and agricultural regulations for foreign trade in each tariff position.
Customs tariff classification of goods consisting of different components, substances
In theory, it is easy to legally declare goods: you have to find out the customs tariff code and the customs rate, for example free of charge via the German customs website or via the EU customs tariff (TARIC). But what should you do if the goods are made up of different components, for example if the goods are half toys and half food (chocolate)?
The European Union customs tariff is decisive for the classification of goods. The decisive criterion for the customs tariff classification of goods is generally their objective characteristics and properties, as defined in the wording of the positions and sub-positions and in the notes to the sections or chapters of the Common Customs Tariff.
In addition, according to settled case-law, the Explanatory Notes to the Harmonised System (HS) drawn up by the Customs Cooperation Council and the Explanatory Notes to the Combined Nomenclature (CN) drawn up by the European Commission are an important, non-binding aid in the interpretation of the various tariff headings.
Mixtures, goods consisting of different substances or components and goods put up in sets for retail sale which cannot be classified under General Rule 3(a) are classified according to the substance or component which gives them their essential character, provided that this substance or component can be identified.
Determining the essential character requires a careful examination of the product in question, also for demarcation purposes: the characteristic which determines the character of a product varies according to the type of product. It may, for example, result from the nature and composition of the substance or component, its volume, quantity, weight, value or the importance of the substance for the use of the product.