Import duty
Also known as: import duties
Import duty is the charge you pay on the customs value when goods enter the EU. The rate follows from the TARIC code and the country of origin, and it is assessed on the import declaration in DMS.
How is import duty calculated?
You calculate import duty by applying the TARIC rate to the customs value. That value is as a rule the transaction value, plus freight and insurance to the external border of the EU. The rate is attached to the combination of the ten-digit TARIC code and the country of origin. Most rates are ad valorem, a percentage of the value. There are also specific rates, expressed in euro per unit, kilogram or litre, and mixed rates that combine a percentage and an amount per unit. In DMS you see the calculated amount per item line. If the goods code or the origin is wrong, the amount is wrong as well, and a correction afterwards costs interest. A preferential rate, often zero per cent, applies only with valid proof of origin: an EUR.1, an origin statement on the invoice, or an attestation by a registered exporter in REX. Without that proof at the time of the declaration, or sent in within the time limit, the consignment falls back to the third-country rate.
When do you pay import duty?
The customs debt arises at the moment Customs accepts the import declaration for release into free circulation. From that moment the goods are Union goods, with T2 status, and import duty is due. For as long as the goods stand under a suspension procedure (T1, customs warehouse or temporary storage) there is no debt. You do not necessarily pay on that same day. With a deferred payment authorisation you book the debt on a current account with Customs and settle periodically, against a guarantee. Without that authorisation the amount must be available before the goods are released. A declarant without guarantee headroom holds the consignment until payment is in. An incomplete declaration can give rise to provisional duties. Once the supplementary declaration is in, the final amount follows. If it is higher, Customs recovers the difference. If it is lower, a repayment follows. For the importer that is a reason not to treat the provisional amounts as a final settlement, and to deliver the supplementary documents within the time limit.
How does origin determine the rate?
The third-country rate applies to goods without preferential origin. If the product comes from a country with which the EU has a trade agreement, and it meets the origin rules of that agreement, the rate can be lower or zero. Origin is the country where the product was manufactured, not the country of dispatch. Goods made in China and shipped via Singapore remain of Chinese origin. The proof must belong with the declaration. An invoice statement is valid only if the exporter is entitled to issue it. Under REX agreements the exporter's REX number must appear on the attestation. If the number is missing or invalid, DMS rejects the preference or Customs withdraws it at a later control. Anti-dumping and countervailing duties also attach to origin, and sometimes to the specific producer. For that there is an additional TARIC code of four characters. Without that code the consignment often falls to the highest duty. That is a different amount from ordinary import duty, but it is calculated on the same declaration and booked on the same current account.
What is the exemption up to one hundred and fifty euro?
For consignments with an intrinsic value up to one hundred and fifty euro, an exemption from import duty still applies in the EU. Intrinsic value is the price of the goods themselves, excluding freight and insurance. That exemption does not apply to excise goods and not where prohibitions or restrictions rest on the goods. In those cases a full import declaration in DMS is required, with the ten-digit TARIC code, even if the value is below the threshold. The VAT exemption up to twenty-two euro was abolished on 1 July 2021. VAT is due on every imported consignment, even if there is no import duty. In the e-commerce chain that VAT runs via DECO and the H7 dataset, or via IOSS if the seller has already charged the VAT at the sale. The EU is working towards abolishing the import duty exemption. If it disappears, import duty is due on every consignment and the six-digit HS code is no longer sufficient, because the rate attaches to the ten-digit TARIC code.
How do you pay import duty in practice?
In the Netherlands the assessment runs through DMS, the Dutch declaration system. The declarant files the import declaration, DMS calculates the duty per item line, and Customs releases the goods if no control follows. The amount is booked on the current account of the declarant or of the importer, depending on the form of representation and the authorisation. Under direct representation the importer is the debtor. Under indirect representation the declarant is jointly a debtor. That difference matters if the importer does not pay: Customs can pursue the declarant. The power of attorney must cover that form of representation explicitly. An authorisation that only allows direct representation is no basis for a declaration in which the declarant shares the debt. The declarant then invoices the duties on to the client. That is not a customs formality, it is a private-law arrangement. If the amount on the declaration is wrong, the recharge is wrong as well, and a Customs correction weeks later leads to a credit or a late invoice.
What happens if the rate is wrong?
A wrong goods code, a forgotten preference or a customs value that is too low produces import duty paid too little or too much. Customs can recover up to three years after notification of the customs debt. Interest is due, and in case of gross negligence or intent a penalty can follow. Duty paid in excess you reclaim with an application for repayment or remission. The time limit is as a rule three years after the date on which the debt was notified. The most common reasons are a wrong goods code and a preferential origin that was missing at the declaration but is later still proven. Without the documents that support the lower duty, Customs rejects the application. A structurally too-low rate on a regular flow adds up fast. Hundreds of declarations at half a per cent too little is a recovery over the whole period. That is why the combination of code, origin and document code should be checked before the declaration goes to DMS, not after.