Customs Tariff

• Legal basis
• Structure of the code number
• Classification of goods in the Common Customs Tariff

Legal basis

The customs tariff applicable within the Community is strictly based on Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff, which introduced the combined nomenclature (Kombinierte Nomenklatur - KN) as a generally binding, harmonised tariff system and statistical nomenclature (Annex I to the said Regulation) directly applicable in all EU Member States. Article 12 of the Regulation provides that the European Commission adopt each year a complete version of the CN, together with the applicable rates of duty, in order to ensure that it is permanently updated. The amendment shall be published by means of a Regulation not later than 31 October in the Official Journal of the European Communities and it shall apply from 1 January of the following year.

Structure of the code number

The eleven digit code number is based on the Harmonised System (Harmonisierte System - HS) which is administrated by the World Customs Organization (WCO) and determines the first six digits of the code number. The HS is a description and coding system aimed at providing a worldwide uniform classification of goods.

Building on this six digit code, the HS is extended with two digits by the combined nomenclature (CN) of the European Communities (places 7 + 8 of the code number, see Annex I to the said Regulation). On the basis of this eight digit number, customs duties, textiles categories, bans and restrictions, or facts relating to import authorisations can be assigned during import clearance.

The ninth and tenth digits (known as TARIC = Integrated Tariff of the European Communities) encodes Community measures such as antidumping rules, duty suspensions or tariff quotas. Pursuant to Article 2 of the Regulation, the Commission has the power to establish an integrated tariff of the European Communities (Integrierter Tarif der Europäischen Gemeinschaft - TARIC).

The eleventh digit of the code number is for national use only, and is, for example, used to encode VAT rates or national bans or restrictions.

The 11 digit code number must always be stated in an import declaration; in contrast, for an export declaration only the 8 digit commodity code, which can also be found in the Commodity Classification for Foreign Trade Statistics, is required.

For some goods that fall under specific legislation in terms of market organisation and excise duties, the 11 digit code numbers can be "extended" with a 4 digit code in either case so that the goods can be more precisely identified.

Classification of goods in the Common Customs Tariff

The Common Customs Tariff is formally structured according to the following system (as exemplified by a woman’s coat):

• Sections
  (for example, textiles and textile articles - Section XI)

  • Chapters or subchapters
    (for example, articles of apparel and clothing accessories - Chapter 62

    • Headings
      (for example, women’s or girl’s overcoats - heading 6202)

      • Subheadings
        (for example, women’s coats of wool - subheading 6202 11)

        • Code number
          (for example, women’s coats of wool, other than hand-made ponchos or hand-made capes of wool - code number 6202 1100 90 0)

The current nomenclature is made up of 21 sections, 97 chapters, and 5,000 subheadings.

Another way the Common Customs Tariff can be arranged is functionally, by what is known as the production principle, showing the path of goods from a “raw product” through the semi-finished product to the final product. Here the focus is on the classification of material characteristics of the raw materials or the semi-finished product, while when a product undergoes repeated processing the focus is increasingly upon its intended use.

Example:

However, many goods can only be classified if both the material characteristics and the intended use are considered.

The most important rules for the classification of goods in the Common Customs Tariff are the General Rules 1 to 6 on the interpretation of the combined nomenclature (CN). They are part of Annex I of the Regulation, and lay down how, among other things, to proceed with incomplete and/or unfinished goods. They must be applied for the systematic classification of a product under its only appropriate heading - and thus under its applicable code number.

In addition to theses legally binding classification rules, there are a number of further decisions to be made about classification. Other available aids to their interpretation are the detailed explanations of the Harmonised System (HS), and also of the General Rules and Combined Nomenclature (CN).

At present, you may access the electronic customs tariff (Elektronische Zolltarif-online - EZT-online), which is made available online by the Federal Fiscal Authority, though only in German, and the TARIC (Integrated Tariff of the European Communities) free of charge on the Internet to research the applicable code number yourself.

EZT-online (in German)
TARIC-Consultation

In order to offer economic operators legal certainty about the tariff classification of goods, anyone may request binding tariff information (verbindliche Zolltarifauskunft - vZTA) in which the Customs authority gives reliable information on how any particular goods must be classified under the EU Common Customs Tariff.