Customs planning reduces your costs by analysing the elements that go to determine your customs duty liabilities, including:
- Origin of Goods and the use of Trade Agreements
- Customs valuation
- Customs duty relief schemes
Customs duty rates on imports to the EU vary between zero and 217% with an average duty rate of 4.1%. As a consequence, the correct classification of your goods forms the cornerstone of good Customs Planning.
Based on a no-win, no-fee business model, our classification service provides you with a free analysis of the import classification codes you’re using. By applying our proven, class-leading methodology, our classification experts can quickly ascertain if – and how – you are overpaying. Past successes have included refunds that applied retrospectively to the previous three years of that client’s business.
Reduction in import duty costs as a result of re-classifications are normally achieved via one of three methods
Correcting the code
With over 16,000 commodity codes in the EC Customs Tariff, there are some very fine distinctions within certain categories. Dry noodles, for instance, attract a higher duty rate than for those containing water. Ensuring your goods are all correctly classified can result in significant savings.
Stripping down kits
Sometimes, it pays to strip down your imports into their constituent parts. Why? Some individual items attract lower rates of duty. For example, a 2% duty rate applies to stereo turntables – whereas no duty is charged for styluses if they are imported individually.
Building up kits
The reverse of stripping down kits is building them up. This approach involves presenting various components at the same time. In the case of digging machines, individual parts are subject to duty. However, presenting the parts together in unassembled kit form classifies them as a finished machine – which qualifies for a zero rate of duty.
If your goods are re-classified within a lower duty range, it can be beneficial to apply for a Binding Tariff Information (BTI). This type of ruling binds all EU Member States to the same conditions – ensuring all relevant authorities abide by the agreed classifications for your goods.
Origin & Trade Agreements
The EU has over 30 Trade Agreements in place that can reduce – or even remove – the duty paid on certain imports. Many of these agreements are reciprocal and help unlock overseas markets to EU exporters. It is possible that more than one Trade Agreement applies to your goods – in which case it’s in your interests to be on the more favourable rate. We can check if any of your goods meet the various conditions necessary before a Trade Agreement can be applied for.
Trade agreements and origin rules are becoming increasingly important and complex with the explosive growth of international agreements over the last few years and their inter-connected nature.
Deducting qualifying items from the customs value
The Customs Code allows various allowances and deductions to be made to the customs value when certain conditions are met. These can include buying commissions and some finance charges etc. It is well worth investigating whether your company is utilising every option – especially since duty reclaims can be made retrospectively in certain circumstances.
The Customs Code also requires certain element such as royalties, sales commissions etc., be added to the customs value which increases the duty payable and can lead to retrospective demands. Good customs planning checks to ensure all the conditions are met before the customs authorities demand extra duty.
Customs Duty Relief
Many companies import raw materials, components or goods into the EU which they then process into a finished or semi-finished product. In these instances, Inward Processing Relief (IP) could reduce costs.
Firstly, IP can apply when the processed goods are subsequently sold outside the EU. (If you are already operating IP, there are various ways to further reduce duty costs through small changes to your existing processes.)
Secondly, when a product would have attracted a lower rate of duty if it had been imported ready the IP enables parts and materials are declared under the same code as for the finished product – potentially saving you money on Customs Duty, agricultural levies and other CAP charges.
Customs duty relief can also reduce costs on re-imports of EU goods
When goods are exported outside the EU, they become subject to duty on re-importation. Outward Processing Relief (OPR) allows you to claim total or partial relief on goods sent outside the EU for processing or repair. Returned Goods Relief (RGR) enables you to re-import goods you previously exported within a three-year period, if they are in the same state. This could apply to goods that an overseas customer chooses to return.
Customs Freight Simplified Procedures
Once granted authorisation for Customs Freight Simplified Procedures (CFSP), an importer can accelerate the removal or release of most non-EU imports from the border by making a simplified declaration. It is also worth noting the conditions for authorising a CFSP represent the majority of those necessary for obtaining an AEO Customs certificate.
CFSP can also reduce your customs declaration costs while providing greater visibility through line level reporting.
Cash Flow Planning
Rather than pay customs duty and import VAT as goods arrive in the EU, customs warehousing can defer those payments until call off from your warehouse – giving you improved cash-flow conditions as a consequence. This regime also allows goods to be imported, stored and exported without any customs duties or VAT becoming due and can be used with other Customs Relief Schemes to accelerate qualification.