How to assess customs duties and taxes for Chinese products?

 

When shopping abroad (outside Europe), your purchases will be made under the heading "duty-free", many of you refer only to VAT when talking about tax. This is a classic mistake!

Indeed, you should not forget what is called "customs duties"! This tax, which is compulsory for a large number of importers, is a rather obscure point, but it is even more complicated to gauge. However, it is essential to consider it in your business model since it can have a significant impact on your figures.

VAT - Value Added Taxes

VAT is a must, so you need to clarify this situation so that you don't have any unpleasant surprises in your cash flow.

Before going into the explanation, you can directly read this article about import duty from USA: the essentials

When you import products from outside the European Union, the VAT on the products is collected during the customs clearance period. Only after payment of customs duties and VAT will your goods be released and legally resold on the mainland.

Companies can include the VAT paid during customs clearance directly in the turnover declaration to avoid a disbursement.

 

Eligible companies

Of course, not all companies are eligible for this tax advantage. Here are the 2 conditions of eligibility:

  • Companies established on the territory of the European Union
  • Companies subject to VAT in the European Union (with representative office and/or local subsidiary)

How can I pay less tax?

There is no real leeway on the customs duties and taxes you will pay when you import your products. Some will tell you that it is possible to under-declare goods (indicate a value lower than the actual value). Yes it is possible but it is dangerous and we do not advise it!

It is indeed possible to ask your supplier to send documents (including the "packing list" and the "purchase invoice") showing a value lower than what you actually paid. Those who attempt such a manipulation risk 2 types of problems:

  • Customs penalties: revaluation of your cargo, customs inspection fees, storage and handling...
  • Reimbursement of disputes: in case of a dispute, your insurance will only reimburse up to the value indicated on the transport documents.

 

Tables for estimating customs duties and taxes (Europe)

Documentary bundle and regulation

Mandatory documents for customs clearance

Bill of Lading

The "bill of lading" (which can also be found under the name "B/L") is an indispensable document when it comes to international freight. While the Bill Of Lading is specifically for sea freight, we will refer to this document as the "Airway Bill" when chartering your goods by air.

In any case, the 2 documents have the same principle: they allow you to confirm the space reserved for freight and therefore the transport of goods.

bill-of-lading-example

1 = Sender
2 = Recipient
3 = Notify party
4 = Vessel and voyage number
5 = Port of departure / arrival
6 = Place of departure / arrival
7 = Container number
8 = Description of goods
9 = Gross weight
10 = Dimensions

4 copies of the B/L will be printed and the original will be retained for customs clearance when the cargo is at the destination terminal.

Packing list

The "packing list" is one of the other essential documents when it comes to international freight. It is a document that will notably be necessary during the import customs clearance phase but also to make the export declaration.

The packing list provides a multitude of information such as :

  • The purchase incoterm
  • Terms of payment
  • Information on the product(s), in particular weight, volume, description, etc.
  • Declared value of products and total amount
  • Origin and destination of cargo
  • Seller and buyer information (name, address, email, phone)

packing list exemple

Certificate of  Origine (C/O)

The Certificate of Origin (or Certificate of Origin in English) is still one of the indispensable documents to be able to ship products around the world. Indeed, it certifies that the product listed on it meets certain criteria to be considered as originating from a particular country.

Here is an example of a Certificate of Origin (Chinese):

Certificate-of-Origin-of-China

 

Other mandatory documents

We have made a very condensed list of the documents you need to have during development. But beware, some shipments for specific products require very special documents. Here is a list of these documents:

  • The purchase invoice
  • Insurance policy
  • The quota compliance certificate
  • The inspection certificate
  • Quality certificates
  • Sanitary certificates

EORI Number

EORI Number: What is it?

The EORI number (Economic Operators Registration and Identification Number) was introduced to identify economic operators in the EU in a uniform way, as regards their relationship and interaction with customs authorities and can be considered as a kind of "customs number".

The main idea is to simplify customs clearance, which has become increasingly automated. The EORI number is indispensable for all correspondence between the operator and the customs authorities, whether it concerns applications, declarations, or other documents.

Who needs an EORI number?

Anyone importing goods from outside the EU or exporting in the other direction must have an EORI number. It is also used by customs authorities to find out what is happening and for security, data analysis, and statistical purposes.

When moving goods within the EU or importing products for private use, no EORI number is required. However, it is still required for imports and exports within the European Economic Area.

Sometimes, companies located outside the EU but trading within Europe must also obtain an EORI number.

 

How to get an EORI number?

The EORI number is very easy and quick to obtain if you already have a company registered in the European Union. You will get it within a few days (depending on the member country) directly on the internet (or by mail if you prefer). Note that the EORI number you will have is unique and definitive, so you will not need to repeat the process over and over again.

Although directly related to the functioning of the European Union, the EORI number can be obtained directly from the local authorities in which your company has been registered. Here is a list of the different websites (by country) to help you apply for an EORI number:

 

How long does the EORI recording last?

After the registration process and all documents are completed, it should take no more than 3 days before you receive it by e-mail. Check your spam folder and keep in mind that this may vary from country to country.

 

Check the EORI number: EORI validation

Before you think about getting an EORI number, make sure you are not already registered. Some companies automatically obtain an EORI number when they register for VAT.

You can check whether your company has an EORI number with the EORI number validator provided by the authorities in many countries. You can also go to the EORI number validator provided by the European Union.

Conclusion

As you may have read through this page, customs clearance is not a step you can afford to rush! You will have to be rigorous and meticulous throughout the entire process to avoid mistakes and/or omissions that can cost you a lot of money! A document is missing and customs officials may decide to seize the goods until they are compliant: storage fees, handling fees, etc... etc.

At DocShipper, we check all documents before departure, this is part of our company policy. It's quite simple, if we don't have the necessary documents, we won't ship your shipment!

Of course we accompany you throughout the whole process in order to obtain the missing documents if necessary!

Do you need customs clearance? Do not hesitate to contact our team!

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