Freight Shipping between China and Hungary | Rates – Transit times – Duties and Taxes

How to calculate duties & taxes when importing from China to Hungary?

Cracking the code behind customs duties might seem daunting, but it's really a matter of gathering the necessary information and solving a straightforward equation. The primary factors that dictate your duties and taxes when shipping goods from China to Hungary, are the country of origin, the HS Code, the Customs Value, the Applicable Tariff Rate, and any additional taxes and fees that are applicable to your products. Take a moment to ensure that you have all these details at your fingertips. That said, the first stride on this journey is to clearly identify the country where your goods were manufactured or produced, not merely where they're being shipped from. This initial step solidly plants the foundation for your customs duties estimation process.

Step 1 - Identify the Country of Origin

Understanding the Country of Origin - in our case, China - is fundamental for several compelling reasons. First, it plays a pivotal role in classifying your goods. Second, it assists in estimating duties accurately, thus preventing any unforeseen costs. Third, trade agreements between both countries, like the EU-China Bilateral Investment agreement, directly impact customs duties. Knowing the country of origin informs if these agreements apply. Fourth, specific import restrictions in Hungary are dependent on the country of origin. Familiarize yourself with these - ignorance could incur penalties or shipment delay. Lastly, knowing the Country of Origin catalyzes the subsequent process of acquiring the Harmonized System Code, a vital tool for classifying your goods internationally.

In terms of practical advice, always document the Country of Origin accurately. Strive to remain updated on Hungary's trade agreements and understand their implications on your shipment costs and regulations. This steady grasp will equip you to navigate the import process from China to Hungary smoothly.

Step 2 - Find the HS Code of your product

The Harmonized System (HS) Code is an internationally recognized code used to classify a product for customs purposes. This classification plays a key role in defining tariffs, duties, and regulations for the product across global trade.

Your product's HS code can typically be obtained from your supplier, who should have extensive knowledge about the goods they're exporting and the relevant regulations that apply. This is usually the most straightforward approach.

If obtaining the HS code from your supplier is not an option, don't fret. We have an easy step-by-step process to guide you.

1. To find the HS code, start by using the Harmonized Tariff Schedule lookup tool
2. Once you're at the site, simply type the name of your product into the search bar.
3. Look for the relevant HS code under the 'Heading/Subheading' column.

Please keep in mind that accuracy is crucial when determining an HS code. Using an incorrect code could lead to unexpected delays and potential fines. The HS code must accurately represent your item to ensure that customs procedures go smoothly.

Here's an infographic showing you how to read an HS code.

Step 3 - Calculate the Customs Value

Understanding the concept of Customs Value can seem a bit intimidating, but let's break it down to get a clear view. Unlike the product's price tag, the Customs Value is an amount used by Customs authorities to calculate duties and taxes. It includes more than just the cost of your goods. Specifically, it encompasses the CIF (Cost, Insurance, and Freight) value – combining the cost of the goods, international shipping charges, and the insurance cost.

To put this into perspective, let's say you've purchased goods from China worth $1000, the shipping fee is $200, and the insurance is $30. Your Customs Value will be $1230 ($1000 + $200 + $30). Keep in mind, the calculation of duties will be based on this Customs Value. It's all about getting the full picture, taking into account every cost from start to finish, to ensure a smooth clearance process in Hungary.

Step 4 - Figure out the applicable Import Tariff

The import tariff, also known as customs duty, is a tax that your goods incur when imported into a specific country. In your case, shipping from China to Hungary, EU regulations are applicable as Hungary is part of the EU. You can identify your goods' tariff using the TARIC System - European Customs.

The process involves:

1. Entering the HS code identified earlier (this is a universal code that classifies your product) and selecting China as the country of origin.
2. Reviewing the duties and taxes applied to your specific product.

For instance, let's say you're importing leather handbags from China to Hungary. The HS code for this product is 420221 (Handbags with outer surfaces of leather or composition leather), and upon entering this into the TARIC system, you find a tariff rate of 3%.

Assume the cost, insurance, and freight (CIF) value for your handbags is $10,000. To calculate your import duties, multiply the CIF value by the tariff rate: $10,000 0.03 = $300. Therefore, you would owe $300 in import duties. Understanding this step will help you avoid unexpected costs and ensure a smoother customs clearance process.

Step 5 - Consider other Import Duties and Taxes

Understanding import duties and taxes is crucial to prevent any surprises in your freight costs. Let's dive into it.

Firstly, besides the standard tariff rate, which depends on the product's classification, there is the excise duty. It applies more commonly to goods like tobacco, alcohol, or energy products. Imagine importing a large shipment of wine, and being taken aback when an additional excise duty of, say, $100 per 100 liters gets slapped on top of your standard tariff!

Secondly, anti-dumping taxes may arise. Let's assume you're importing steel rods from China. If Hungary believes it's being sold cheaper than in China to stifle competition, then these goods could incur an anti-dumping duty; for instance, an extra 20% cost on your goods' value.

Most important of all is the VAT (Value Added Tax), which applies to almost all goods. In Hungary, for example, the standard VAT rate is 27%. Something to remember is that VAT is levied on the CIF value plus the duty. So if you're importing goods valued at $10,000 with a duty of $1,000, your VAT would be 27% of $11,000, which gives you $2,970.

These figures are illustrative and actual rates should be verified. Overall, the import process might seem daunting, but knowing these details can prepare you for the associated costs and help make your business operations smoother.

Step 6 - Calculate the Customs Duties

Despite its seeming complexity, understanding the calculation of customs duties isn't rocket science. When importing goods into Hungary from China, the first variable is the customs value, which is derived from the transaction value of the goods, shipping costs, and insurance.

Take your first scenario - where you have duties but no VAT. Consider a customs value of $5,000 with a duty rate of 5%. Your customs duty is a straightforward $250. Simple, right?

Now, consider a case involving both duty and VAT. Suppose the customs value remains at $5,000, the duty rate at 5%, and Hungary's standard VAT rate is 27%. You'll first calculate the customs duty as before, then add this to the customs value to find base value. In this instance, $5250 is the base, so the VAT is $1417.50.

Finally, for the less common situation of customs duties, VAT, Anti-Dumping Tax and Excise Duty, let's add a 10% anti-dumping tax and a $200 Excise Duty on a $5,000 value. Customs duty is still $250, but your Anti-Dumping Duty is $500. After these are added to your customs value, VAT is calculated on $5750 ($1552.50), and you finally add your $200 Excise Duty.

While these calculations are doable, they can be time-consuming and prone to error. That's where DocShipper comes in handy. Our customs clearance services promise you carefree and accurate handling of any customs clearance worldwide, ensuring no overcharges. Get in touch for your free quote in less than 24h, and leave the rest to us!

Bill of Lading

When shipping goods from China to Hungary, the Bill of Lading (B/L) is a cornerstone document. It symbolizes that the ownership baton has been passed and is a receipt for your transported cargo. In an age of fast-paced logistics, consider opting for an electronic (or telex) release. It's speedy and cuts down on red tape. Like a championship relay race, instead of waiting for a paper B/L, the telex release swiftly passes the ownership baton! Astronomically quicker, right? If you’re looking at air cargo, your equivalent is the Airway Bill (AWB). Save time and simplify processes. Start using telex releases for your sea shipments and see the difference for yourself, besides of course, saving a few trees along the way! Happy freighting!

Packing List

Getting your goods from China to Hungary smoothly hinges on the Packing List. Think of it as your shipment's diary - it details what's in your container, how it's packed, and its weight and dimensions. Accuracy here is paramount since it aids customs officers in checking your shipment against its declared contents. Imagine your container housing car parts, but your packing list alludes only to furniture: it can lead to delays, or even impounding. Correctly prepared, it aids both in sea and airfreight, ensuring harmonious passage through customs. So, double-check all details on this must-have document - your stress-free shipping depends on it!

Commercial Invoice

Navigating customs clearance from China to Hungary? Your Commercial Invoice is vital. Packed with important details like product description, quantity, value, terms of trade (Incoterms), and country of origin, it's a must-have for smooth customs processing. Misalignments with other documents, such as your Bill of Lading or Airway Bill, could delay clearance and ramp up costs. Say you’re shipping 500 batches of machine parts. If your Bill of Lading mentions 450 batches, you're in for some hang-ups at Hungarian customs. So, double-check for consistency across documents! With a correctly compiled Commercial Invoice, your freight sails through customs, saving you valuable time and migraine-inducing confusion. So, while it may seem like tedious paperwork, that's all it's standing between your freight and its final destination in Hungary. Get it right!

Certificate of Origin

When navigating the shipping route between China and Hungary, the Certificate of Origin (CoO) becomes your secret weapon. Imagine it as the ID card for your goods, authenticating them as proudly Chinese-made. It not only gives a green light at Hungarian customs but can unlock benefits like preferential duty rates, giving your business a potential cost advantage. Here's a real-world scenario: if you're exporting high-end electronics from Shenzhen to Budapest, obtaining a CoO that verifies the tech was born in China could reduce your import costs, fostering a more lucrative business deal on Hungarian soil.

Certificate of Conformity (CE standard)

If you’re shipping goods from China to Hungary, obtaining a Certificate of Conformity (CE standard) is crucial. Unlike quality assurance that concerns your internal processes, this certificate proves your product meets European safety norms. Consider it as your passport to the European market. It's akin to the FCC Declaration of Conformity in the US. Being CE-certified not only builds your brand's credibility but also fast-tracks the customs clearance process, avoiding any potential bottlenecks. So, before you seal that container, make sure you include this legal prerequisite in your shipment documents, ensuring a hassle-free journey of your cargo from the Great Wall to the Danube.