Modified: 11-20-2023 Published: 10-29-2021
You have just correctly determined your customs tariff numbers and already something is changing again. That’s exactly how it is with customs tariff numbers every year. And every five years, including the year 2022, the customs tariff numbers in the Harmonised System change.
The Harmonised System is one of the most important basics that you get to know at the beginning of your work. The correct classification of goods in the Harmonised System lays the foundation for the collection of duties and serves to systematically record the goods. Restrictions on imports into other countries also depend on the correct classification of your goods. If you do not state the HS code correctly on your commercial invoice or shipping documents, the recipient of your goods may pay the wrong taxes and the transit time of the shipment may be unnecessarily delayed. To avoid this, it is important to know: How exactly is the Harmonised System structured? What changes do I need to be aware of in the future?
Find out in our article what exactly the Harmonised System is and what changes you can expect in 2022.
The first six digits of a commodity or tariff number only change when the World Customs Organisation makes adjustments. This usually happens every five years. The currently valid HS 2017 system will therefore be replaced on 1 January 2022. The purpose of the revision is to reflect changes in international trade, be it technical innovations or changed trade flows of individual types of goods.
The new edition contains 351 sets of amendments covering numerous goods in cross-border trade. These include 77 in chemicals (Section VI), 58 in wood (Section IX), 21 in textiles and clothing (Section XI), 27 in metals (Section XV), 63 in machinery (Section XVI) and 22 in means of transport (Section XVII). Technical progress and changing trade patterns as well as environmental aspects are thus to be better reflected.
The most important changes in a brief overview are:
– HS 2022 contains new, special provisions on classification, for example for electrical and electronic scrap.
– Numerous new subheadings are introduced, for example for dual-use goods and chemicals
– Subheadings that are not in line with technological progress and consequently may cause erroneous trade statistics and classifications are reorganised (e.g. 7019 and 8462)
– In the area of health and safety, for example, placebos, cell cultures, cell therapies and dual-use goods will receive new provisions
In addition to the changes in content, there will also be linguistic changes to allow for alignment between different languages. In the correlation table you can check whether the commodity code you are currently using is also affected by the HS amendment.
You should consider the effects of the HS changes for your own company in good time before the turn of the year. Here you should assess which and how big the effects will be for you. Pay particular attention to the following topics: your preference calculation, the lists of goods in customs authorisations and the validity of existing binding customs information.
Since experience shows that not all countries worldwide will manage the changeover to HS 2022 at the same time, there may be import delays in individual cases.
The basis for a successful and correct tariff classification is the determination of your goods characteristics. Without this basis, in many cases the subsequent classification of the goods is difficult, or sometimes not possible at all. The most important characteristics are
– the use
– the function
– the nature of the material
– the type of machine and the power
– the operating voltage and whether it is a machine or a machine part.
Note that the customs tariff number must be determined for each item, in the state in which it is presented to customs. Once you have decided on a chapter, the second step is to determine the correct heading. Here you work your way up to the 4th digit of the customs tariff number using the General Provisions (AV) and the EZT online database. Pay attention to the notes and explanations on the respective sections, chapters and positions. Determine the subheadings in the same way.
Once you have determined the first eight digits of your customs tariff number, you must now ask for the code number (11-digit) based on the characteristics of your goods.
It is therefore important to know the exact nature of the goods as well as the intended use in order to be able to work out a correct customs tariff number. In practice, there are always differences of opinion with customs, which can be avoided by good research in the General Regulations and the Explanatory Notes.
The HS was developed under the leadership of the World Customs Organisation as a customs tariff scheme and since mid-2017 156 WCO members are contracting parties. It is used in more than 200 states, countries and territories worldwide and 98% of global trade is classified using the HS nomenclature. It is increasingly used as a definitional and descriptive classification for various economic classifications, e.g. classifications of goods (classifications, commodity classifications of foreign trade). The HS is a nomenclature consisting of 9,500 code numbers for the classification of your goods. According to the HS Convention, the six-digit HS nomenclature can be further diversified according to one’s own needs. Thus, in order to meet tariff and statistical needs, the EU has made an additional subdivision, resulting in the Combined Nomenclature (CN) (eight-digit codes). The EU’s integrated customs tariff, TARIC (ten-digit codes), was also derived. The member states base their customs tariffs on this TARIC, including the German Electronic Customs Tariff (EZT). In Germany and France, a further subdivision with 11-digit codes is used.
If the first 6 digits match, every good in these countries is already in the correct commodity group and they become easily comparable across national borders through the following national regulations.
To avoid annoying delays when exporting goods, you should check in good time which customs tariff numbers have changed in your master data. Our tip is to create an export from your ERP system with all customs tariff numbers and active articles. Then you should compare the existing customs tariff numbers with the new ones. There are always some that become invalid and get a direct match. Then there are tariff numbers that change in content and those that are split.
Preference calculations and lists of goods for the authorisations also have to be checked.
The changes brought about by a new Harmonised System are more extensive than the adjustments made during a normal annual change. Goods may find themselves in other subheadings, headings or even in other chapters. Prepare yourself and your company in good time to be able to foresee the correct classification for your goods and the resulting consequences for you and your customers.
With our poster “Classification in the customs tariff” you can keep track of the general regulations in the office or at home. Really easy and funny illustrated, everybody likes to look at it and learn something! You will also find the other important customs questions there.
Do you need help with tariffication and export control? Then get in touch with us and arrange a free initial consultation. Or register for our webinar on “Changes in the Harmonised System 2022“. We will be happy to advise you!
