DAC Consulting has been constantly dealing with customs issues for more than ten years and has been carefully monitoring all the news in that field. Therefore, we are able to provide all our clients with comprehensive consultancy at a high professional level. Our clients are thus assured that their cross-border business will run smoothly and in perfect compliance with applicable regulations.
We provide customs consultancy mainly (but not exclusively) in the following fields:
Tariff classification of goods
The import duty to be paid is based on the Common Customs Tariff. Import duties and other measures provided for in EU regulations which govern specific areas of trade with goods, apply in particular, according to the tariff classification of those goods.
The tariff classification of goods consists in the determination of one of the subheadings or further subdivisions of the combined nomenclature under which those goods are to be classified. For the application of non-tariff measures, tariff classification of goods consists in the determination of one of the subheadings of the combined nomenclature or further subdivisions of the combined nomenclature, or of any other nomenclature based on the combined nomenclature.
The Common Customs Tariff is established by the Customs Tariff, where Annex I is amended every year. The Customs Tariff is thereby regularly introduced for each calendar year.
Each customs tariff consists of a combination of two main elements, namely the goods nomenclature and the tariff rates. The goods nomenclature is a systematic list of goods which are released into circulation when are in contact with third countries. It contains the relevant numerical code and description of the goods under the numerical code. The goods nomenclature goes beyond customs law and is also applied in other fields of law, such as tax law. The tariff rate is a criterion for incurring customs debt. The classification of the tariff rates according to the basis for assessment of customs duties is as follows:
- ad valorem duty,
- specific duty,
- combined duty.
However, the classification of goods into the appropriate subheading, based on the description, is not always simple and the goods may appear to be classified into two or more subheadings of the combined nomenclature. And because of the second element of the tariff, namely the tariff rate, there is, of course, a tendency on the part of a declarant to prove, that the particular goods are classified into the subheading of the combined nomenclature which is associated with a lower tariff rate or which does not fall under other restrictive measures according to special regulation. It is neither possible nor intended for all existing tradable goods to be classified into the specific subheading of the combined nomenclature.
For this reason, the explanatory notes to the combined nomenclature are necessary during the work with the customs tariff. The explanatory notes to the combined nomenclature have been considered by the case law of the Court of Justice of the European Union as a recognized guidance for tariff application since 1970 and are currently published in accordance with Article 9 (1) of the Customs Tariff on customs and statistical nomenclature and the Common Customs Tariff. They do not have the nature of a source of law, but have the nature of an administrative guidance. The Explanatory notes to the combined nomenclature summarize several sources, including the Explanatory Notes to the Harmonized System, Union decisions, judicial decisions, national decisions and guidance. In that regard, it should be noted that the Customs Tariff begins with the General Rules for the Interpretation of the Combined Nomenclature, the General Rules on Tariffs and the General Rules Applicable to Nomenclature and Tariffs, which are also an integral guidance in the process of classifying goods under the relevant CN subheading.
As already mentioned in the subchapter Customs Tariff and Nomenclature Classification of Goods, we recognize the following duties:
- ad valorem duties – customs duties are expressed as a percentage of the customs value,
- specific duties- basis for calculating the duty is a quantity other than the customs value, such as weight, volume, area or alcoholic strength, and the rate is expressed as a fixed amount per unit of that quantity,
- combined duties- elements of both (ad valorem duty and a specific duty) are used for calculating the duty.
Ad valorem duties are the most frequently used duties, and therefore the customs value of the goods is the most used basis for calculating the duty. For this reason, the issue of customs value has a special place in customs legislation among the factors on the basis of which customs duties are applied. Moreover, unlike the basis for specific duties where no special regulation is required, in case of customs value, this special regulation is clearly required. In relation to this type, a number of questions arises. These questions are covered by the legal regulation on customs value.
Although the customs legislation does not contain a definition of the term customs value, it can be generally stated that customs value is the value of the goods, namely transaction value or substitute value, which is used as the basis for the assessment of ad valorem duties on import or export of goods.
The content of the term of customs value is clarified and specified in the legislation itself contained in Article VII of the General Agreement on Tariffs and Trade (GATT), in the Convention on Customs Valuation of the World Customs Organization (WCO) and in the European customs legislation which derives from the above-mentioned international regulations.
We distinguish six methods of determining customs value, which are used in the specified order. If the customs value of the goods is determined by one method, all other methods following it are excluded. Only in case of methods no. 4 and 5, the order of the methods may be changed at the declarant´s request.
Origin of the goods (preferential origin of the goods and non-preferential origin of the goods)
The issue of the origin of the goods is very complicated. It is based primarily on international agreements, but the European customs legislation is also used, mainly due to autonomous preferential measures, which can be applied under the so-called Generalised System of Preferences (GSP) to developing and least developed countries or may relate to other unilateral measures taken by the Union. In addition, the origin of the goods is an important category for both import and export, so we need to deal with it from the Union's point of view from each side. On the one hand, preferences or trade policy measures apply to imports into the Union, on the other hand, the Union has an interest in granting a preference to the exporters of the goods from the Union in relation to the exported goods in the third countries of importation, provided that the conditions are met.
The importance of this issue derives, in particular, from the fact that the proof of the origin of the goods is a precondition for the choice of the relevant duty rate. (In particular in order to grant any preferential tariff measure, tariff reduction or tariff exemption, or any other preferential tariff treatment, whether from the Union´s point of view upon importation or exportation to a third country.)
A distinction is made between a non-preferential origin of the goods and a preferential origin of the goods. The objective of determining a non-preferential origin of the goods is to ensure the application of commercial policy measures which are linked to the origin of the goods. The objective of determining a preferential origin of the goods is to provide for a reduction in duty rates (preferential tariff measures) in cases of importation of goods from a beneficiary country or exportation of goods to a beneficiary country.
Simplified procedures are an important legal tool for speeding up customs formalities during the customs procedure. They are considered to be part of the Union's customs policy, which facilitates trade in the supply chain between economic operators in a form strictly regulated by the Union Customs Code and its related rules.
The nature of customs simplifications is to speed up international trade without disrupting the proper conduct of customs procedures. Simplifications can usually be used on the basis of a structured authorisation issued by the customs authorities. The authorisation shall define the conditions for the use of the simplification, such as the transfer of certain authorisations of the customs authorities to the holder of the authorisation or the reduction of the obligations of the authorisation holder. However, this transfer cannot be considered to be absolute, as the customs authorities always retain the possibility to intervene in the ongoing customs procedure. This possibility is also based on the results of risk management by the customs authorities using various analytical procedures related to the transfer of goods from the customs territory of the Union and vice versa, when the customs authorities exercise their powers to intervene in the customs formalities process in a legally relevant manner. These are often simplifications that can only be available to Authorised Economic Operators. The economic operator, to whom the customs authorities delegate part of their powers, must be verified in a relevant manner and the customs authorities must trust him. Not all types of simplifications are subject to the fulfilment of the criteria for Authorised Economic Operators, but there are also some simplifications that are decided directly during the customs procedure.
Simplifications (simplified procedures) were already an immanent part of the Original Community Customs Code, which created the conditions for an incomplete customs declaration, a simplified declaration and a local clearance procedure. These simplifications are redefined in the Union Customs Code legislation and are extended to other types.
The Union Customs Code recognizes the following types of simplifications:
- simplified declarations,
- simplification of the drawing-up of customs declarations for goods falling under different tariff subheadings,
- centralised clearance,
- entry in the declarant's records,
Authorised Economic Operator (AEO)
As part of our services, we offer to our clients an assistance in obtaining the so-called AEO (Authorised Economic Operator) status. We offer the following services to our clients:
- complete preparation of an application,
- preparation of the required annexes to the application,
- representation throughout the proceedings,
- communication with the customs authorities,
- proposal of measures to optimize the client's processes related to the application of customs regulations,
- consultations and advice throughout the cooperation.
What is Authorised Economic Operator? In generally is defined as "a safe part of the supply chain involved, within the scope of its business, in activities covered by customs regulations". This definition covers also producers, importers, exporters, carriers and others.
The status of Authorised Economic Operator has a number of benefits, including the minimization of formalities by using simplified customs procedures, fewer controls, and obtaining a quality mark for business partner in the EU and outside the EU.
We prepare the application for AEO status for all types of authorisations:
- type C -for entities dealing with customs simplifications;
- type S -for entities requesting the simplification of customs controls at the borders of the EU customs territory;
- type F -combined authorisation.
Control on the export (dual-use goods)
Dual-use goods are defined under European legislation as products, including software and technology, that can be used for both civilian and military purposes, and include all goods that can be used for both non-explosive uses as well as any assistance in the manufacture of nuclear weapons or other nuclear explosive devices.
European and national legislation introduce lists and strict rules for the export of dual-use goods, licensing obligations and penalties for non-compliance. This is an extremely sensitive agenda, for which we also offer support and assistance.