Customs: Classifying your goods post Brexit
A question of classification
When is a drone not a drone? When it’s a camera, a toy or even a light aircraft. This is just one example of how a product classification for customs purposes can change depending on its characteristics. In this case, it depends on its intended use, whether the item is fitted with a camera or not, and its size and range.
This matters because there is duty payable on some of these items and not on others. For example, drones of a low weight and speed with a limited range may be deemed to be toys. Toy drones if made from plastic attract customs duty of 4.7% when imported from many countries outside of the EU and if made from other materials are free from customs duty. No customs duty is payable on drones without a camera that are deemed to be civil aircraft regardless of the country of origin.
How will product origin determine the duty rates?
The questions of product origin, composition and size have had little relevance for the great majority of Irish companies up until now. That’s about to change with Brexit, however, as the origin of the products will determine the duty rates. Products purchased and consigned from the UK may not originate in the UK and may be liable to Anti-Dumping duty in addition to the customs duty, VAT and possibly excise duty. Ireland imports almost €20 billion worth of products from the UK every year and following Brexit it will have third country status.
This means Irish companies importing from UK suppliers or exporting to UK customers should start the process of finding the customs classification code for all products involved, now, in order to be fully prepared for trading with the UK after the transition period ends.
Next steps to getting your codes
The first port of call is the Classification page on the Revenue website. This offers a brief explanation of the customs classification system and a link to the EU TARIC site which companies can use to find the eight-digit code they need for exporting and the ten-digit code for importing products.
The first component of the system is the Harmonised System (HS) developed by the World Customs Organization (WCO) comprising about 5,000 different commodity groups, organised in a hierarchical structure by broad section headings. These are subdivided into chapters, which give the first two digits of the code, headings and subheadings which each give a further two digits. A further EU subheading brings the code up to eight digits for export. A TARIC subheading brings the code to ten digits for imports.
The home page of the TARIC site includes various search functions which allows searches under a range of headings. For those unsure of how to use the TARIC system there is a helpful video tutorial available below.
Make sure you get it right
Misclassification of products can be very costly and lead to significant delays. Any delays can be catastrophic where short shelf life products are concerned. Companies with difficulty in finding the exact product classification code can call the Revenue Tariff Classification Unit in Nenagh (Telephone: 00353 1 7383676, 1890 62 63 64) for guidance.
In preparation for your call with Revenue you should consider the following questions in advance;
- What the Product is
- What the Product looks like – size, colour, packaging etc
- What the product does or what it is used for
- What the Product is made of
- How the Product is manufactured
- Any other defining characteristics
Where uncertainty in relation to the classification code arises, a company can request Binding Tariff Information (BTI) from Revenue. This is a legally binding code, but it can take up to 120 days for one to be issued, so it may be best to first seek advice from a customs agent or other expert.
While the tariffs payable on UK imports have not been finalised as yet, the UK government has announced a new UK Global Tariff that will replace the current EU common external tariff from the 1st of January 2021. Firms exporting goods to the UK will be subject to potential tariffs under this new regime in the event that no future trading agreement is in place by the end of the transition period. To check what tariffs will apply under this new system please see the UK Global Tariff website.