The customs classification of goods is a key aspect of import-export operations, and—due to the reengineering of customs systems—also for goods in transit.
An incorrect classification of goods can result in unnecessary costs, delays in customs clearance, incorrect application of duties (penalties apply for both under- and overpayment), avoidance of border controls, and even significant fines.
What is customs classification of goods?
Customs classification of goods is the process of determining the nature of a product by assigning each item a unique code of 6 to 10 digits, known as a customs tariff code, in order to properly classify the goods according to shared standards. This applies to both imports and exports, depending on the length of the code used.
This classification is based on a set of rules and systems designed to support consistent product classification.
The need to assign a unique code stems from the obligation to precisely identify the type of goods, their origin and intended use, the corresponding tariff treatment, and any restrictions on import or export.
What are the customs classification systems?
Harmonized classification systems were introduced by the World Trade Organization to create a globally consistent framework, enabling people from different cultures and countries to determine and categorize goods for import-export activities.
There are three main classification systems:
- Harmonized System (HS Code): A globally recognized 6-digit code used to classify goods and determine applicable customs rules and charges.
- Combined Nomenclature (CN): A 2-digit extension introduced by the European Union for EU-wide classification.
- Integrated Tariff of the European Union (TARIC): An additional 2-digit code to provide detailed documentation of goods entering EU territory.
Structure of a TARIC code:
Harmonized System (HS)
- 1st–2nd digit: Chapter
- 3rd–4th digit: HS heading
- 5th–6th digit: HS subheading
Combined Nomenclature (CN)
- 7th–8th digit: EU-specific breakdown (for import/export)
TARIC
- 9th–10th digit: TARIC-specific breakdown (EU measures)
Additional TARIC Code digits
- 11th digit: Anti-dumping or countervailing duties
- 12th digit: Agricultural elements, pharmaceutical substances
- 13th digit: Preferential tariff quotas
- 14th digit: CITES-listed products, refunds, and other measures
For intra-EU trade (purchases/sales), the code is always 8 digits.
For exports to non-EU countries, it is 8 digits.
For imports from non-EU countries, it is 10 digits.
There are 99 chapters grouped into 21 sections, with approximately 20,000 TARIC codes (constantly updated), allowing classification of all goods.
What are the customs classification rules?
Correct customs classification is essential for determining applicable import duties and for identifying any trade measures (e.g. anti-dumping duties, safeguard measures, etc.).
Countries using the HS Code must follow the 6 General Rules for the Interpretation (GRI) established by the World Customs Organization (WCO).
What happens if goods are misclassified?
Misclassification of goods may result in:
- Customs duty evasion, leading to severe penalties (see Article 303 of the Italian TULD 43/73 and Legislative Decree 141 of 2024) for the declarant.
- Criminal liability, where the misclassification constitutes smuggling.
- Customs disputes and official or self-initiated revisions of assessments.
- Incorrect revenue collection for the State, and possible consequences beyond the fiscal domain (e.g. public safety, economic sanctions, health regulations).
What is Binding Tariff Information (BTI)?
If there is uncertainty about correct classification, customs authorities can issue a Binding Tariff Information (BTI) ruling.
This is an effective tool for ensuring correct classification, because:
- It is issued by the national customs authority where the applicant is based.
- It is valid across the EU (a BTI issued in Germany can be used in Italy).
- It is published on the EU BTI database and regularly monitored.
- It is valid for three years from the date of notification, unless revoked.
- It is binding for the importer/exporter, who must reference the BTI in every customs declaration for the goods concerned.
- It is binding for Customs, who must accept the classification unless there are overriding reasons to reject it.
Final notes
It is important to note that classification rules and HS codes are frequently updated, and careful prior consultation is essential.
In conclusion, customs classification can be a complex and delicate process, making professional support and guidance more crucial than ever.
Fammi sapere se vuoi la versione con formattazione per il sito o se procediamo con il prossimo articolo.
