Silk Bridge Journal

Definition

 Duty, or customs duty, is a charge imposed by a government on certain goods imported from abroad. The amount of duty payable depends primarily on the correct classification of the product according to its HS Code, the country of origin, and the customs regulations in force at the given time.

Customs duty is one of the components of the total cost of importing goods and should be taken into account already when calculating the profitability of an order. Depending on the type of product, the duty rate may be very low, but for certain goods it can have a significant impact on the final cost of importing the product.

It is also important to remember that customs duty is not the same as VAT. These are two separate charges that may be imposed during the import process.

Why Should Importers Know This?

 Correctly determining the amount of customs duty is one of the fundamental elements of safe import planning. An incorrect assumption regarding the applicable duty rate can mean that a product that initially appears highly profitable will have a significantly lower margin once all costs are taken into account.

The amount of duty is affected, among other things, by the correctly assigned HS Code and the country of origin of the goods. In some cases, additional trade defence measures may also apply, such as Anti-Dumping Duty.

For this reason, the applicable duty rate should be checked before placing an order, rather than only after the goods are already on their way to Europe.

Related Terms

 HS Code · VAT · Landed Cost · Customs Clearance · Certificate of Origin · Anti-Dumping Duty

In Practice

Before placing an order, the importer should determine the correct HS Code for the product and check the applicable customs duty rate. Only after taking into account customs duty, VAT, transportation and other costs can the actual profitability of the import be assessed reliably.