Importing goods from China has become an essential part of global supply chains, providing Belgian companies with cost-effective products and manufacturing capabilities. However, the process of importing from China involves dealing with a complex landscape of customs regulations and compliance issues. This article explores the key customs challenges faced by importers and offers strategies to ensure smooth and efficient import operations from China.
Preparation before import
Before you start importing from China, it is important to first obtain an Economic Operators Registration and Identification (EORI) number. This unique identifier is mandatory for all companies involved in the customs process within the EU. You may consider applying for Authorised Economic Operator (AEO) status as well, which can offer benefits like simplified customs procedures and faster clearance.
Then you should identify the HS Code of your imported product. ‘HS’ stands for Harmonised System and is a standardized numerical classification method of traded products. Determining the correct HS code is crucial, as this directly impacts the applicable VAT rate. EU customs authorities use online resources and databases to assist with HS code classification. After establishing the correct HS code and calculating the additional costs of your imported goods, you can calculate the landed cost. This is the total value of your imported goods, including the products’ value, freight costs, insurance, and applicable duties. Knowing this landed cost is essential for calculating the import VAT amount.
Tariffs, import duties and VAT
Importing from China often involves paying various tariffs and import duties, which can vary based on the product category and its classification under the Harmonized System (HS) code. Certain products imported from China may be subject to anti-dumping duties if they are considered to be sold at unfairly low prices or are subsidized by the Chinese government. These additional duties aim to protect European industries from unfair competition and can significantly impact the cost of imported goods.
The applicable VAT rate depends on the specific product category and the destination country within the EU. These rates can vary between 0% and 27%. You can find relevant information using the EU’s VAT Rates by Country database. VAT applies to most imported goods. In the EU, VAT is generally levied on the total value of imported goods, which includes the product’s value, customs duties (if applicable), and any transport or insurance costs. If you are working with a third-party logistics provider (3PL) in the EU, you need to clarify who is responsible for import VAT payments. The ‘Importer of Record’ (usually the European company receiving the goods) is typically responsible for paying import VAT during customs clearance.
Compliance with regulations
Imported goods must comply with the regulatory standards of the importing country. This includes adherence to safety, health, and quality standards, which can differ significantly from those in China. For example, electronics imported into the European Union must meet the CE marking requirements, and textiles must comply with specific labeling regulations. Certain goods leaving China may also require special export licences or fall under quota limitations. These restrictions can sometimes fluctuate based on Chinese supply concerns, so consulting the Ministry of Commerce (MOFCOM) for the latest updates is essential.
Agreement with your supplier
Clearly define the delivery responsibilities (‘Incoterms’) in the agreement with your Chinese supplier. This clarifies who is responsible for customs clearance procedures and any associated costs on the European side. Once you have signed the agreement with your Chinese supplier, issued the purchase order and are ready to receive the goods, your Chinese supplier needs to prepare a detailed commercial invoice accurately reflecting the product description, value, HS code, and currency. Additionally, a detailed packing list is also required, specifying the number of packages, weight, and dimensions of your goods. Depending on the specific product category, additional documents like certificates of conformity, licences, or permits may be required.
Customs clearance process
Your chosen customs broker or freight forwarder will typically manage the electronic submission of the Entry Summary Declaration (ENS) to EU customs authorities. This declaration provides detailed information about your shipment. Once your goods arrive at the designated EU port of entry, they will be presented to customs for clearance. Customs may select your shipment for physical inspection or request additional documentation. Make sure that all paperwork is readily available to facilitate a smooth process. Customs duties and import VAT will be calculated based on the declared value, HS code, and relevant trade agreements. Payment of the duties and VAT must be settled before the goods are released.
Diversifying Supply Chains
To mitigate the risks associated with trade disputes and regulatory changes, importers can consider diversifying their supply chains. This might involve sourcing products from multiple countries or regions to reduce dependence on Chinese imports and spread risk more evenly across different markets.
Conclusion
Importing from China presents significant opportunities for Belgian companies, but it also involves navigating a complex landscape of customs regulations and compliance issues. By understanding the key challenges, staying informed, and implementing effective strategies, importers can overcome these challenges and ensure smooth and efficient import operations.
Please contact the Belgian-Chinese Chamber of Commerce (BCECC) in case you need more information.