A beginner’s guide to customs clearance in EU
By Camille Felappi
Do you know how to clear your goods through customs? When you send a parcel to the EU, it doesn’t reach the customer immediately after crossing the border. It will first need to be declared and released by customs. In that way, we can say that customs clearance is the backbone of international trade.
If you are expanding your activities, you may not know where to start with customs clearance- and we get that. However, you shouldn’t restrict your growth and potential because of regulatory barriers. This is why we compiled all you need to know about customs clearance in one place. Check out this beginner’s guide to make sure your goods will reach your EU customers with no hassle.
You don’t have enough resources to handle customs clearance? Check out our automated customs clearance service!
What is customs clearance?
Before diving into customs clearance requirements, let’s shed some light on its purpose. Customs clearance is when you apply for approval from a customs authority to import or export goods into or out of the EU. This occurs for international shipments but not intra-EU trade. Customs clearance has several goals. First, it makes sure goods comply with EU and national regulations. It also ensures that duties and other taxes such as excise, anti-dumping and VAT are paid, that any required certificates/licenses are submitted, and that all other laws are complied with. Customs duty is a discriminatory tax only imposed on goods imported to the EU. The EU and its member states impose duties and taxes on consignees in a Member State which a non-EU seller can choose to pay on their behalf (DDP). If you do not use the IOSS scheme, customs will also ask your clients to pay VAT. Handling VAT issues when a package is in customs can quickly become a nightmare. Several companies shared with us their unfortunate experiences. Packages were held in customs, and clients asked to pay extra money.
You might also wonder what items need to be declared at customs. The short answer is all of them. Last year, the EU enforced new trade rules and abolished the low-value items exemption. It means that all goods entering the EU must be declared. Your buyer will need to declare all your parcels to the customs authority, no matter their value. A few items can be exempt from duties, but they will still need to go through the customs clearance process.
What is the customs clearance process?
Now that the customs clearance purpose is set, let’s have a closer look at how it works in practice. You might wonder how long customs clearance takes. If you provide all the necessary paperwork, it usually takes about 24 minutes. However, if there is a document missing or if you give the wrong information, it can take several weeks. That is why being aware of the process is key when you conduct cross-border sales.
The EU is a customs union that benefits from harmonized import procedures. Sometimes though, there are some variations between countries. That’s why it is safer to check with the competent authority of the country you trade with. In general customs clearance process is divided into 3 main steps:
- First, you will need to prepare customs paperwork. This is the key step to clear goods. Everything that happens next derives from the information provided by these documents.
- Then, the customs authorities’ system will automatically assess what fees apply. Taxes and duties depend on the type of goods, their value, and the laws in place.
- If there are unpaid taxes and duties, you will need to pay them. This depends on which incoterms you agreed on with your buyer. Sometimes, duties and taxes are deferred until after goods release. Additional checks can also take place after the payment.
What documents are needed for customs declaration?
As we saw, the whole procedure relies on the paperwork you will prepare beforehand. You should thus pay extra attention to the information you fill in. Customs declaration documents are often the same in all EU states, but countries can ask for more. We recommend you double-check with the customs office you deal with. In general, you will need to prepare these mandatory documents:
- Commercial invoice. It is one of the most important documents in international trade. It certifies the trading operation between you and the buyer. You will need to fill out transaction information and information on the goods sold. Besides, you will need to state the means of transport and the Incoterms you agreed on (EXW/FOB/FCA/CIF/DAP/DDP). The commercial invoice is the main document used to determine what duty you have to pay.
- Bill of lading, airwaybill, CMR or tracking label. The document needed will depend on the type of transport (ocean freight, air or road). It establishes an agreement between you and the transportation company you choose. You should include the type and quantity of goods. It should also give details on the shipper, the carrier, and the destination.
- Packing list. Most of the time, this document is integrated in the invoice. If you need to issue this document, it should include details on the merchandise you are shipping. For example, the number and type of packages, weights, or volumes.
Once you prepared these documents, you need to lodge a customs declaration. You should submit it via electronic declaration.
Do I need a customs clearance agent?
Global sellers usually wonder if they need a customs clearance agent. Before clearing up that point, we should answer one question. Who is responsible for customs clearance? In almost all international shipping situations, the buyer alone is responsible as importer. In the EU, there is no legal requirement to hire a customs broker that would do everything on your behalf. Yet, it is preferable to use a customs declaration service to avoid legal troubles.
As we saw, you need to prepare paperwork beforehand, and they are interrelated. If you add the wrong information to one document, the rest will be invalid. For example, if you state the wrong commodity code, you will assess the wrong duty on all your documents. This will slow down the whole process and your goods can be held in customs. You can also receive an administrative penalty for misdeclaration.
As a global eCommerce seller, your number one priority should be client satisfaction. That is why customs clearance cannot be overlooked. Using a customs declaration software is the safest option.
How can Eurora’s Automated Customs Clearance help me clear customs?
To help international sellers with regulations, Eurora developed an automated Customs Clearance service. It works as one unique platform from which you can handle all your customs clearance issues in the EU. We offer an end-to-end compliance service, and we can also provide fiscal representation.
Eurora’s platform uses several AI-based solutions. They validate the declaration data before submitting it to customs for clearance. It uses HS Code Allocation, Duty & Tax Calculation, and many other Eurora services to provide you with a fast and seamless clearance process. Our Global Database covers VAT rates, duties, and trade restrictions for most of the countries in the world.
Automating customs declaration makes sure you avoid human error and missing data. With a fast automated customs clearance process, you also save time and money. You can focus on your core activity while seizing new international markets.
Do you want to avoid customs issues and improve your customers’ satisfaction? Check out our Customs Clearance service!