Customs debt

What is customs debt and when does it arise?

The customs debt is the sum of due import duties or export duties at the time goods change customs status or conditions are violated. With imports, the debt normally arises when the declaration for release for free circulation is accepted. A customs debt may also arise outside of a normal declaration, for example, in the event of removal from customs supervision, incorrect or incomplete information in the declaration, failure to comply with licensing conditions, or the unlawful application of a preferential tariff. For exports, a customs debt can arise when refunds or duties apply and conditions are not met. In all these cases, a invitation to payment after checking afterwards.

Common causes:

• Incorrect rate classification
• Wrong origin
• Preference not demonstrated
• Understated customs value
• Violation scheme

Who is liable for the customs debt?

The primary debtor is usually the declarant. If you work with a customs representative, the choice between direct or indirect representation is decisive. At indirect representation the representative is in principle a co-debtor, which may create joint and several liability. Licensees of special arrangements, those who remove goods from surveillance and parties who gave instructions to an irregularity may also be liable. It is therefore important that your agreements with your service providers are sharp, including authority, data quality and recordkeeping. Read more about terms and roles on our page with requirements for customs representation.

Liability within special arrangements

At suspension arrangements such as customs warehousing, inward processing or transit applies that the licensee and the actual user must strictly observe the conditions. If they do not, the customs debt arises at the time of the irregularity, often retroactively. In transit, both the principal liable representative and the holder of the procedure can be sued. If you have transit movements in your chain, make sure you have conclusive termination and proof. For operational support, use our service for transit declaration enable.

How is customs debt calculated?

The calculation starts with the customs value. That is usually the transaction price plus transportation and insurance costs up to the EU's external border, plus any licenses, royalties and commissions that need to be added. You then apply the applicable import duty rate Apply on the basis of appropriate HS classification and origin. Any additional duties, such as anti-dumping, count. A separate base is used for VAT according to national rules.

Sample calculation of customs debt on importation into the Netherlands

This example shows that both tariff classification, origin and proper cost allocation determine the final customs debt. Do you work with preference through a EUR.1 or declaration of origin, then the duty rate may be lower or zero. In this case, origin must be demonstrable and verifiable. For structural preferences, we recommend a procedure for proof and document management. Our specialists will take care of your import declaration including review of rate, origin and value.

Deadlines, UTB, interest and recovery

Following a post-clearance audit, customs may impose a UTB. As a rule, a three-year period applies for post-clearance recovery, counting from when the customs debt is incurred. In case of suspicion of criminal offenses, the period may be longer. Recovery or default interest may be charged on the amount due from the due date until payment. Deferred payment or security is possible, depending on your status and history. It pays to check the UTB and underlying calculations for tariff, origin, customs value and procedural aspects.

Refund or remission

Repayment or remission is possible in certain cases, such as in the case of demonstrable error by customs, special circumstances or when goods have been returned. The burden of proof is on you and the application must be submitted within legal deadlines. A thorough file with invoices, transport documents, proof of origin and correspondence is indispensable. We assess your position, prepare the application and conduct the dialogue with customs.

Preventing and controlling customs debt

Prevention starts with data quality, clear contracts and internal controls. Capture HS classifications, use binding tariff information where appropriate, manage origin and preferences with conclusive evidence, and secure your customs value including add-ons such as royalties. Monitor deadlines in special arrangements and close transit files in a timely manner. Have periodic risk analysis and train your team. European Customs Clearance supports you with procedures, files and daily operation, from customs documents to execution guidance. Want direct sparring on an ongoing case or UTB, contact op with our consultants.

How we help

We provide correct declarations, file preparation and representation, and act as a sparring partner during audits. For export flows, we arrange your declarations and proofs of origin, including, for example, a EUR.1 or certificate of origin. For inbound flows, we take care of accurate classification, valuation and preferences. If you work with a representative, record agreements in line with the requirements for customs representation. This way you limit liability risks and keep a grip on your customs debt.