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Customs tariff: Details matter

Apr 14, 15 • Customs LawNo Comments

Do entrepreneurs need to know the difference between patent leather and lambskin leather? Clear answer: yes, because when dealing with matters of customs law such as import and export, details such as the code number cannot be avoided.

Product nomenclature and customs tariff

Importers are familiar with it: product nomenclature and customs tariff. However, very few entrepreneurs are aware of the financial significance of these terms. Without exception, all objects that surround us in our daily life have a code number. This number is the basis for customs clearance, in fact worldwide. 140 contracting states use uniform codes for the same products. The assignment of a product to a code number is referred to as classification. The correct classification is crucial for determining the correct customs tariff. So simple in theory.

Importing into the European Union

Leather bag

Patent leather or lambskin leather?

In the case of the mentioned patent leather and lambskin leather, the classification is as follows: 42022100900 is the correct code number for a women’s handbag made of lambskin leather. 42022210000 is the correct code number for a handbag made of patent leather.

When importing these handbags into the European Union, a tariff rate of 3% is incurred under the European customs tariff on lambskin leather handbags. A tariff rate of 9.7% is incurred on handbags made of patent leather, however.

Classification important for customs duty

An error in the classification of these products thus means a difference of 6.7% for the entrepreneur. If he confuses or disregards the code numbers, he pays too much or accordingly too little customs duty. If the business pays too much customs duty, this will reduce profit. If it pays too little, management must defend itself against the allegation of tax evasion.

Please Note: Entrepreneurs in the import and export business should therefore always make sure that products are classified correctly. Nevertheless, anyone who is suspected of tax evasion should urgently obtain legal advice, no matter if the issues occured at customs in Frankfurt, at customs in Munich or elsewhere.

German and European Customs Law
Your German Customs Attorney

Stefan Winheller

Attorney Stefan Winheller has specialized in tax law for about 20 years, especially in the areas of cryptocurrencies, foundations/nonprofits and international tax law.

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