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Customs clearance

A central part of international trade

Customs clearance is a central part of international trade and acts as a filter where goods are examined before they can be imported or exported across a national border. This process ensures that all laws and regulations are followed and that goods can be moved across borders legally.

For customs clearance to go smoothly, proper documentation must be provided, such as commercial invoices, shipping bills, and in some cases, certificates of origin or other permits. If customs authorities find anything that does not comply with the requirements, the goods may be detained or seized.

For companies, it is important to have a careful handling of all necessary documents and procedures to avoid delays and additional costs. One option is to hire a customs agent or a professional service, like Tullify, which can help with the entire process and ensure that everything happens according to the rules.

The use of customs brokers

To avoid the challenges and pitfalls that can arise during the customs clearance process, many companies choose to hire a customs broker or expert. A customs broker can handle the entire procedure, from documentation to communication with customs authorities and calculating fees. This reduces the risk of mistakes and saves time and resources for the company.

Customs brokers also have in-depth knowledge of the latest laws and regulations, which is crucial for handling complex international transactions.

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The role of documents in customs clearance

Documentation is a fundamental part of any customs clearance. The documents required depend on the type of goods being transported and which country they come from or are being shipped to. Among the most important documents are the commercial invoice, which details the value, origin, and specifications of the goods, and the bill of lading, which serves as proof of transport. These documents are the basis for customs authorities to assess customs duties and VAT, as well as to verify that the goods meet all necessary requirements.

In addition to these basic documents, certain goods may require additional paperwork, such as certificates of origin or export permits, depending on the trade agreements or restrictions in place between the exporting and importing countries. Incorrect or incomplete documentation can result in goods being held by customs, which can cause delays and increased costs. A properly documented customs procedure reduces the risk of these issues and ensures a smoother process.

Electronic customs clearance and procedures

Today, much of the customs clearance process takes place digitally, with declarations submitted through electronic systems. The EU, for example, uses the "EORI" (Economic Operators Registration and Identification) system, which provides companies and individuals with a unique identification code to facilitate trade within the union. Electronic systems simplify and speed up the process by allowing customs authorities to quickly assess and handle customs cases. This digitization reduces the need for paper documents and minimizes the risk of human errors in handling documentation.

By using these systems, companies can track their cases and receive faster notifications of approvals or potential issues. This is especially important for companies that regularly import or export goods, as it streamlines the entire customs process and makes it more predictable.

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Customs duties and taxes

When goods cross international borders, customs duties and other taxes, such as VAT, are often imposed. These fees are calculated based on several factors, including the value, origin, and type of goods. Customs clearance plays a key role in this process, as customs authorities base their decisions on the information provided in the declarations.

A crucial part of this assessment is the use of Harmonized System Codes (HS codes), which are used to classify goods. If an incorrect code is used, it can result in incorrect customs duties or goods being held for further inspection.

Customs duties vary depending on the country of origin and trade agreements. For example, goods from countries with free trade agreements with the importing country may benefit from reduced or no customs duties. VAT is usually added to the value of the goods upon import, and in some cases, additional excise taxes may apply, depending on the type of goods. Therefore, it is important to be aware of the applicable rules and fees to avoid unexpected costs.

Customs procedures within the EU

When goods arrive at a customs office within the EU, they are first placed in temporary storage under customs supervision, usually for up to 90 days. During this time, the goods must be assigned to an approved customs procedure or re-exported. This can include several specific procedures that allow the goods to be legally transferred to free circulation, processing, or temporary storage.

Free circulation
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The procedure for free circulation allows goods to be released on the EU market once all applicable import requirements have been met. This includes payment of duties, fees, and any import licenses. The goods can then be sold or consumed within the union. Once the declaration is approved at the EU customs office, the date is set for when customs duties, VAT, and excise taxes are calculated.

Special customs procedures
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There are also several special customs procedures used depending on the final destination of the goods or their intended use:

  • Union transit
    • External transit: Allows non-EU goods to be transported within the EU without import duties being paid. This transfers the customs clearance to the destination country.
    • Internal transit: Allows EU goods to be moved within the EU without changing their customs status, even if they pass through non-EU territories.
  • Storage
    • Customs warehouses: Goods are stored under customs supervision without duties being paid until they are assigned to a new procedure or re-exported.
    • Free zones: Designated areas where goods can be stored or processed without being subject to customs duties and taxes until they are assigned to another procedure.
  • Special use
    • Temporary admission: Non-EU goods can be temporarily imported without duties being paid, provided they are re-exported within a certain period, usually two years.
    • End use: Goods may receive customs benefits based on their specific intended use, such as humanitarian or public projects.
  • Processing
    • Inward processing: Goods are imported for processing without duties, taxes, or formalities, and then re-exported after processing. If the goods remain within the EU, duties apply.
    • Outward processing: EU goods are temporarily exported for processing outside the EU and re-imported later, often with duty reductions based on the added value of the goods.

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The difference between import and export clearance

Import and export clearance differ in their handling. For imports, customs' primary task is to ensure that the goods comply with the country's regulations and that the correct fees and taxes are paid. The importer must submit a declaration stating the nature, value, and origin of the goods, which serves as the basis for customs' assessment. Customs duties, VAT, and any excise taxes are usually added upon import.

Export clearance, on the other hand, involves ensuring that the goods are allowed to leave the country and that they are not subject to export restrictions. Certain goods require special permits for export, such as products subject to export controls, such as certain high-tech goods or military equipment. Exporters must ensure that all documents are correct and that the goods comply with the regulations in both the exporting and importing countries.

Customs unions and free trade agreements

The EU is an example of a customs union, which means that members share a common customs policy with the rest of the world and have eliminated customs duties between them. This facilitates trade between member states, as no customs duties need to be paid for goods moving within the union. In addition, the EU has entered into several free trade agreements with other countries and regions, which means that goods imported from these countries may be exempt from customs duties or benefit from lower fees.

Free trade agreements offer companies advantages by reducing or eliminating customs duties, but to take advantage of these agreements, the origin of the goods must often be proven through a certificate of origin. This certificate shows that the goods have been produced in accordance with the agreement and therefore qualify for customs benefits.

Restrictions and permits

Certain goods are subject to special restrictions or require permits before they can be imported or exported. This may include products deemed dangerous, sensitive, or regulated by international agreements. Examples of such goods are pharmaceuticals, chemicals, and advanced technology. When exporting, special permits may be required if the goods are subject to export control. For imports, restrictions may apply if the goods do not meet standards or regulations for health, safety, or the environment.

It is important for companies handling these types of goods to be aware of the applicable rules and to apply for the necessary permits before the goods are shipped. By following the rules and having all permits in place, companies can avoid serious delays or even the seizure of their goods.

Import requirements and authorities in EU member states

Although the EU operates as a customs union with harmonized import procedures, there are still differences between the various member states. Each country has its own specific requirements and responsible authorities that handle import formalities, licenses, and specific controls. To navigate these rules, companies can consult relevant authorities for assistance with:

  • Submission of administrative documents
  • Access to free zones
  • Issuance of import licenses
  • Inspections of live animals and animal products
  • Phytosanitary controls
  • Standards for food and feed
  • Technical standards, packaging and labeling requirements

​These authorities can also provide guidance on specific trade standards and safety requirements, making it easier to comply with both national and EU-wide regulations.

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Common mistakes in customs clearance

One of the most common causes of problems during customs clearance is incomplete documentation. It is essential that all documents are correctly filled out and match the actual value and nature of the goods. Mistakes in documentation, such as incorrectly completed invoices or missing export permits, can result in goods being held by customs and the process being significantly delayed.

Another common mistake is the use of incorrect HS codes when classifying the goods. Incorrect use of these codes can result in incorrect customs duties and, in some cases, lead to goods being seized for further investigation. By hiring customs brokers or experts, companies can minimize the risk of these mistakes and ensure that the entire process is handled correctly.

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Frequently asked questions about customs clearance

What is customs clearance?

Customs clearance is the process in which customs authorities inspect and approve goods transported across an international border. It involves declaring the value, type, and origin of the goods, as well as paying any customs duties and taxes.

Customs clearance is necessary to ensure that the goods comply with all legal requirements in the receiving country and that all relevant fees have been paid before the goods can be released for further transportation or distribution.

The cost of customs clearance varies depending on several factors, such as the value of the goods, their country of origin, and the type of goods involved. Customs duties, VAT, and any applicable excise taxes may be added.

Additionally, there may be administrative fees from the shipping company or if a customs broker is hired. The customs duty is usually determined based on the classification of the goods using Harmonized System (HS) codes, while VAT is typically applied at a fixed percentage depending on the country.

When customs clearance is "complete," it means that customs authorities have reviewed and approved the goods for entry or exit. All necessary documents have been submitted, and any customs duties, VAT, or other taxes have been paid. The goods can then be released from customs and continue their journey to the recipient. This indicates that there are no more obstacles from customs and the delivery process can proceed.

Customs clearance fees and taxes are usually paid by the recipient of the goods unless otherwise agreed. In international trade, the seller can choose to cover customs fees depending on the shipping terms, such as in DDP (Delivery Duty Paid), where the seller pays all costs. However, it is common for the recipient to bear these costs, especially in personal imports or when ordering from foreign online retailers.
The time between customs clearance and delivery varies depending on the shipping company and distribution network. Normally, delivery can take place within a few days after customs clearance is approved, but this depends on factors such as shipping time, distance to the delivery address, and whether there are any additional delays with the carrier. Large shipments may sometimes take longer to process depending on the complexity and volume of the goods.
A customs clearance fee is an administrative charge imposed by the shipping company or customs broker for handling the customs process on behalf of the customer. This fee is separate from the actual customs duty and taxes paid to customs. The customs clearance fee covers the cost of preparing and submitting the necessary documents and ensuring that the goods comply with all applicable regulations. The amount may vary depending on the carrier and the extent of the service provided.
You need to pay customs duties if you import goods from a country outside the EU and the value of the goods exceeds the duty-free threshold. This amount varies depending on the type of goods and the country from which they are shipped. Customs or your shipping company will usually send you a notification when your package has arrived and requires customs clearance. This notification will indicate whether you need to pay customs duties and any applicable fees and taxes.
If your package is stuck in customs, you will usually receive a notification from customs authorities or the shipping company informing you of the reason for the delay and what is required to resolve the situation. You can also check the status of your package through the carrier’s tracking service, where it may be marked as "in customs" or "awaiting clearance." Sometimes additional documentation or payment of fees is required for the package to be released.

Delays in customs can be due to several factors, including insufficient or incorrect documentation, the value or origin of the goods, and increased workload at customs authorities. If customs authorities suspect something is wrong with the declaration, they may hold the package for further inspection. Goods that require special permits or certificates may also take longer to process. It is important that all documents are correctly completed to avoid unnecessary delays.

If you don’t pay the customs duty, your package may not be released from customs and may be returned to the sender or, in the worst case, seized by customs authorities. If the duty is not paid within a certain timeframe, additional fees or storage costs may also apply. To have the goods released, payment must be made within the deadline specified by customs or the carrier.

Yes, when buying from Aliexpress, which is based outside the EU, you must pay customs duties and VAT if the value of the goods exceeds certain thresholds. As of July 1, 2021, EU VAT rules have changed, meaning that all goods imported into the EU are subject to VAT, regardless of value. In some cases, customs duties may also apply depending on the type and value of the goods. The recipient is usually responsible for paying these fees.

Trade agreements between countries can lower or eliminate customs duties for certain goods by offering benefits to companies within the contracting countries. These agreements facilitate easier cross-border movement of goods, simplifying customs clearance and reducing costs for importers and exporters.
EORI (Economic Operators Registration and Identification) is a unique registration number used by companies and individuals who trade with countries outside the EU. It is required for customs clearance and helps track customs transactions, making the entire customs process smoother and more transparent.
Electronic customs clearance means that customs declarations are submitted digitally through specialized systems, such as EORI in the EU. This simplifies the process by reducing the need for paperwork, speeding up approvals, and minimizing errors. Companies can also track the customs status in real-time.
Temporary storage means that goods are placed under customs supervision for up to 90 days until customs clearance is complete. During this time, the goods cannot be sold or altered. The goods must then be assigned to a customs procedure or re-exported within the specified period.
Inward processing allows the import of goods into the EU without customs duties for processing under customs supervision. After processing, the finished products are exported. If the goods remain in the EU, customs duties and taxes must be paid. This system facilitates international trade in raw materials.
Free circulation means that goods are released for consumption in the EU market after all import formalities have been met. This includes paying customs duties, VAT, and other charges, as well as submitting the necessary licenses and certificates, such as veterinary or origin certificates.
Free zones are designated areas where goods can be stored, processed, or repackaged without being subject to customs duties or other import taxes. The goods can later be assigned to a customs procedure or re-exported. Free zones facilitate goods handling without immediately paying customs duties.
HS codes (Harmonized System Codes) classify goods internationally and determine which customs duties and taxes apply. Incorrect use of HS codes can result in miscalculated customs duties or goods being held in customs, which may delay the import or export of the goods.
Outward processing means that EU goods are temporarily exported outside the EU for processing and then re-imported, often with reduced customs duties based on the added value of the goods. The goods are then returned to the EU market without the full customs duty being applied, making it a cost-effective solution for companies processing goods abroad.
Customs value is the basis for calculating customs duties and taxes. It includes the price of the goods as well as shipping, insurance, and handling costs. A higher customs value results in higher customs duties, so it is important to declare the correct value to avoid excessive charges.
Union transit allows goods to be transported between EU countries or through countries outside the EU without paying customs duties in each country they pass through. It prevents goods from being taxed multiple times during their transport, simplifying cross-border trade.
A customs warehouse is a place where goods can be stored under customs supervision without customs duties being paid upfront. The goods are stored until they are assigned to a customs procedure or re-exported. This allows companies to delay the payment of customs duties until the goods are released to the market.
To apply for customs duty reductions, companies must submit a request to customs authorities, often with documentation proving that the goods meet the requirements for the reduction. This may apply to specific goods, origin, or processing that qualifies for preferential customs rates under free trade agreements.
Phytosanitary inspections involve checking plants and plant products during customs clearance to ensure they are not carrying pests that could threaten agriculture. The inspection is carried out by the relevant authorities and may be required for the import of plant-based goods from countries outside the EU.
Technical standards ensure that imported goods meet health, safety, and environmental requirements in the importing country. During customs clearance, the goods' compliance with these standards is checked. Incorrectly labeled or insufficiently certified products may be held until they meet the necessary requirements.

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