Every commodity that is imported or exported attracts certain tariffs. The most common are export, import, and transit duties. Tariffs in the EU are governed by the TARIC code system, where each commodity’s TARIC code decides the tariff that will be applied to it.
TARIC stands for TARif Intégré Communautaire (or Integrated Tariff of the European Communities). TARIC codes showcase the rules and tariffs that apply to different products imported into the EU. These codes are globally recognized and are used specifically for the imports or exports in the EU during customs, for them to be received correctly.
Introduction to TARIC Code
Each TARIC code consists of 10 digits. The HS (Harmonized System) and Combined Nomenclature (CN) codes are an integral part of the TARIC code, as explained later in this article.
Origin of the TARIC Code in the EU and Spain
The origin of the TARIC code can be traced back to 1860-1892. It has been challenging to pinpoint a singular time frame because of its different names in history. TARIC codes in Spain surfaced after the Amortization System (AS) was created in 1988. As part of this system, members of the World Trade Organization (WTO) voted to build a more uniform tariff classification system.
The World Trade Organization estimated that approximately 98% of all commodities sold worldwide are categorized using HS codes. Even if the TARIC Code's application is present in at least 200 international countries, the WTO's more than 180 members currently support the classification of the HS and, by extension, the TARIC Code.
Purpose of TARIC Code
The TARIC code is used for classifying goods, and their tariffs, at EU customs.
The regulation of TARIC codes is approved by the World Customs Organization (WCO). Even though EU member states use the TARIC for product identification, it is also widely used internationally.
The importer or exporter is required to classify goods and items for customs when importing or exporting them into or out of the European Union (EU). Each item has a unique code. The amount of customs duty an importer must pay on imported products is based on this categorization code. To classify products using the correct code for import or export, the TARIC database can be used.
The TARIC website also contains relevant information about:
- Duty suspensions
- Tariff quotas
- Tariff favors
- Anti-dumping laws
TARIC Code Changes
Changes to TARIC codes typically take place on the 1st of January 1st each year. However, the EU Commission may change the TARIC codes at any point during the year with minimal advance notice.
Structure of the TARIC Code
The TARIC Code is made up of various components. The HS, the CN, the 'TARIC Subheading,' and the additional TARIC in a few consumer goods make up the TARIC number.
The TARIC code is generally a 10-digit number where each number represents the following-
The first 6 Digits: The consumer goods' categories and subcategories are represented by the first six of the 10 numbers that make up the TARIC code. These numbers are the same as the 6-digit HS code.
Digits 7 & 8: These TARIC Code digits are represented by the Combined Nomenclature (CN) and include specific information about the product identity as defined by the EU.
Digits 9 & 10: The last two digits of the TARIC code are known as the ‘TARIC Subheading’ and they further classify the goods in question. This may be ‘00’ if there is no further categorization needed.
Example of TARIC Code
Let us assume this to be the TARIC code - 85171200 10 V999
85 - HS Code 8517 - HS Heading 851712 - HS Subheading 00 - CN Subheading 10 - TARIC Subheading V999 - Additional TARIC code (These 4 digits are used sometimes to further classify the goods)
Finding a Product’s TARIC Code
To find a product's TARIC code, input the generic name of your product or the material from which it is formed in the official TARIC website. Through a systematic framework, the system aids users in locating the most accurate representation of the searched product.
Importance of using the correct TARIC Code
TARIC codes identify which rules apply to what goods when imported into the EU. Using the wrong TARIC code can result in delay, non-compliance, penalties, and sometimes even denial of import privileges. Businesses are responsible for classifying products accurately.
E.g., If one is using a TARIC code with a 0% duty rate for a product that should ideally be charged, there are high chances of facing a delay at customs.
The business is responsible for selecting the correct code for each specific good in its import / export statement. As close as feasible, the code should match the concerned goods.
The correct code must be chosen carefully since even seemingly little factors, such as size or power, can substantially impact the applicable tax code. However, the code should be carefully selected because it influences the taxes and other regulations applied during import and export.
Difference between TARIC Code and HS Code
TARIC and HS code, when used together, lead to a lot of confusion since they complement each other.
The HS, or Harmonized System code, is integrated into the TARIC code. It is present in the first 6 digits of the code and is an internationally recognized nomenclature in the classification of products. The TARIC Code is a ten-digit, European Union-standardized customs identifier that contains information about duty suspension, tariff quotas, and other details. Hence the HS code is a crucial component of the TARIC Code.
All companies that export goods from an EU nation to a country outside the EU must include the CN code of their items on their export declaration forms. Similar to this, all companies importing goods into the EU from outside the EU are required to include the TARIC code on their import declaration forms.
On the TARIC consultation page of the European Commission, one can find the right TARIC code for various products. This list includes a detailed description of each product, the relevant tariff number, and financial details about the transported goods.
With the integration of online stores, agreements with couriers and getting the goods through customs can become an endless source of paperwork. But all of this can be improved and automated to streamline the process with the correct information and valid codes.
Also Read: Duty vs Tariff - What's the Difference?
Difference between TARIC, CN, HTS, and EZT
Like the TARIC code, the CN, or Combined Nomenclature, is also based on HS codes. The first 6 digits of a commodity’s CN code are the same as that of its HS code. Thereafter, the CN code comprises 2 more digits. These additional digits are used by EU member states to apply specific rules or tariffs to categories of goods that have the same HS code but need different tariff treatment. The CN forms the first 8 digits of the TARIC code.
The Harmonized Tariff Schedule (or HTS) is a code used by the US customs for import into the country. It is also a 10-digit code, of which the first 6 digits are taken from the HS code of the goods being imported. The last 4 digits are defined by US customs categorization.
The Electronics Customs Tariff (EZT, based on its German name Elektronischen Zolltarifs) has been created by the German Customs Administration for electronic products only. It consists of 11 digits, of which the first 10 are similar to the TARIC code. This code is only used by German customs and is not universally used.
Are EU and UK tariff codes the same?
Since Brexit, the UK is no longer a part of the EU Customs Union. Since early 2021, the UK has applied global tariff codes i.e. HS codes, which now replace the previously used TARIC code.