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HS Codes: Everything You Need to Know

In the global landscape of trade and commerce, there exists a language that facilitates the smooth movement towards another trade-union (so outside the EU): HS codes. If you’re involved in international trade or simply curious about how products are categorised for import and export, understanding these codes is essential. In this article, we’ll delve into the complexities of HS codes, explore how to find them, the difference with HTS codes and give you some extra tips.

What are HS codes?

HS codes, or Harmonized System codes, are a standardised numerical method of classifying traded products. Developed and maintained in the 1980s by the World Customs Organization (WCO), the Harmonized System (HS) provides a universally recognised framework for categorising goods in international trade. Each HS code consists of a series of digits that represent specific categories, subcategories, and characteristics of products. This systematic classification allows customs authorities, traders, and statisticians worldwide to identify and track goods accurately.

The HS code consists of six digits. Countries can choose to add other sub-codes to the HS code of a product by a few digits. The EU has eight-digit codes – HS codes supplemented by two digits –for goods to be exported outside the EU. For the import of goods into the EU, you usually need 10-digit codes: HS codes supplemented by four digits. Each HS code represents a specific product or group of products.

For example, a typical HS code might look like this: 6404.11.00

This code corresponds to sports footwear, incl. tennis shoes, basketball shoes, gym shoes, training shoes and the like, with outer soles of rubber or plastics and uppers of textile materials. Let’s break down this code below.

The first two digits (64) represent the chapter (Footwear, gaiters and the like; parts of such articles); the following two digits (04) represent the heading (Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of textile materials), and the last two digits (11) represent the subheading (Sports footwear; tennis shoes, basketball shoes, gym shoes, training shoes, and the like).

Time for some extra trivia! Did you know that HS codes…:

  • are used by more than 200 countries and economics?
  • are reviewed every five years to reflect new patterns, technologies, trends and new goods that have entered the global market and are traded in significant volumes?
  • had their last update on 1 January 2022 with 351 sets of changes?

How to find HS codes?

Finding the appropriate HS code for a product can seem daunting at first, but several resources simplify the process. Here are some common methods:

  • Online Databases: Various online platforms provide searchable databases of HS codes, allowing users to input product descriptions or keywords to find the corresponding code.
  • Customs Authorities: National customs authorities often offer guidance and may provide access to databases or assistance in determining the correct code for specific products.
  • Trade Associations: Industry-specific trade associations or chambers of commerce may offer resources or expertise to help businesses identify HS codes relevant to their products.
  • Books: Published versions of the Harmonized System, available in print or digital formats, provide comprehensive listings along with explanatory notes.

By leveraging these resources, traders and businesses can ensure compliance with customs regulations and streamline the import/export process.

Why is it necessary to use HS codes correctly?

Using HS codes correctly is crucial for several reasons:

  1. To pay the correct customs duty: Trade unions have made a preferential agreement between each other. This means that there is a discount on the duties for certain items. Without the proper HS code, you may pay a higher amount than necessary. If you pay a lower amount than necessary, you risk a fine or suspension. Make sure you use the correct code to pay the correct amount.
  2. To avoid the risk of delay: with an incorrect code, customs authorities can’t identify your shipments. While they determine which goods you are shipping, your shipment waits at customs. To avoid this kind of delays, use correct codes.
  3. To avoid penalties or destruction of goods: Authorities use the HS classification to identify forbidden goods: Some countries restrict the importation of certain goods. In most cases you require a certain permit. Without this you might face penalties and a destruction of your shipment.
  4. To increase customer satisfaction: timely deliveries without unforeseen delays may improve customer satisfaction and increase the chances of more business.

What is the difference between HS codes and HTS codes?

While HS codes and HTS codes serve similar purposes, they are used by different countries and customs territories.

The Harmonized Tariff Schedule (HTS) is specific to the United States and is based on the HS nomenclature. A HTS code is 10 digits long, four more than an HS code. The extra digits come after the first six. The first two additional digits represent the duty rate, and the last two are used for trade data. These final digits don’t actually classify the product and mostly listed as ’00’ as they aren’t always necessary.

Good to know: HTS codes are only for imports to the U.S.. For export, Schedule B numbers are used.

Are HS codes and commodity codes the same?

HS codes and commodity codes are partly the same. In fact, the first six digits are the same. The main difference is that a commodity codes consists of ten digits, instead of six (like a HS code). So we can state that commodity codes are based on HS codes, but they are not completely the same.

Tips for using correct HS codes in shipping

  • Always check if the codes are still up to date. Regularly monitor updates to codes, tariff schedules, and trade regulations.
  • Be aware that some countries have their own set of codes. We already referred to the U.S. HTS codes, but China also has their own code.
  • Although classification is worldwide, some countries have a different classification for certain items. For example, Switzerland (Tares: Tarif suchen).
  • Consult your customs expert/broker. Most customs authorities are also willing to share their expertise.
  • Always check if the codes are still up to date. Regularly monitor updates to codes, tariff schedules, and trade regulations.
  • Be aware that some countries have their own set of codes. We already referred to the U.S. HTS codes, but China also has their own code.
  • Although classification is worldwide, some countries have a different classification for certain items. For example, Switzerland (Tares: Tarif suchen).
  • Consult your customs expert/broker. Most customs authorities are also willing to share their expertise.

Summary

In conclusion, HS codes play a crucial role in international shipping by providing a standardised method for classifying goods. By understanding this language and utilising available resources, businesses can navigate the complexities of global commerce more efficiently. Whether you’re a seasoned importer/exporter or a newcomer to the world of trade, familiarity with HS codes is a valuable asset in today’s interconnected economy.

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