Understanding HS Codes: Everything You Need to Know

The tariff number, also known as the HS code (Harmonised System), is a vital component of international trade. For businesses moving goods across borders, correctly classifying products is crucial. But what exactly is an HS code, how is it structured, and why is it so important? In this guide, you will learn everything you need to know about HS codes, their application, and how Gerlach can help you streamline your customs processes.

What is an HS Code?

An HS code is a numeric code used to classify goods in international trade systems. This system was developed and standardised by the World Customs Organization (WCO) to simplify and harmonise international trade. The HS code consists of six digits that specifically describe the nature and purpose of the goods. In many countries, including the UK, these codes are extended with additional digits to meet national requirements.

For example, a company exporting electronic devices uses the HS code 8542 for integrated circuits. This helps customs authorities worldwide identify the type of goods instantly and apply the correct duties and taxes.

Structure of the HS Code

The HS code is structured to enable detailed and precise classification of goods. The code consists of six digits divided into sections, chapters, headings, and subheadings:

• Sections: There are 21 sections covering major categories of goods.
• Chapters: Each section is divided into chapters representing specific groups of goods.
• Headings: Chapters are further divided into headings defining narrower groups of goods.
• Subheadings: These are specific categories within a heading.

For instance, the HS code 854231 describes “Electronic integrated circuits”:

• Section XVI: Machinery and mechanical appliances; electrical equipment.
• Chapter 85: Electrical machinery and equipment.
• Heading 8542: Electronic integrated circuits and microassemblies.
• Subheading 854231: Electronic integrated circuits.

This structure allows for precise identification of goods, facilitating international customs clearance.

How to Find the HS Code

To find the correct HS code for your products, you can use various resources:

1. Online Databases: Many countries offer online tools for searching HS codes. These tools allow you to search by keywords and find the appropriate tariff number.
2. Chambers of Commerce and Customs Authorities: These institutions provide support and advice on classifying goods.
3. Consultancy Firms like Gerlach: Specialists can help you determine the correct HS code for your goods.

A practical example: A furniture manufacturer looking to export a new type of chair can use online databases and consulting services from Gerlach to identify the correct HS code, ensuring proper classification and tariff application.

How to Obtain the HS Code for a Product

Obtaining the correct HS code requires thorough research and often professional assistance:

1. Product Analysis: A detailed description of the product is essential, including material, function, and purpose.
2. Consultation with Experts: Customs advisors and professionals, like those at Gerlach, can assist in accurate classification.
3. Verification with Customs Authorities: It may be necessary to have the classification confirmed by the relevant customs authorities.

A practical example: An electronics manufacturer introducing new devices to the market can ensure all new products receive the correct HS code through detailed product analysis and consultation with Gerlach, avoiding delays and additional costs at customs.

How to Use the HS Code

The HS code is used in various phases of international trade:

1. Customs Declarations: The HS code must be included in customs documents during import and export.
2. Calculation of Duties and Taxes: The HS code determines the amount of duties and taxes applied.
3. Trade Statistics: Governments use HS codes to collect and analyse trade data.

A practical example: An online retailer selling various products worldwide must ensure each product is assigned the correct HS code to facilitate smooth customs clearance and accurate tax calculations. Gerlach’s experts can support and optimise this process.

Regular Changes to the HS Code and Nomenclature

The HS code and its associated nomenclature are regularly updated to accommodate new technologies and trade practices. These updates are made by the WCO every five years and must be adhered to by businesses.

A practical example: A manufacturer of medical devices must ensure its products always comply with the latest HS codes to avoid delays in customs clearance. Gerlach provides regular updates and training to inform businesses about changes and ensure compliance.

How Gerlach Can Help You with HS Codes

Gerlach is a leading provider of customs and logistics services in Europe. With over 140 years of experience, Gerlach offers comprehensive support in determining and applying HS codes. By leveraging Gerlach’s expertise and digital solutions, businesses can ensure their goods are correctly classified and cleared through customs. This reduces the risk of delays and additional costs and ensures compliance with all legal requirements.