For all companies involved in the import and export of products – a large part of e-commerce is based on them – tariff codes are of great importance. Since tariffs vary according to the product and its origin, it is essential to have a clear, precise and universal classification for the different exported/imported goods. This is how the Taric Code came into being.
The import and export of goods is subject to different regulations, which have been simplified over the years, in order to speed up the application of all fiscal measures and avoid confusion among the 194 sovereign nations recognized by the UN. Although the code of the harmonized system is composed of ten digits, the first eight correspond to the NC and the last two are identified with the Taric Code itself, an integrated tariff in the European Union that responds to the acronym in English of ‘Integrated Tariff of the European Communities’.
Often this tariff code, which is born with the dual purpose of being both collection and ordering, is also called HS-code, because it complements both, as will be explained in the following lines. In order to clarify the points to be dealt with and the different tariff codes that will be mentioned, it seems logical to summarize them in these points, which will be duly expanded below:
- Taric Code
- HS-Code (which is integrated into the Taric
- CN-Code (idem)
- Harmonized Tariff Schedule or HTS
- EZT or Electronic Customs Tariff
What is a Taric Code, one of the most widespread tariff classifications?
There are tariff codes for almost all goods traded internationally, which are required in official documents and formalities and a reason for suspension in customs in case of irregularities. Even before the creation of the European Union in 1993, the diversity of existing tariffs had been gradually reduced, moving towards unification, because of the benefits that this uniformity would provide to the trade of all countries.
With the exception of retailers whose suppliers and customers are in the same national territory, the import and export of products is an essential part of trade, especially ecommerce, where geographical and linguistic barriers are not a limiting factor. For both, in any case, knowledge of Taric codes is indispensable.
The Taric Code is defined as a tariff code intended for the classification of goods at customs. Its ultimate purpose is the declaration of goods, the calculation of duties and the recording of statistics. Its regulation passes through the World Customs Organization (WCO), and unlike other similar codes, it contains information on the conditions for the exchange of goods in other markets, because although the Taric is used by EU member countries, it is also used internationally for product identification.
What was the origin of the Taric Code in the EU and Spain?
Contrary to popular opinion, tariffs are far from being a creation of the European Union, much less of capitalist states, and future liberal states are unlikely to give up the most critical aspect of today’s trade structure. Tariffs are difficult to trace in time, because of the different forms they took, disappearing in a single recent period, the Europe in between. 1860 y 1892
In Spain, as in the European continent, tariffs have evolved towards a unification, sometimes between two countries as happened with the brief Iberian Union of 1580 and 1640. Taric codes in Spain emerged after the creation of the Amortisation System (AS) in 1988, when members of the World Trade Organisation (WTO) voted to establish a more uniform system of tariff classification.
But this was not a recent idea. Already in 1950, the Customs Cooperation Council (former WCO) promoted a tariff classification system known as NCCA or Nomenclature of the Customs Cooperation Council, more in line with the globalizing spirit that was growing among the countries that would join, four decades later, under the EU’s star flag.
Needless to say, this initiative is one of the EU’s most significant successes. According to World Trade Organisation estimates, almost 10 out of 10 global goods (over 98%) are classified on the basis of HS codes. At present, the classification of the Harmonised System, and therefore the Taric Code, is endorsed by the more than 180 member countries of the WTO, although its application is present in at least 200 international countries.
Taric Code and HS-Code, different but complementary
However, the confusion between the Taric Code and the HS-Code is frequent and reasonable to some extent, as the two complement each other, so to speak. However, they are neither equal nor do they have the same meaning, as we will discover below.
While the Taric Code is a European Union standardised customs identifier containing ten digits and containing information relating to duty suspension, tariff quotas and other details, the HS or Harmonised System code is integrated into the Taric code, corresponding to the first 6 digits of the code, an internationally recognised nomenclature in the classification of products.
Although this last code, which was born in 1988 after the merger of the NIMEXE code and the Common Customs Tariff, may be surprising, it is a very common abbreviation that is used in more than 200 countries and covers five thousand groups of basic products. Each group is clearly labelled with a 6-digit code, and was developed by the World Customs Organization (WCO).
Thus, the HS code is an essential part of the Taric Code, being habitual to use one and others indistinctly to refer to the same identifier, as if the part represented the whole, although they are not equal. On the other hand, it has been explained what a Taric code is and how many digits it is made up of, but what exactly is its structure, what do the remaining four digits of this tariff classification mean?
What is the structure of the Taric Code and why does it vary from country to country?
Having clarified what a Taric code is, it is worth analysing the different parts that make it up and that can be synthesised, in the first instance, in the HS, the CN, the ‘TARIC Sub Heading’ and the additional Taric, in certain consumer goods.
Of the ten numbers that make up the Taric code, the first six correspond to the HS-Code and refer to categories and subcategories of consumer goods (for example: cocoa, chocolate and chocolate Ki-Kat, each being identified by two numbers). Digits 7 and 8 of the Taric Code, however, correspond to the Combined Nomenclature (CN) and incorporate detailed information on the product specified in the first six numbers (e.g. that its sucrose content is less than 5%).
The last two numbers of the Taric code are identified by the so-called ‘TARIC Sub Heading’ and may appear as 00, if the product in question has no subdivision in which to classify it, as is often the case. However, it is possible that not only these last two digits but four additional digits are necessary to properly classify the goods.
In addition to being updated periodically, the HS codes of the Taric are identical in their first six numbers in any country, but the 7, 8, 9 and 10 do differ depending on the territory in which we find ourselves. For example, in India it is known as the HSN code and has a maximum of eight digits, while the United States uses up to ten numbers and is called the HTS code. The Brazilians know it as NCM code and it is used up to eight digits, in China it is called SA code and has eight to ten numbers, etc.
Differences between the NC, EZT and HTS codes and the Taric Code
The differences between the Taric code and the HS-Code, which are often used as synonyms, have been explained in detail. This is also the case for CN codes, for identical reasons which will be discussed below. More alarming is the confusion between the Taric Code and the EZT and HTS codes, to some extent reasonable because they are directly related to the import of particular products and trade in general.
Again, the CN or Combined Nomenclature (sometimes represented as CN) code is part of the Taric Code. It was introduced in 1987 as a common customs tariff and corresponds to digits 7 and 8 of the Taric Code, as already mentioned in one of the previous points. Unlike other tariff codes, the CN has a list which it updates every year, normally before 31 October and which is published in the Official Journal of the European Union (OJ).
On the other hand, the Electronic Customs Tariff (EZT) is a special case. This code consists of eleven numbers, the first ten digits of which are identical to the Taric of the European Union. This tariff, driven by the German Customs Administration, applies to electronic products.
However, this is not a universal code, since its use is only applicable in the customs of the Federal Republic of Germany and not in the other EU member countries. However, ecommerce interested in introducing electronic goods into the German market should consider this tariff.
The same is true of the Harmonized Tariff Schedule or HTS, a tariff classification designed to tax goods imported into the United States. It is part of the Harmonized Tariff Schedule of the United States Code (HTSUS), and should not be confused by the HS code or Amortized System, since the latter is in force in more than 200 countries, while the HTS is specific to U.S. importing companies.
Similar to what happens with the Taric Code and the EZT of Germany, the HTS is identical to the HS code in its first six digits, differentiated by the last four digits, which are different. Clearly, only ecommerce whose activity depends on the importation of US products will have to worry about this tariff.
Returning to the Taric code, interested parties can consult the search engine and database offered by the Customs Union of the European Union (better known as EUCU or European Union Customs Union) and know in detail the measures and geographical information of the commodity code.