Essential terminology for international trade and customs compliance
Ad Valorem Duty: A customs duty calculated as a percentage of the customs value of goods. Most EU import duties are ad valorem, meaning the duty amount increases proportionally with the value of the goods.
AEO (Authorized Economic Operator): A status granted to businesses that meet EU criteria for customs compliance, financial solvency, and security standards. AEO status provides benefits including reduced inspections, priority customs clearance, and easier access to customs simplifications.
Anti-Dumping Duty: An additional duty imposed on imported goods that are being sold in the EU at prices below their normal value in the exporter's domestic market. Anti-dumping duties protect EU industries from unfair competition.
AWB (Air Waybill): A transport document for goods shipped by air. The AWB serves as evidence of the contract of carriage, receipt of goods, and may be used for customs purposes.
Bill of Lading (B/L): A document issued by a shipping carrier acknowledging receipt of cargo for shipment. The bill of lading serves as a receipt, contract of carriage, and document of title to the goods.
Binding Tariff Information (BTI): A legally binding decision issued by EU customs authorities confirming the correct tariff classification for a specific product. Valid throughout the EU for six years, a BTI provides legal certainty for importers.
Bonded Warehouse: A secure facility where imported goods can be stored without payment of customs duties or VAT until they are released for free circulation, re-exported, or placed under another customs procedure.
CCT (Common Customs Tariff): The EU's unified external tariff applied to goods imported from third countries. All EU member states apply the same CCT rates regardless of where goods enter the EU.
CE Marking: A conformity marking indicating that a product meets EU safety, health, and environmental requirements. Required for many product categories before they can be placed on the EU market.
CIF (Cost, Insurance, Freight): An Incoterm where the seller pays for transport and insurance to the destination port. The CIF value is typically the basis for calculating customs duties and VAT.
CN (Combined Nomenclature): The EU's eight-digit tariff classification system, extending the six-digit HS code. Used for EU trade statistics and as the basis for the Common Customs Tariff.
Countervailing Duty: A duty imposed to offset subsidies provided by a foreign government to exporters, ensuring fair competition for EU producers.
Customs Value: The value of goods used for calculating customs duties and VAT. Typically based on the transaction value (price paid) plus certain additions like transport and insurance to the EU border.
De Minimis: The threshold below which goods are exempt from certain charges. In the EU, the customs duty de minimis is €150 for commercial shipments. The VAT de minimis exemption (€22) was abolished in 2021.
Dual-Use Goods: Products that can be used for both civilian and military purposes. Trade in dual-use goods is controlled, and export/import may require licenses.
EORI (Economic Operators Registration and Identification): A unique identification number required for businesses or individuals engaged in customs activities in the EU. Used on all customs declarations and import/export documentation.
EUR.1: A certificate of origin used under EU preferential trade agreements to claim reduced or zero duty rates. Issued by customs authorities in the exporting country.
FOB (Free On Board): An Incoterm where the seller delivers goods onto the shipping vessel, after which risk and cost transfer to the buyer. FOB value excludes shipping and insurance.
Free Circulation: The customs status of goods that have been properly imported, had duties and VAT paid, and can move freely within the EU without further customs formalities.
Free Zone: A designated area within EU customs territory where goods can be stored, handled, or processed with suspension of customs duties and other charges.
GRI (General Rules for the Interpretation): The six rules in the Harmonized System that provide the legal framework for classifying goods. Applied in sequence to determine the correct HS code.
GSP (Generalised Scheme of Preferences): The EU's trade preference program providing reduced or zero duties for imports from developing countries.
HS Code (Harmonized System Code): An internationally standardized six-digit code used to classify traded products. Maintained by the World Customs Organization and used by over 200 countries as the basis for their customs tariffs.
Incoterms: Internationally recognized terms published by the International Chamber of Commerce that define the responsibilities of buyers and sellers in international trade, including delivery points, risk transfer, and cost allocation.
Inward Processing: A customs procedure allowing goods to be imported duty-free for processing (manufacturing, repair, etc.) and subsequent re-export. Duties are only due if processed goods are released for EU free circulation.
IOSS (Import One-Stop Shop): A simplified VAT scheme for B2C sales of goods valued up to €150 shipped directly to EU consumers from outside the EU. Allows sellers to collect VAT at point of sale.
MFN (Most Favored Nation): The standard duty rate applied to imports from WTO members without preferential trade agreements. Despite the name, MFN is typically the highest rate applied to legitimate trade.
Origin (Non-Preferential): The country where goods were wholly obtained or underwent substantial transformation. Determines applicable trade measures but not preferential duty treatment.
Origin (Preferential): Origin status under a specific trade agreement that qualifies goods for preferential duty rates. Requires meeting the agreement's rules of origin and providing valid proof.
Preferential Tariff: A reduced or zero duty rate available for goods originating in countries with which the EU has trade agreements, provided rules of origin are met.
REACH: EU regulation on Registration, Evaluation, Authorization and Restriction of Chemicals. Affects imports of chemicals and products containing chemicals.
RoHS: EU directive restricting hazardous substances in electrical and electronic equipment. Imported electronics must comply with RoHS limits.
Specific Duty: A customs duty calculated as a fixed amount per unit of quantity (per kg, per liter, per piece) rather than as a percentage of value.
Suspension: A temporary reduction or elimination of customs duties on certain products, typically when EU production is insufficient to meet demand.
TARIC (Tarif Intégré de la Communauté): The EU's integrated tariff database containing the ten-digit commodity codes with all applicable measures including duty rates, preferential tariffs, quotas, anti-dumping duties, and regulatory requirements.
Tariff Rate Quota (TRQ): A specified quantity of goods that can be imported at a reduced duty rate. Once the quota is filled, higher rates apply.
VAT (Value Added Tax): A consumption tax applied to goods and services. Import VAT is charged when goods enter the EU, calculated on the customs value plus any duties.
WCO (World Customs Organization): The intergovernmental organization that develops and maintains the Harmonized System and promotes customs cooperation worldwide.
For more detailed explanations, see our comprehensive customs guides and frequently asked questions.
