Binding Tariff Information: What is it?
The European customs tariff and its guidelines are open to interpretation, and small misunderstandings can lead to large consequences. Consider that the EU has 27 countries using 24 official languages, and you can see how the exposure to risk is unavoidable.
Thankfully, the European Commission continually works to ensure the quality of its legislation, and seeks ways to make it clear, transparent, and understandable.
We explain Binding Tariff Information, and other useful methods of getting customs certainty, in this article.
Table of Contents:
- What “binding information” means
- Binding Tariff Information (BTI)
- Binding Origin Information (BOI)
- Binding Valuation Information (BVI)
- Binding Excise Information (BEI)
- Binding VAT Information BVI)
- The benefits of binding information
What “Binding Information” Means
Binding information, in all its forms below, is legal confirmation from customs authorities regarding your goods classification, origin, tax process, or another variable which can leave you with a large exposure if it is incorrect. Because the authorities verify these decisions, legally valid throughout the EU’s customs administrations.
Binding Tariff Information (BTI)
A Binding Tariff Information (BTI) decision is written confirmation of your goods classification.
Although this is not a legal requirement, BTI provides assurance that your goods have the correct commodity code. This is important because similar codes can have different duty rates, rules of preferential origin, quotas, customs permit requirements or other variables which are important to get right.
If you have an audit from customs authorities and they believe the wrong code has been used, you can be liable for additional duty, fines, and other penalties which can have a significant impact – especially when they are applied retrospectively to years of trading. This is where Binding Tariff Information can provide peace of mind that you have the right classification.
A Binding Tariff Information decision is typically valid for three years. However, they can also become invalid if a legislation change means that the BTI is no longer valid – such as the removal of a commodity code from the tariff or a change in a measure related to that code which is essential to confirming the use of that classification. In these cases, it is advisable to apply for a new BTI.
According to the EU’s statistics, the EU issues on average around 50,000 BTI decisions annually. The highest number of BTI decisions is issued by Germany, followed by France, the Netherlands, and Poland.
Note that the UK no longer uses Binding Tariff Information since their departure from the EU. In the UK, you must instead get an Advanced Tariff Ruling (ATaR).
Binding Origin Information (BOI)
The popularity of Binding Tariff Information prompted the European Union to create a similar solution in 2016: Binding Origin Information (BOI).
Unlike a BTI decision, a BOI is for goods where the commodity code is known but clarity is needed on the country of origin or application of preferential origin.
Binding Origin Information is an administrative decision which determines the origin of your product, taking everything into account for a particular product under one commodity code, and originating from one country, group of countries, or territory.
However, a BOI cannot be used in place of a certificate of origin, or an equivalent statement such as a declaration on the commercial invoice.
When you are applying for a BOI decision, you must provide detailed information such as the product’s classification, description, composition, proposed country or region of origin, legal basis, ex-works (EXW) price, materials used, and the processing required to obtain the origin. If there are existing BOI or BTI decisions for identical or similar goods, this information must also be included in your application.
Like the BTI, any BOI which you hold is valid for three years from the date of issue unless a legislation change renders it invalid.
Binding Valuation Information (BVI)
Currently due to be available from the 1st of December 2027 – following the implementation of regulation 1071/2024 and the delegated regulation 1072/2024 – Binding Valuation Information (BVI) will provide validation of the methods or criteria used for establishing the customs value of your goods. These BVI decisions will determine the appropriate way for you to value your goods under specific conditions.
The popularity of this new solution will become apparent in the coming years. In the meantime, there are options available for simplified customs valuation based on Article 73 of the Union Customs Code – although we expect the scope of BVI will be broader.
Binding Excise Information (BEI) and Binding VAT Information (BVI) – Poland only
Poland, inspired by the EU’s binding information initiatives, has introduced its own: the WIA for excise and the WIS for VAT. These decisions bring clarity to the methods of determining when excise and VAT are due, or how exemptions should be managed.
According to official figures, Binding VAT Information is even more popular than Binding Tariff Information within Poland.
The Benefits of Binding Information
Whether you get Binding Tariff Information or one the other variations, there are real benefits of having legal certainty. The main one being that it significantly reduces risk relating to duty costs, avoiding penalties, and saving yourself some heavy conversations with trading partners.
Imagine that customs does an audit on your business and trade, and determines that you’ve been using the wrong methods for years. Maybe your commodity code was incorrect, you’ve claimed preference incorrectly, or the origin was wrong altogether.
The outcome could be that you have to pay 2% on all the goods you’ve imported in the last few years and a fine, which is enough to significantly impact any sized business.
However, it may not stop there. If you have an ongoing commitment to buy goods from a certain supplier, or sell them to a customer for a certain price, you may find you are committed to an unsustainable piece of business that will demand some hard conversations or swallowing a continued loss.
Binding Tariff Information and similar decisions alleviate this risk so that you can trade with confidence, protecting your business from expensive mistakes or uncomfortable situations.
The Customs Support Group works with businesses across to Europe to obtain binding information from customs. Contact us today to get started.
