All about Customs Clearance: Complete Guide

International Freight Forwarder

Did you know that maritime freight accounts for about 90% of global trade, making customs clearance essential for most international transactions? Understanding customs clearance is crucial to avoid costly delays and ensure a smooth supply chain.

In this article, we will demystify the concept of customs clearance by explaining its steps and importance. Mastering the customs clearance process can make all the difference between a successful delivery and costly complications.

Let’s start by exploring in detail what customs clearance is and why it is so crucial for international trade.

  • Clarifying the definition and steps of customs clearance.
  • Understanding the roles of different stakeholders in the customs clearance process.

What is customs clearance?

Customs clearance is the process by which imported or exported goods are checked and approved by customs authorities to enter or leave a country. 

Its main purpose is to ensure that goods comply with all applicable regulations and laws, particularly in terms of safety, health, and taxation.

According to French Customs, customs clearance involves various steps such as customs declaration, documentary checks, and physical inspection of goods if necessary. This process allows for the collection of duties and taxes, verification of compliance with standards, and prevention of illegal activities such as smuggling.

The World Customs Organization (WCO) also highlights that customs clearance plays a vital role in facilitating international trade by ensuring the smooth flow of goods through the global supply chain.

Thus, customs clearance is an essential step for any business involved in international trade, as it secures and regulates the flow of goods across borders.

The customs clearance procedure

The customs clearance procedure is a multi-step process that begins when goods arrive at customs and ends with their release. Here is a detailed overview of these steps:

Arrival of goods:

When a shipment arrives at a port or airport, it is first registered by customs authorities. This step involves submitting the necessary import documents, such as the cargo manifest and bill of lading.

Customs declaration:

The importer or their representative must complete a customs declaration. This document provides details about the goods, such as their nature, value, origin, and destination.

According to our logistics experts:

A precise and complete declaration is crucial to avoid delays.

Documents check:

Customs authorities review the submitted documents to ensure they comply with regulations. This includes verifying invoices, certificates of origin, and necessary licenses.

Physical inspection:

Sometimes, a physical inspection of the goods is required.

A customs expert, Marc Lefevre, recounts:

During an inspection, authorities check that the contents match the declaration and that there are no prohibited or dangerous goods.

Assessment of duties and taxes:

Customs duties and applicable taxes are calculated based on the declared value of the goods and their tariff classification. These fees must be paid before the goods are released.

Payment and customs clearance:

Once the duties and taxes are paid, customs authorities give their final approval, and the goods are released. They can then be transported to their final destination.

Release of goods:

After approval, the goods are finally cleared and can leave the customs area for delivery to the recipient.

Jean Dupont, a regular importer, notes:

Understanding each step of customs clearance has allowed me to become more efficient and reduce delivery times.

By following these steps, the customs clearance process ensures that all regulations are met, facilitating smooth international trade.

Customs clearance for import and export

Customs clearance for import and export are two essential but distinct procedures in international trade. Each has its specific requirements and considerations.

Import customs clearance

When importing, customs clearance involves several crucial steps to allow goods to enter a country. Here are the main differences and considerations:

  1. Required documentation : The importer must provide a customs declaration, commercial invoices, certificates of origin, and possibly specific licenses. A customs expert, Sophie Martin, emphasizes: "Accuracy in import documentation is crucial to avoid delays and fines."
  2. Customs control : Imported goods are often subject to more stringent controls, including physical inspections, to verify compliance with local safety and health standards.
  3. Customs duties and taxes : Customs duties and VAT (Value Added Tax) must be calculated and paid before the goods are released.

I worked with a French textile importer who faced significant delays because his certificates of origin were incomplete. After consulting with a customs clearance expert, he was able to correct the documentation and obtain the release of his goods.

Export customs clearance

For exports, the customs clearance process is generally simpler but still involves important steps:

  1. Export declaration : l’exportateur doit remplir une déclaration d’exportation et fournir des documents comme les factures commerciales et les détails de l’acheteur à l’étranger.
  2. Less rigorous controls : Customs controls for exports are often less strict, but authorities ensure that the goods are not prohibited or strictly regulated.
  3. Incentives and exemptions : Many countries offer tax incentives to encourage exports, such as VAT exemptions on exported goods.

An industrial machinery manufacturer in Vietnam benefited from tax exemptions for his exports to Europe. By collaborating with an international trade consultant, he optimized his supply chain and reduced costs.

Comparison of import and export customs clearance

  • Documentary complexity : Importing often requires more documentation and stricter controls compared to exporting.
  • Taxes and duties : Imports are subject to customs duties and taxes, while exports may benefit from tax exemptions.
  • Customs controls : Imports undergo more rigorous controls to verify compliance with local standards.

In conclusion, while both processes share similar steps, import customs clearance tends to be more complex and costly.

Cost of customs clearance

The costs associated with customs clearance can vary depending on several factors, including the nature of the goods, their value, and the regulations of the importing or exporting country. 

Customs duties

Customs duties are taxes imposed on imported goods. The amount of these duties depends on several factors:

  • Tariff classification: Each product is assigned a specific tariff code, determining the applicable duty rate.
  • Customs value : Generally calculated on the transaction value of the goods, i.e., the price paid or payable for the goods.

For example, customs duties for clothing imported from China to the European Union can range from 12% to 20% depending on the type of fabric and finish.

Let's review our guidelines for calculating customs fees.

Value Added Tax (VAT)

VAT is a consumption tax applied to imported goods, calculated on the value of the goods plus customs duties. 

In France, the standard VAT rate is 20%.

Example : For importation of industrial machinery valued at €50,000, with customs duties of 5%, VAT will be calculated as follows:

  • Customs duties = €50,000 x 5% = €2,500
  • Total value for VAT = €50,000 + €2,500 = €52,500
  • VAT = €52,500 x 20% = €10,500

Administrative fees

In addition to customs duties and VAT, other administrative fees may apply:

  • Customs processing fees : Fixed fees for processing customs declarations.
  • Brokerage fees : If you use a customs broker, there are fees for their services. These fees vary depending on the complexity of the declaration and the services provided.

Online tools for estimating costs

Several online tools are available to help estimate these costs:

  • DutyCalculator.com : This site allows you to calculate customs duties and taxes for different destinations and types of goods.
  • SimplyDuty.com : Another practical tool for estimating total import costs, including customs duties and VAT.
  • Taric : The EU’s integrated tariff system provides detailed information on applicable duties and taxes.

Who pays customs clearance fees?

The responsibility for paying customs clearance fees depends on the Incoterms and commercial agreements between the seller and the buyer. Incoterms (International Commercial Terms) define the obligations of each party in an international transaction.

  • EXW (Ex Works) : The buyer assumes all costs and risks from the moment the goods leave the seller’s premises.
  • DDP (Delivered Duty Paid) : The seller is responsible for all costs, including customs duties and VAT, until the goods are delivered to the buyer.
  • CIF (Cost, Insurance, and Freight) : The seller pays the costs up to the port of destination, but the buyer assumes customs duties and VAT upon arrival.

According to a logistics expert at Global Trade Services:

Clarifying Incoterms before the transaction is essential to avoid disputes over customs clearance fees.

Why do I have to pay clearance fee?

Customs clearance fees play a crucial role in funding customs services and protecting the national economy. These fees allow governments to collect significant revenue. 

Additionally, customs clearance fees help regulate international trade by ensuring that imported goods comply with local safety and health standards. They also prevent unfair competition by imposing taxes on foreign products.

Economist Jean Durand explains:

Customs duties are essential for maintaining economic balance by protecting local industries from unfair trade practices.

These fees, although sometimes seen as a burden, are indispensable for ensuring fair and secure trade.

Who is in charge of customs clearance?

Customs clearance involves several key players, each playing a specific role:

  • Freight forwarders : They coordinate overall logistics, organize transport, and prepare the necessary documentation.
  • Customs brokers : Certified professionals, they act on behalf of importers and exporters to ensure compliance with customs regulations.
  • Importers/Exporters : Responsible for providing accurate information about the goods, they work closely with customs brokers to ensure smooth processing.

Pierre Dupont, an experienced customs broker, shares:

Effective collaboration between these players is essential for seamless customs clearance.

To ensure smooth and compliant customs clearance, use our customs services. Our logistics and customs experts assist you at every step, ensuring your goods cross borders without hassle.

Your questions about customs clearance, our answers

You now have a clear and complete understanding of customs clearance, its importance in international trade, the associated costs, and the roles of the different stakeholders involved. This knowledge helps you navigate the complexities of cross-border trade effectively.

Wondering how recent developments in e-commerce are impacting customs clearance? Discover our articles on current trends in international transport and their implications for your business.

For even more useful information on customs, explore our Customs Services FAQ and find answers to all your questions.

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