The upcoming EU CN changes, effective from 1 January 2024, revamp tariff classification, VAT, and customs duties, demanding adaptability from trade professionals.
The CN, a detailed classification system for EU goods, impacts customs duties, import/export controls, and adherence to trade agreements and regulations. These changes require businesses to stay ahead of the curve to maintain competitiveness.
Combined Nomenclature Changes
Plastic Products (Chapter 39): This revision introduces new subheadings for waste, pairings, and scrap made of polymers of ethylene. This modification is substantial as it expands the categorisation of plastic waste, ensuring a more nuanced classification system for these materials.
Agricultural Products (Chapters 8 and 20): New tariff subheadings for certain types of bananas and tomatoes: New tariff subheadings have been introduced for peeled and other types of tomatoes. Additionally, a specific type of banana known as “Plátano de Canarias” has received its dedicated tariff subheading.
Textiles and Technology (Chapters 5007, 5603, 7019, 9013): The CN updates encompass alterations in chapters 5007, 5603, 7019, and 9013, directly impacting textiles, fibres, cables, and electronic components. The classification of specific electronic parts has also been refined, necessitating updates to customs declarations and compliance measures.
In addition to these CN changes, there are significant developments in environmental regulations:
EU Emissions Trading System (ETS): Starting 1 January 2024, shipping will be included in the EU ETS. This system limits greenhouse gas emissions, with a gradual implementation plan starting with 40% coverage of emissions in 2024, increasing to 70% in 2025, and full coverage from 2026.
Carbon Border Adjustment Mechanism (CBAM): CBAM, targeting carbon-intensive products like cement, steel, and electricity, aims to mitigate carbon leakage. This initiative will require EU member states to start quarterly emissions reporting beginning 31 January 2024.
Changes in Free Trade Agreements (FTAs): The EU is enhancing the sustainability dimension of its FTAs. Efforts are underway to strengthen implementation and enforcement mechanisms, including a review of the Trade and Sustainable Development (TSD) Chapter to bolster sustainability commitments.
Compliance and Best Practices
Proactive Compliance
Please regularly review and update your product classifications to align with the new CN codes. Monitor the most recent trade compliance developments, such as EU free trade agreements and global corporate tax implications.
Efficient Classification and Technology
Leverage reliable software to efficiently and accurately classify goods, and employ digital platforms and software solutions to enhance accuracy and efficiency in customs processes.
Environmental Integration and Compliance
To ensure compliance with evolving environmental regulations, businesses should integrate environmental considerations into their compliance strategies. This includes documenting imports and acquiring certificates under the Carbon Border Adjustment Mechanism (CBAM), a key initiative in the EU’s environmental regulation framework.
Supply Chain Due Diligence
Implement thorough due diligence practices in supply chains to comply with ethical standards and human rights regulations.
Early Preparation and Workforce Development
Update systems and processes to align with new CN codes and emerging trends. Additionally, conduct training sessions to ensure staff are well-versed with the recent CN changes and proficient in using updated software or tools essential for classification and regulatory compliance.
Customs Broker Collaboration and Auditing
To effectively manage the 2024 CN changes and regulatory requirements, fostering strong partnerships with customs brokers and freight forwarders is crucial. Their expertise is invaluable in navigating these updates efficiently. Additionally, businesses should regularly audit their compliance processes to identify improvement areas, maintaining high compliance standards and operational efficiency.
Navigating Regulatory Changes with eClear
Since its establishment in 2016, eClear has emerged as a standout entity in European tax technology, notably as the region’s only VAT and Customs Clearing House. Specialising in VAT and customs compliance, eClear plays a crucial role in assisting businesses to adapt to regulatory changes within the European Single Market.
eClear Enhances Businesses with Automated VAT and Customs Compliance
eClear provides automated VAT and customs compliance solutions, crucial for businesses navigating the complexities of European transactional taxes. This includes certified real-time tax determination and calculations relevant to the 2024 CN changes.
End-to-End Tax Filing: FileVAT brings automated VAT filing and reporting, encompassing advance VAT returns, annual returns, and EC Sales Lists across all EU member states, Switzerland, Norway, and Great Britain.
SPOT — Complete Compliance Control: SPOT is an innovative real-time transaction monitoring tool. It serves as an omnichannel merchant transaction dashboard, providing financial control on e-commerce sales and focusing on real-time alerts on cross-border tax, customs, and compliance issues.
Precise Product Classification: VATRules enables precise classification of entire product portfolios according to the specific logic of each delivery country. This feature is crucial for adapting to the CN changes, ensuring correct product classification for all 27 EU Member States, Great Britain, Northern Ireland, and Switzerland.
Facilitation of Cross-Border E-Commerce: ClearVAT provides a tax-free sales integration for intra-EU orders, facilitating seamless cross-border commerce. This is especially important in light of the CN changes, as it helps businesses scale EU sales and calculate full landed costs.
Border-Free Commerce Solutions: ClearCustoms offers seamless shipping to Great Britain, Switzerland, and Norway, providing a border-free shipping experience. This service will be increasingly valuable for businesses dealing with the new CN regulations and looking to maintain smooth cross-border transactions.