Duties, taxes & trade defence measures

Understanding customs duties and taxes

When goods cross an international border into the European Union, they become subject to a range of fiscal charges collectively known as customs duties and taxes. These charges serve multiple purposes: they generate revenue for the EU and its Member States, they protect domestic industries from unfair competition, and they incentivise compliance with trade agreements. Understanding the full landscape of duties, taxes, and trade defence measures is essential for any importer or exporter seeking to accurately cost a transaction and remain compliant.

The EU operates a Common External Tariff (CET), meaning all 27 Member States apply the same duty rates to goods imported from non-EU countries. These rates are published annually in the Combined Nomenclature (CN) and the TARIC (Integrated Tariff of the European Communities), which layers additional measures - anti-dumping duties, quotas, suspensions - on top of CN rates.

Before calculating any duty, you must have determined three foundational elements covered in previous chapters: the tariff classification (HS/CN code), the origin of the goods, and their customs value. These three pillars drive every duty calculation.

Types of customs duties

Ad valorem duties

The most common type of duty in the EU tariff. An ad valorem duty is expressed as a percentage of the customs value of the goods. For example, a 6.5% duty on ceramic tableware (CN 6912 00 10) means that for every EUR 10,000 of customs value, the importer owes EUR 650 in duty.

Customs value is typically the transaction value - the price actually paid or payable for the goods when sold for export to the EU - adjusted for certain additions (freight to the EU border, royalties, assists) and deductions as described in Chapter 5 on customs valuation.

Specific duties

A specific duty is a fixed monetary amount per unit of quantity - per kilogramme, per litre, per piece, per 1,000 items, etc. For instance, certain sugars attract a duty of EUR 41.90 per 100 kg net. Specific duties are common for agricultural products where the EU uses them to stabilise prices regardless of the declared value.

The advantage for customs authorities is that specific duties are harder to evade through under-valuation. The disadvantage for importers is that they weigh proportionally heavier on lower-value goods.

Mixed and compound duties

Many tariff lines combine ad valorem and specific components. These take two forms:

• Mixed (alternative) duties: the higher (or sometimes lower) of an ad valorem rate or a specific rate applies. For example: 12.8% but not less than EUR 0.30/kg. The customs authority calculates both and applies the one producing the larger amount.
• Compound (cumulative) duties: both components are added together. For example: 8% + EUR 2.50/100 kg. The importer pays the ad valorem duty plus the specific duty on top.

Agricultural products under the Common Agricultural Policy frequently use these structures, particularly dairy, sugar, cereals, and processed foods.

Seasonal duties

Certain perishable agricultural products - fruits, vegetables, flowers - are subject to duty rates that vary by calendar period. The EU entry price system for products like tomatoes, cucumbers, and citrus fruits adjusts duties depending on the time of year to reflect European growing seasons.

Calculating customs duty - practical example

Consider an import of 5,000 kg of ceramic tiles (CN 6907 21 00) from Turkey, with a transaction value of EUR 25,000 and freight costs of EUR 1,200 to the EU border.

1. Customs value (CIF): EUR 25,000 + EUR 1,200 = EUR 26,200
2. Applicable duty rate: Check TARIC for CN 6907 21 00 from Turkey. If the EU-Turkey Customs Union applies (it covers industrial goods), the preferential rate is 0%. If the product were from a non-preferential country, the MFN rate might be 5%.
3. Duty amount: EUR 26,200 x 0% = EUR 0 (under the Customs Union)

If the same goods came from China with an MFN rate of 5%:

• Duty = EUR 26,200 x 5% = EUR 1,310

Always verify rates in detailed tariff data, as they change with each annual CN update and can be affected by trade defence measures.

Import VAT

Once customs duty has been assessed, the next layer is import VAT (Value Added Tax). In the EU, import VAT is levied by each Member State at its national standard or reduced rate.

Tax base for import VAT

The VAT taxable amount is calculated as:

Customs value + customs duty + any excise duty + incidental expenses (transport and insurance costs within the EU up to the first destination).

Using the China ceramics example:

• Customs value: EUR 26,200
• Customs duty: EUR 1,310
• Incidental expenses (inland freight): EUR 400
• VAT base: EUR 27,910
• VAT at 20% (France): EUR 5,582

Import VAT is typically deductible for VAT-registered businesses on their periodic VAT return, making it a cash-flow cost rather than a final cost. However, the timing gap between payment at import and recovery on the VAT return can be significant.

Postponed VAT accounting

Many EU Member States now offer postponed VAT accounting (also called reverse charge on imports), allowing businesses to declare import VAT on their VAT return rather than paying it at the border. France introduced this system (autoliquidation de la TVA a l'importation) as mandatory from January 2022. This eliminates the cash-flow burden entirely.

Excise duties

Certain categories of goods are subject to excise duties in addition to customs duty and VAT. In the EU, harmonised excise duties apply to:

• Alcohol and alcoholic beverages (beer, wine, spirits, intermediate products)
• Manufactured tobacco (cigarettes, cigars, rolling tobacco, heated tobacco products)
• Energy products (motor fuels, heating fuels, electricity)

Excise duties are typically specific (per hectolitre of pure alcohol, per 1,000 cigarettes, per 1,000 litres of fuel) and are set at minimum EU rates, with Member States free to apply higher national rates. They are due at the point of release for consumption, which for imports coincides with customs clearance unless the goods enter a tax warehouse (suspension arrangement).

Trade defence measures

Anti-dumping duties

Anti-dumping duties are imposed when the European Commission determines that a non-EU producer is selling goods in the EU at prices below their normal value (typically the domestic selling price in the country of origin) and that this dumping is causing material injury to EU industry.

These duties are additional to the standard customs duty and can be substantial - often ranging from 10% to over 80% of the CIF value. They are imposed on a product-specific and country-specific (sometimes company-specific) basis. For example, certain Chinese steel products may carry anti-dumping duties of 30-70%, while the same product from another country faces only the MFN rate.

Key characteristics:

• Imposed for an initial period of 5 years, renewable after an expiry review
• Individual duty rates may be assigned to cooperating exporters
• A residual duty (usually the highest rate) applies to non-cooperating exporters
• Importers can request new exporter reviews if their company was not examined in the original investigation

Countervailing duties (anti-subsidy duties)

Countervailing duties target goods that have benefited from government subsidies in the exporting country, where those subsidised imports cause injury to EU producers. The subsidy can take many forms: direct grants, tax breaks, below-market loans, provision of goods or services at preferential rates, or currency manipulation.

The EU has significantly expanded its use of countervailing duties in recent years, particularly against Chinese industrial subsidies. Countervailing duties can be imposed alongside anti-dumping duties if both dumping and subsidisation are found.

Safeguard measures

Unlike anti-dumping and countervailing duties, safeguard measures are not directed at unfair trade practices. They are emergency measures applied when a surge in imports of a product - regardless of whether fairly traded - threatens serious injury to a domestic industry.

Safeguard measures are typically:

• Applied on an erga omnes basis (all countries, though developing countries may be exempted)
• Time-limited (maximum 4 years in the EU, extendable to 8 years)
• Implemented as tariff-rate quotas (a certain volume enters at the normal rate; quantities above the threshold face an additional duty)

The most prominent recent EU safeguard is on steel products, first imposed in 2018 and extended through reviews. It applies as a tariff-rate quota system across multiple steel product categories.

CBAM - Carbon Border Adjustment Mechanism

The Carbon Border Adjustment Mechanism became fully operational on 1 January 2026, following a transitional reporting phase from October 2023 to December 2025. CBAM is one of the EU's flagship climate policies, designed to prevent carbon leakage - the relocation of production to countries with less ambitious climate policies.

How CBAM works

CBAM requires importers of covered products to purchase CBAM certificates corresponding to the carbon price that would have been paid had the goods been produced under the EU Emissions Trading System (EU ETS). The price of CBAM certificates mirrors the weekly average EU ETS carbon price.

Covered products (as of 2026)

• Iron and steel
• Aluminium
• Cement
• Fertilisers
• Electricity
• Hydrogen

Practical obligations for importers

1. Authorised CBAM declarant status: importers must register and be authorised before importing covered goods
2. Quarterly reporting: report embedded emissions in imported goods
3. Annual CBAM declaration (due by 31 May each year): declare total embedded emissions for the previous calendar year and surrender the corresponding number of CBAM certificates
4. Deduction for carbon prices paid abroad: if the producer already paid a carbon price in the country of origin, this can be deducted from the CBAM obligation

CBAM effectively adds a cost layer that can be significant - at an EU ETS price of EUR 60-80/tonne of CO2 in early 2026, a tonne of imported steel with 1.8 tonnes of embedded CO2 would face an additional charge of EUR 108-144 per tonne.

Duty suspensions and tariff quotas

Autonomous tariff suspensions

The EU autonomously suspends or reduces customs duties on certain raw materials, semi-finished products, and components that are not available in sufficient quantities from EU producers. Suspensions reduce the duty to 0% or a reduced rate, and are reviewed biannually (January and July each year).

Suspensions are designed to keep EU manufacturers competitive by lowering input costs. They are published in Council Regulations and reflected in TARIC.

Tariff quotas

A tariff quota allows a limited quantity of goods to be imported at a reduced or zero duty rate. Once the quota volume is exhausted, the standard (out-of-quota) rate applies. Two main types exist:

• Autonomous quotas: set unilaterally by the EU, similar in purpose to suspensions but limited in volume
• Conventional (preferential) quotas: established under free trade agreements or GSP, allocated on a first-come-first-served basis or by licence

Quota management is handled centrally by the European Commission via the TARIC quota database. Importers must monitor quota balances, as quotas for popular products can be exhausted within days or weeks of opening.

Tariff preferences

Free trade agreements (FTAs)

The EU has the world's most extensive network of FTAs, covering over 70 partner countries. Preferential duty rates - often 0% - apply to goods that meet the rules of origin specified in each agreement. Major agreements include:

• EU-UK Trade and Cooperation Agreement (2021)
• EU-Canada CETA (provisionally applied)
• EU-Japan EPA (in force since 2019)
• EU-Vietnam FTA (in force since 2020)
• EU-New Zealand FTA (in force since 2024)
• EU-Mercosur (agreement in principle, ratification progressing)

Generalised Scheme of Preferences (GSP)

The EU grants unilateral tariff reductions to developing countries through three tiers:

1. Standard GSP: partial or full duty reduction for around 66% of tariff lines for lower-middle-income countries
2. GSP+: nearly full duty removal for countries committing to implement 27 international conventions on human rights, labour, environment, and governance
3. Everything But Arms (EBA): duty-free and quota-free access for all products (except arms) from Least Developed Countries

How to verify applicable preferences

Always check detailed tariff data for the most current rates. Preferences require:

• Goods must meet the product-specific rules of origin of the relevant agreement
• A valid proof of origin must be presented (EUR.1, EUR-MED, origin statement on invoice, REX statement, etc.)
• Goods must be shipped directly or through acceptable transhipment points
• The customs declaration must explicitly claim the preference

Binding Tariff Information (BTI) and Binding Origin Information (BOI)

To secure legal certainty on the duty rate applicable to your goods, you can apply for a BTI decision from any EU Member State's customs authority. A BTI is binding across the entire EU for 3 years (5 years from 2027 under the UCC reform) and guarantees the tariff classification. Similarly, a BOI provides binding certainty on origin determination.

Putting it all together - total landed cost

A complete import cost calculation must account for every layer:

In this example, a EUR 50,000 shipment results in EUR 34,780 of additional charges at the border - a 69.6% uplift on the customs value. While VAT may be recoverable, the remaining charges (duty, anti-dumping, CBAM) are definitive costs.

Optimisation strategies

• Tariff engineering: lawfully modifying the product, its presentation, or its assembly to qualify under a lower-duty CN code
• Origin planning: sourcing or processing in countries with preferential access to the EU
• Customs warehousing: deferring duty and VAT payment until goods are released for free circulation
• Inward Processing: importing materials duty-free for re-export as finished goods
• Quota monitoring: timing imports to benefit from open tariff quotas
• CBAM optimisation: sourcing from producers with lower carbon intensity or documented carbon pricing