Customs debt

What it means

A customs debt is the concrete obligation to pay import or export duty on identified goods. It does not arise when the contract is signed or the truck pulls in, but at the moment the customs code names: acceptance of the declaration, or a breach of the conditions of a procedure.

The debt is not the rate. The rate says how much is paid; the debt says who pays, when and on what: the debtor is the declarant and, under indirect representation, the importer and the customs representative are liable jointly and severally, while the base is the customs value and the classification.

A customs debt should be kept apart from import VAT, even though customs assesses both in one decision. Import VAT is governed by the VAT Act and a payer that meets the conditions deducts it, whereas the duty in a customs debt is never refunded and stays part of the cost of the goods. The same audit shortfall therefore hits the company in full on duty and only temporarily on VAT.

How it works in practice

The customs office assesses the debt in a decision and normally ties payment to a guarantee. On an ordinary import, duty and import VAT are paid before the goods are released; with a deferment authorisation they are paid for a whole period at once.

Post-clearance recovery is routine: customs rechecks the classification under the combined nomenclature years after release and charges the shortfall with interest. That is why the whole import file is archived, not only the invoice.

With regular imports a deferred payment authorisation pays off, so the debt is not settled shipment by shipment. We put the due date of deferred duty into the client’s tax calendar next to the return filing deadlines, because late payment carries interest like any other tax, and repeated delays put the authorisation itself at risk.

What to watch out for

The expensive case is a special procedure that was never discharged. If goods vanish from the warehouse or are sold without closing the procedure, the debt falls due for the entire consignment at once, the guarantee is drawn, and import VAT on such a debt is hard to deduct without a proper document.

A person who bought or took over goods, knowing or having reason to know they had been removed from customs supervision, can become a debtor too. Suspiciously cheap goods from a third country without customs papers are therefore a risk for the buyer, not only the importer, and checking a new seller as part of a supplier audit is worth it.