Shipping tariff codes for product sellers

Jun 29, 2021 | Etsy, Small Business Life

There’s hot news for you if you’re a product-based business owner, this week…
Not just Etsy sellers, I’m talking about product-business owners on any marketplace, or using their own site, and even if you are purely selling via Facebook…
It’s about the new legal requirements around shipping into the EU.

So if you send your items to customers in the EU (or you want to do that in the future), then this is for YOU!

As of 1st July 2021, new regulations are coming into force, which mean you’ll need to cover off some paperwork.

Specifically it’s in regard to the tariff and customs codes that you will need to ‘attach’ to your shipping parcels.

In this article, I’m covering what those codes are & how we use them. Also what NOT to do!
For:
– the HS Code &
– the IOSS code

So what’s the first code you need to know about… it’s the HS Code.
Which stands for Harmonised System Code.

This code is a 6-digit numeric code which is applied to ANY item which is being shipped around the world. Whether it’s being imported or exported… tiny, small or bulk… one parcel or a ship full of the stuff.
(And weirdly, some countries extend the 6-digits up to 12. But we’re only concerned with 6. Phew.)

Sometimes the Harmonised System code may be described as a trade tariff reference, or a commodity code.

It operates as a universal identifier so that any customs or port official, any transportation agent, anyone at all, will know what’s inside that parcel/ container shipment. Whatever language they speak.
And of course different code numbers will reflect whether a license is needed, or a particular saftey handling situation, what the item is made of and what it is to be used for, and whatever else.

(The detail the can be inferred from any single code is very, very specific!)

The HS Code is a way of classifying items.
And it matters to us as small business owners since as of 1St July 2021, it will become compulsory to list the relevant HS Code on the label of the package, for items being shipped into the EU.

Of course, digital items eg downloadables aren’t covered because they’re not physically shipped anywhere.
And the regulation is only covering shipments into the EU right now.

What you have to do:
The main thing is take responsibility for finding out the HS Code of every item you sell.
If it sells to someone who’s shipping destination is EU, then you’ll need that code at your fingertips.
It’s possible to look up the codes on a multitude of websites. But I’ve done the hard graft for you on that one. (You can thank me later.)

I recommend using tariffnumber.com for ease of use in the way the codes are set out, and the fact that it’s very search-friendly.

You’ll need to look up the Harmonised System Code for every item in your range.
Sure, you could wait to check the code at the point when you sell to an EU buyer, but the pressure will be on and you may find time (and effort-levels!) are tight. It’ll add to your processing time and won’t it be better to have the code number handy, ready to add quickly to the label?

Right now, when businesses ship items overseas from the UK, we need to use the CN22 customs form (sometimes CN23, depending on parcel weight and value – you’ll be able to check which is relevant for you with your Post Office/ shipping provider).
The HS Code will now form part of the details you need to add to the CN22/CN23.

Whether you use a hand-completed form (at the Post Office) or a print-at-home version, this will still apply.

Same for the Etsy shipping labels that you may purchase and print direct. The CN22 info is included on that label where relevant, so there’ll be space to include your HS Code in there, too.

(Just like the changes to CN22/23 forms, which meant we need to have a business EORI number, to ship overseas, following Brexit… this is another piece of paperwork we’ll need.
Not hard to solve, but yes, another piece of admin.
If you’re in the GB and need to apply for an EORI number – Economic Operators Registration and Identification number – click www.gov.uk/eori/apply-for-eori. At least it’s free and not overly time-consuming to get this for your business & be legit!)

What if you don’t use the HSCode or your CN22/23 is incomplete/ incorrectly filled out?
1. A delay. And:
2. As Elvis sang, “Return to Sender”.
Which means they don’t get their item until you’ve sorted this out. Which means more hassle for you. And which also means a less-than-happy customer. Which means more chance of a bad review.
There’s a lesson in there.

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Photo of brown cardboard delivery package with label. Text overlay reads EU shipping regulations for product businesses, an easy guide to the paperwork you need

OK, so let’s talk the other code that has become mandatory this week…
It’s the IOSS code.
So this one stands for Import One-Stop Shop code. (Which sounds a pretty-lot more exciting that it really is IMHO 😆 )

This is basically a VAT code, explaining to the customs office about eligibility of VAT, payable by the purchaser of that item.
If you’re not VAT registered (which is most maker-business owners), then the generous-folks at most seller platforms (Etsy, Folksy, NOTHS etc) let us use *their* IOSS so that the VAT payments are taken care of.

VAT is paid by the buyer and processed by Etsy/ relevant marketplace, at time of purchase. Win.
BUT!
If you don’t include the IOSS number – which acts to confirm to the customs office that VAT has been paid – when shipping to the EU, there are consequences.

It will mean that buyer will have to pay duties AGAIN (and a handling fee) to claim the item.
And there’s likely to be a delay too.
Delays and extra charges = less-than-happy customer = more chance of a bad review. Again.

What you have to do:
When you receive an order from an EU-based customer, the IOSS of your platform (Etsy, Folksy, NOTHS etc) will appear in the order confirmation details (certainly for Etsy; the IOSS appears on the Order receipt page.)

You’ll need to let Royal Mail/ your postal service provider know this IOSS. At time of writing, you don’t add that code to a form/ CN22 – you’ll need to tell them at time of posting.

If you’re registered for Royal Mail Click&Drop, you’ll submit the relevant IOSS online.
Likewise for Etsy printed shipping labels, the IOSS will be submitted at source.

If your EU-based sale isn’t made through a platform, you won’t have access to their IOSS – what to do now?
You’ll need to register for an IOSS yourself, OR register to use one of the Royal Mail services that offer solutions around providing IOSS. Find out more here.

Another point on “what not to do”…
Don’t confuse the IOSS numbers of different platforms!
If you sell on multiple platforms and/or your own site… etc, and you list the same products across multiple marketplaces/ pages, it’ll be easy to get confused and potentially use the incorrect IOSS for an item.

Always check carefully which is the correct IOSS to use for the sale you’ve made.
I’m sure you can guess the delays/ customer fees incurred/ hassle for you will not be desirable otherwise!

I hope this guide helped you cut through the dos and don’ts around this new regulation for shipping products to the EU.
You’re already on the right lines, by taking the responsibility to read this and educate yourself on the issues!

Thanks for reading 😉

If you’d like extra support around getting your product business seen more, my training is here for you to achieve that. Drop me a message to find out about how I could help you make your business the success it deserves to be; no obligation.

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Graphic image with text reading Do's and Don'ts for Etsy sellers, A guide to shipping to EU destinations
Photo collage image showing pictures of parcels and packages, and a person holding items for delivery. Text overlay reads How to Guide: Shipping products to the EU, an Etsy seller checklist