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A Guide to HS Codes

A Guide to HS Codes

Released On 20th Oct 2022

In our article explaining ECCN classifications for imported goods, we briefly mentioned HS Codes. Since then, it’s become clear that some people aren’t completely sure of the difference between ECCN and HS codes.

Here’s a more detailed explanation of HS codes, and an attempt to offer a simple distinction between these and ECCN classifications. Both can be complex areas, though, so if your imported goods relate to technical or IT hardware or medical equipment, please contact Mouse & Bear for expert support.

What are HS Codes?

The Harmonised System is an international, standardised system of names and numbers. The system gave rise to a set of codes – HS Codes – that classify traded products to make it easier to calculate and apply the right taxes and duties. 212 countries currently use this system.

HS codes have other uses, too. For example, by monitoring their use, it’s possible for governments around the world to gather and analyse useful trade statistics, determine the origin of goods, monitor the movement of restricted items etc.

ECCN vs HS Codes

Export Control Classification Numbers (ECCNs) are used globally to determine whether or not an item requires special controls, or is subject to restrictions, before it can be imported to certain countries. Depending on a product’s ECCN, measures might include requiring an export licence (or a licence exception), or tracking the goods’ movement from source to final destination.

HS Codes are also a global classification system, but they are used to identify the proper duty and taxes that are payable on imported goods.

Your items will need both an ECCN and HS Code.

Why HS codes can get complicated

Although standardised HS codes are designed to make the classification of traded goods somewhat simpler, there are two major reasons why they are still a complex area.

  1. The sheer volume and diversity of international traded goods means the HS code system is also very large and complex.
  2. The first 6 digits of an HS code are consistent among all the countries that use the system, but many countries, the USA being one example, require additional classification. This can result in HS codes up to 10 digits. 

Breaking down the parts of an HS Code

In order to accurately find the correct HS code for your product, you must have a clear understanding of what it is, what it does and what it’s made of. This will help you find your way through the intricate list of classifications.

  1. In a standard 6-digit HS code, the first two digits indicate the chapter in which your goods are listed. This is just a broad definition of your goods, however. 
  2. The second two digits, called the heading, are more specific about the type of equipment you’re importing or exporting.
  3. The final part of the six-digit HS code, called the sub-heading, goes further still, drilling down into the exact nature of the goods.

An example:

HS Code example

Using the wrong HS code

It’s not uncommon, if you’re unfamiliar with the Harmonised System, for goods to be assigned the wrong HS code. Some typical consequences are:

  • Paying too much in customs duties – trying to claim money back from customs is very difficult
  • Fines and penalties for paying too little!
  • Products are delayed going through customs, possibly indefinitely, and may even be destroyed
  • Your customers are disappointed – reputational damage to your business?

Whose job is it to determine the correct HS code?

It’s the legal responsibility of the importer or exporter to ensure that goods are assigned the correct HS code. 

Where to look up HS codes

You can find various tools online to look up HS code classifications, but it’s important to stress again how crucial it is to get the correct code from this complex system.

The World Customs Organisation (WCO) has the most up-to-date version of HS Nomenclature – at the time of writing this is the 2022 edition

For expert help classifying your technical equipment and IT hardware, please get in touch with us at Mouse and Bear.

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