Debitoor's accounting dictionary
Harmonized system

Harmonized system - What is the harmonized system?

The harmonized system is an internationally recognised method to classify traded goods.

Does your business trade goods overseas? Read more on our blog about how to record import VAT for your business.

The harmonized system is also referred to as “The Harmonized Commodity Description and Coding System” or “Harmonized System of tariff nomenclature”.

It began in 1988 by the World Customs Organization (WCO) to standardise customs classifications around the world. All products being imported or exported can be classified using this system.

How does the harmonized system work?

An easy way to think about the harmonized system is like a book. In the harmonized system library, there are several different books with broad topics. Within those books, there are chapters. Within the chapters, there are headings, and under those headings are subheadings.

The further you read, the more descriptive it gets, and each ‘layer’ has a descriptive code or number associated to it. Please find an example below.

Example of a harmonized system (HS) code

Harmonized system codes, or HS codes, are 10 numbers long and based on a hierarchical model where each subsequent layer gets more descriptive.

Example HS Code for fresh lemons:

08 05 50 10 10

  • Section 02 = Vegetable Products
  • Chapter 08 = Edible fruit and nuts; peel of citrus fruit or melons
  • Heading 05 = Citrus fruit, fresh or dried
  • Subheading 50 = Lemons (Citrus limon, Citrus limonum) and limes (Citrus aurantifolia, Citrus latifolia)
  • Second subheading 10 = Lemons
  • Third subheading 10 = Fresh

There are 21 sections divided into 96 chapters, all with different headings and subheadings to clarify exactly what the product is.

What is the harmonized system used for?

The harmonized system is used on customs documents for products being exported or imported to another country (outside of a customs or trade union).

Customs officials check the code to ensure that the correct taxes, levies, and duties are applied. They also use to code to ensure that the product is not banned or restricted in the destination country.

Some things that the customs officials will use HS codes for are import vat, customs duties, export VAT, and excise duties.

You can look up harmonized system codes on the UK Government website.

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