Freight Shipping between Malaysia and Europe | Rates – Transit times – Duties and Taxes

How to calculate duties & taxes when importing from Malaysia to Europe?

Diving into the waters of international shipping might seem daunting, but with some knowledgeable guidance, estimating duties and taxes when importing from Malaysia to Europe can be broken down into manageable steps. By understanding a couple of key factors, such as the country of origin, the HS code, the customs value, the applicable tariff rate, and realizing that there might be some additional taxes and fees that could apply to your category of products, you're already off to a strong start.

But before we delve into the particulars, let's kick-start this journey with the very first step – nailing down the country where the goods in question were manufactured or produced. This isn't just a trivial detail; it's a cornerstone in the plot of navigating international shipping. The country of origin tells a lot about the goods you're dealing with and sets the stage for the rest of the process.

Step 1 - Identify the Country of Origin

Apprehensive about tagging the origin of your merchandise from Malaysia? We get it. Here's why it matters.

Firstly, the country of origin tags the birthplace of your product. It helps customs authorities identify the product's nationality.
Second, it calibrates the Harmonized System (HS) code. This numeric identifier classifies traded products and lays the foundation for duty and tax calculations.

But that's not all!

The origin identifies potential trade agreements. Europe and Malaysia, for instance, share a Partnership and Cooperation Agreement (PCA), influencing customs duties.

Also, certain goods might be taboo. Both Europe and Malaysia have import restrictions tied to their own safety and ethical standards. So, knowing your product's origin helps avoid unwanted hiccups!

Lastly, respecting this phase unwraps room for lower costs. By correctly establishing your product’s origin, you navigate tariff rates more accurately, avoid penalties, and finally save those precious bucks. Remember, rushing might seem appealing, but ultimately it's your wallet that suffers. So, take a step back, breathe, and give the country of origin the attention it deserves!

Step 2 - Find the HS Code of your product

The HS Code, or Harmonized Commodity Description and Coding System, is an internationally recognized system of names and numbers to classify traded products. This code is used by customs authorities around the world to identify products when assessing duties and taxes and to gather statistics about the trade.

Most often, the quickest way to locate the HS code for a given product is through your supplier since they will be familiar with the product they're exporting and the relevant regulatory requirements.

If your supplier is unable to provide you with the HS Code, we're here to help. You can look it up using this step-by-step process:

1. Visit the Harmonized Tariff Schedule.
2. Type the product name in the search bar.
3. In the result list, examine the Heading/Subheading column, which is where your HS code will be.

It's important to note that accuracy is paramount in selecting the correct HS Code. Utilizing an incorrect code may not only lead to shipping delays but also result in punitive fines.

Here's an infographic showing you how to read an HS code.

Step 3 - Calculate the Customs Value

When shipping your goods from Malaysia to Europe, it's important to understand the calculation of Customs Value. Despite potential confusion, this isn't synonymous with the product's inherent value. So, what's the difference? Simply put, the Customs Value includes more than just the price of your goods. It's defined as the Cost, Insurance, and Freight (CIF) value.

This means, in addition to the price of your goods, this value incorporates international shipping costs and insurance costs as well. For example, if your product is worth $2,000, shipping costs $500, and insurance is $50, your Customs Value is $2,550. Understanding this distinction is crucial for accurate customs clearance.

Step 4 - Figure out the applicable Import Tariff

An import tariff refers to a tax imposed on imported goods, influencing the cost of importation. In Europe, the Combined Nomenclature (CN) Tariff is primarily employed for foreign trade.

To determine your applicable tariff, utilize the TARIC System – European Customs. Begin by entering your earlier identified Harmonised (HS) code and Malaysia as the country of origin. This will reveal the duties and taxes applicable to your product.

For an illustrative example, let's suppose that you're importing athletic shoes (HS code 640411) from Malaysia. After inputting this data into the system, you might discover a tariff rate of, let's say, 15%. If your declared Cost, Insurance, and Freight (CIF) costs were $10,000, the import duties payable would amount to 0.15 x $10,000, which equals $1,500.

By calculating your duties with precision, you avoid unpleasant surprises, ensuring a smoother customs clearance process in Europe. Remember that accurate cost estimation is key to effective international trade.

Here's a demonstration:

As you can see, you should fill out the 2 required information, the goods code (HS code), and the country of destination.

Once you have done that, you should be able to check the duties and taxes that apply: here's a screenshot as an example.

Step 5 - Consider other Import Duties and Taxes

While the standard tariff rate is a pivotal part of the customs clearance process, you might encounter additional import duties depending on your goods' origin and nature. Consider the Excise Duty, a specific tax often applied to products such as alcohol, tobacco, and certain fuels. Also, be aware of Anti-Dumping Taxes imposed to protect EU industries from unfairly low-priced imports.

However, the most consequential component could be the Value Added Tax (VAT). For instance, importing wooden furniture from Malaysia to France might attract a standard VAT of 20%. Therefore, if the customs value of your shipment is $5,000, expect to pay around $1,000 as VAT ($5,000 x 0.20).

Remember, these examples are illustrative and actual rates may vary, so always verify the current customs duties and taxes!

Every additional fee represents a potential reduction in your profit margins, so arm yourself with this knowledge to make informed decisions and anticipate these extra costs.

Step 6 - Calculate the Customs Duties

Calculating customs duties when importing goods from Malaysia to Europe involves several components, each computed on the customs value of your goods. A basic formula is: Customs Duties = (Customs Value Customs Duty Rate) + VAT.

If only duties apply, use the formula: Duties = Goods Cost x Customs Duty Rate. For instance, a $500 shipment with a 5% duty rate equals $25 in duties.

VAT is assessed on the total of the customs value plus the duties. So, the formula becomes: (Goods Cost + Duties) x VAT Rate. In a similar scenario, if VAT is 20%, the VAT cost would be ($500 + $25) 0.2 = $105.

Anti-dumping taxes and Excise Duty may also apply. These are additional calculations on the customs value. For a $500 shipment with a 5% duty rate, a 12% anti-dumping tax, and a 20% VAT, the total cost would be: ($500 + $25) 0.12 + ($500 + $25 + $60) 0.2 = $173.20.

The complexity and risk of overpayment make it wise to trust a logistics expert like DocShipper. We handle every step of your customs clearance worldwide, ensuring you're not overcharged. Contact us for a free quote in under 24 hours.

Bill of Lading

Picture this, you're shipping goods from Malaysia to Europe, and your ownership proof is paramount. That's a role the Bill of Lading admirably fills - it's your golden ticket in the world of freight. Acting as the official receipt for your shipment, it details the nature, quantity, and destination of the goods.

But the world doesn't stop turning, the 'telex' or electronic release accelerates the process, helping you breeze through the transition. Quick trip via air cargo? You'll be dealing with the AWB instead, the air counterpart to the Bill of Lading. The takeaway? Ensure you have your Bill of Lading or AWB right at your fingertips for a smooth journey, showcasing your rightful ownership every step of the way.

Packing List

Ensuring a smooth shipping process from Malaysia to Europe, your Packing List emerges as an essential document. It's your job to accurately detail every single item, its weight, its dimensions, and the type of packaging, be it a case, pallet, or container. When your cargo arrives at a European port or airport, customs officers rely on the Packing List to verify the shipment's content - whether it's boxes of Durian fruits or electronic equipment.

An error here, even as trivial as a single misplaced digit, can derail your shipment's approval, costing you both time and money. So, for seamless sea and air freight, stay safe, stay accurate. Your Packing List is your responsibility, and getting it right guarantees a smoother transition across borders.

Commercial Invoice

Crafting the perfect Commercial Invoice for your Malaysia-Europe shipment isn't rocket science—but it does demand attention. This magic paper, essentially an official transaction record between you and your buyer, holds the key to successful customs clearance. It may seem mundane, but a misplaced detail can turn into a logistic nightmare. So, ensure to include your buyer's accurate details, product descriptions, values, HS codes, and the terms of delivery (Incoterms).

For instance, imagine shipping electronics from Kuala Lumpur to Berlin. If the HS code or product value is wrong, you're inviting delays and additional costs. And remember, your Commercial Invoice should echo every other shipping document. Consistency will speed up clearance, getting your goods to their destination faster—whether it's a tech store in Berlin or a boutique in Paris.

Certificate of Origin

Knowing your good's origin isn't just good practice – when shipping between Malaysia and Europe, it's crucial. The Certificate of Origin (CO) declares where your goods were manufactured and can open the door to preferential customs duty rates.

For instance, a Kuala Lumpur-based company shipping electronics made in Malaysia to Europe can benefit from lower duties due to trade agreements. But if those electronics are manufactured in a non-agreement country, regular rates apply.

Inaccurate declarations can result in delays and additional costs, so it's crucial the CO is accurately completed and included in your shipment. Understanding the CO's role is a necessity, not just a nicety.

Certificate of Conformity (CE standard)

If you're shipping goods from Malaysia to Europe, understanding the Certificate of Conformity (CoC) is vital. This document, adhering to the CE standard, is a seal of safety. It means your product meets all EU safety, health, and environmental protection requirements. Suppose you're shipping electronic components. Having that CoC makes customs clearance smooth as silk, since it assures that your products pass European Union standards.

Remember, though, the CE marking isn't a quality assurance certification; it's a compliance mark. Unlike the ISO standards, which focus on quality assurance, CE ensures conformity with regulatory requirements. Keep this in mind when preparing your shipment, as it eases your goods' journey through European customs. In comparison, the US has a different set of standards, primarily led by the FCC for electronic goods. Make sure to double-check which standards apply to your specific product or shipment.