According to the Belgian customs authorities, the European "inverse algorithm" was tested for two months in January and February this year. According to the Belgian Customs, from 1 March 2024, the declaration value of e-commerce goods declared for import into Belgium will be strictly calculated according to the latest "inverse algorithm" in order to increase the efficiency of the inspection.
Once the goods have undergone customs inspection, the Belgian customs will require the relevant deductions to be indicated in the pro forma invoice after the completion of cargo sorting. Failure by the customer to provide the relevant documentation in a timely manner may result in a delay in the inspection time, or Customs may determine that the import declaration unit value of the goods is understated, resulting in a direct fine.
In recent years, customs controls in Belgium have become increasingly stringent. PGS CBEL hereby reminds all sellers that in order to ensure smooth clearance and release of goods, it is imperative to provide authentic and valid sales links when shipping and to strictly follow the "inverse algorithm" for declaration.
We will also pre-verify sales links provided by customers to ensure compliance, and will promptly notify customers of potential inspection risks if there is a significant discrepancy between the value of the goods and the declared value, so that customers can respond promptly.
Once the goods have undergone customs inspection, the Belgian customs will require the relevant deductions to be indicated in the pro forma invoice after the completion of cargo sorting. Failure by the customer to provide the relevant documentation in a timely manner may result in a delay in the inspection time, or Customs may determine that the import declaration unit value of the goods is understated, resulting in a direct fine.
Key points of the inverse algorithm:
- Instead of basing the value on 30% of the previous sales link, the new method calculates the value by deducting certain fixed costs through inverse calculation.
- VAT numbers of the destination country must be provided for VAT deferral.
- The declaration link for FBA goods must match the country of delivery.
- If there is no sales link for a product due to stock shortage, a reference sales link can be provided. Customs will then assess the price of the goods based on the selling price of the reference sales link. However, if the seller does not provide a reference sales link and Customs use the average declared value of the product in the EU system for the previous year to determine the declared value of the product, this is likely to put the seller in a passive position regarding the declaration of value and there is a risk that Customs will consider that an under-declaration has been made.
Belgian inverse formula:
Import declaration value = selling price on the link - fixed costs
Declaration ratio = import declaration value / selling price on the platform link
Fixed costs include:
- VAT on sales: Selling price / (1 + VAT rate) * VAT rate (of the country of final destination)
- Platform costs: Amazon commission + packaging costs
- Transport costs in the importing country: Freight cost + last mile delivery cost + FBA fulfilment fees (allocated based on product weight)
- Handling costs: Handling, sorting and customs fees
- Tariff costs: The amount of duty corresponding to the reasonable declared value recognised by customs, depending on the product's Taric and HS codes.
If you are found to have under-declared, there will be consequences:
- For the first offence:
You will be required to pay the outstanding tax and a fine of EUR 250 per HS CODE. - For a second offence (using the same VAT number):
You will again be required to pay the outstanding tax, but this time with a fine of €500 per HS CODE. - For a third offence:
Your VAT number will be placed on the Customs blacklist and you will be subject to a substantial fine.
Based on the experience of various customs authorities, we have found in practice that:
- With regard to deductible costs, the Belgian customs authorities currently only recognise customs clearance costs, port charges, T1, freight costs, loading and unloading inspection costs, freight distribution costs, customs duties, VAT, sales platform commissions and delivery costs to the final customer. However, it does not include costs such as transit warehouse charges, seller's profit, advertising costs, marketing discounts, customer return and exchange costs, cargo damage costs and obsolescence losses, even if these are actual costs.
- If an item within a split shipment is inspected, all items in the shipment will be detained. In addition, the method of calculation and evidence of cost deductions relating to the detained items must be provided.
- Due to a significant increase in the inspection workload, it usually takes more than two weeks for Customs to arrive on site, resulting in a total inspection cycle of more than three weeks. This has resulted in a significant reduction in inspection efficiency.
In recent years, customs controls in Belgium have become increasingly stringent. PGS CBEL hereby reminds all sellers that in order to ensure smooth clearance and release of goods, it is imperative to provide authentic and valid sales links when shipping and to strictly follow the "inverse algorithm" for declaration.
We will also pre-verify sales links provided by customers to ensure compliance, and will promptly notify customers of potential inspection risks if there is a significant discrepancy between the value of the goods and the declared value, so that customers can respond promptly.
