The indication of the correct customs tariff number not only determines the applicable customs rates. The appropriate classification also has a direct effect on the value-added tax. Possible import bans and import restrictions also depend on the tariff classification of the goods.
Under certain circumstances, it is also possible to import goods at more favourable customs rates by optimising customs duties.
Particularly in the case of the product group vitamins, there are many problems regarding the correct classification and application of the correct customs tariff number.
An essential point is the distinction between pharmaceuticals and food preparations in terms of the customs tariff. The classification of food supplements also often plays a role in the customs tariff nomenclature for vitamins. The actual use of the vitamins as an end product is often important, as are factors such as composition.
But beware: packaging instructions from the manufacturer or the commercial designation of the goods are not necessarily a guarantee of the “desired” customs tariff classification.
Which customs tariff number for vitamins?
But when are vitamins in the true sense of the word actually present? This often raises the question of the definition: “organic chemical product” (Chapter 29 in the customs tariff) or is it a food preparation or medicinal product?
The first question that needs to be clairified is: What exactly are vitamins and what does the customs tariff mean?
In short, vitamins are complex chemical agents that the human body cannot produce itself. Nevertheless, they are essential for the survival of both the human and animal organism.
Therefore, vitamins must be externally and artificially supplied to the body. This can take the form of pure vitamins or provitamins, a kind of precursor to vitamins. If the human body does not get enough of them, this can lead to metabolic diseases or deficiency symptoms.
As vitamins sometimes have a physiological effect, they are often used in medicine or industry.
Vitamins as “organic chemcial products”
In principle, only isolated chemically uniform compounds belong to Chapter 29. However, according to the explanatory notes to Chapter 29 of the Customs Tariff, provitamins and vitamins are also covered, and under certain conditions.
The following products can therefore be classified under tariff heading 2936:
- Natural or identical, synthetically produced vitamins and provitamins and their derivatives used mainly as vitamins
- Concentrates of natural vitamins (e.g. Vitamins A or D)
- Mixtures of vitamins, provitamins or concentrates
- Vitamins and any of the products above dissolved in any solvent (e.g. in vegetable oils)
This includes almost all common vitamins including their derivatives:
- Provitamin D
- Vitamin A
- Vitamin B1, B2, B3, B5, B6, B9, B12
- Vitamin C
- Vitamin D
- Vitamin E
- Vitamin H
- Vitamin K
- Vitamin PP
However, this heading does not include, for example…
- Vitamin B4
- Vitamin F
- Synthetic subsitutes for vitamins
- Medicaments under heading position 3003 and 3004
Certain additives may also be used to enrich the vitamins in order to stabilise them for preservation or transport purposes.
These additives are:
- Anti-caking agents (e.g. carbohydrates)
- Substances for coating (i.e. gelatine, waxes, fats), including those that have been softened
- Substances (i.e. silica) for the absorption of vitamins
A prerequisite is, however, that the additives or the process used do not exceed the necessary level. The character of the vitamins etc. must not be changed. In addition, it is not permitted if the modification of the original vitamin is intended to make the vitamin more suitable for a specific purpose than for general use.
Example: A preparation containing mainly calcium and vitamin D3 cannot be classified under tariff heading 2936. This is because the mineral calcium is not an authorised additive which may be used to stabilise the vitamin.
In this example, the preparation and mixture of vitamins and minerals is deliberate. Such mixtures are considered by the customs tariff as substances with nutritional value and are classified as food preparations under heading 2106 of the CN.
Customs tariff number for Vitamin C (ascorbic acid)
Another thing to look out for is the customs tariff number of vitamin C (ascorbic acid). Ascorbic acid is also commonly known as vitamin C. This is because the acid acts as a vitamin in humans and other living things due to its chemical composition. However, vitamin C is a collective term and therefore also includes substances that can be converted into ascorbic acid in the body.
A problem arises in the case of products for which two or more items in Chapter 29 are relevant. This is particularly true for vitamin derivatives.
For example, the chemical compound L-ascorbic acid-2-glucoside (AA-2G). This is a vitamin C derivative that is enriched and stabilised with glucose. AA-2G is mainly used as a personal care product and is used to protect against UV radiation as well as to prevent melanin pigmentation. It is also used in the manufacture of cosmetics.
Due to its chemical structure, this product is both a sugar acetal and a vitamin C derivative. It is therefore eligible for tariff heading 2936 because of its vitamin C component. However, due to the glucose content, tariff heading 2940 is also applicable to AA-2G.
The explanatory notes to Chapter 29 of the Combined Nomenclature provide a clear hierarchy in such a competitive situation:
Products which are eligible for more than one heading in Chapter 29 must be assigned to the last heading.
The AA-2G would therefore be classified under tariff heading 2940. Ascorbic acid, which is both a lactone (tariff heading 2932) and a vitamin (tariff heading 2936), is more likely to be classified under heading 2936.
Food supplements: food preparation products or drinks?
A common difficulty in pricing arises in the case of vitamins sold in the form of food supplements. Here the question often arises as to whether they are food preparations productsor drinks. A distinction must also often be made between these and medicinal products.
In any case, food supplements are goods containing vitamins and mineral salts which are intended to maintain health or well-being, provided that they do not contain any information about the prevention or treatment of a disease.
These products are often in liquid form. However, they may also be sold in powder or tablet form.
Such products are generally classified as food preparations under heading 2106 in the customs tariff, but may also be classified as “beverages” following Chapter 22 of the Combined Nomenclature (CN).
Reduced rate for food supplements
Companies often benefit from the reduced rate when classifying food supplements. The condition is that they are classified as food preparations.
According to the Harmonised System (HS) Explanatory Notes, the following products are to be classified as food preparations under tariff heading 2106:
- Zubereitungen, die unmittelbar oder nach weiterer Behandlung (z. B. durch Garen, durch Auflösen oder Aufkochen in Wasser oder Milch usw.) zur menschlichen Ernährung verwendet werden
- Zubereitungen, die beim Herstellen von Getränken oder Lebensmitteln verwendet werden (und ganz oder teilweise aus Lebensmitteln zusammengesetzt sind)
- Zubereitungen, die aus Mischungen von chemischen Erzeugnissen mit Lebensmitteln bestehen und
als Bestandteile verwendet werden oder bestimmter Eigenschaften verbessern sollen
(Aussehen, Haltbarkeit usw.)
Food supplements, which are also classified as food preparations under tariff heading 2106, may be:
- Zubereitungen, die auf Grundlage von Pflanzenauszügen, Fruchtkonzentraten, Honig, Fructose usw. bestehen und
- denen Vitamine und manchmal sehr geringe Mengen Eisenverbindungen zugesetzt sind
Often the packaging of these preparations contains a statement that they are generally intended to maintain health or well-being, such as “food supplements are often preparations based on ingredients such as plant extracts, fruit concentrates, honey and fructose and enriched with vitamins”.
Note: Food supplements are not, however, comparable preparations intended to prevent or treat diseases or ailments. These may be classified as medicinal products.
Tax rate on liquid food supplements
It can become problematic if the food supplements are available and sold in a purely liquid form, e.g. as bottles or juices. It also becomes difficult with so-called combination packs. This applies to products that consist of 50% liquid food supplements and the other 50% of food supplements that are sold in non-liquid form.
In the past, purely liquid food supplements were sometimes classified as “beverages” (customs nomenclature 2202). As a result, the standard tax rate had to be paid.
According to the case law of the Court of Justice, the tariff concept of “drink” must be determined on the basis of objective factors: “drinks” are therefore all liquids which are suitable and intended for human consumption, irrespective of the quantity consumed and the particular purposes which the various types of edible liquids may serve.
Liquids are not drinkable if it is impossible for the average consumer to drink the product directly, without dilution or other additives, according to the classification of the Bundesfinanzhof.
Courts have tended in the case-law to classify liquid food supplements as food preparation products. This is because customs tariff number 2106 also covers preparations which are wholly or partly composed of foodstuffs and are used in the manufacture of drinks or foodstuffs.
In this respect, it is particularly noteworthy that the aggregate state of the goods does not play a significant role in the delimitation. Rather, the provisions of the Customs Tariff and the Explanatory Notes of the Combined Nomenclature are to be considered as non-binding indications.
Standard tax rate for tube feeding formulas
A special case would be tube feeding formulas, which are used for dietary treatment, including malnutrition, impaired food intake and inflammatory bowel diseases. This involves dietetic foods in liquid form, which contain various nutrients such as proteins, vitamins, fats and carbohydrates that can also be administered via a gastro-intestinal tube.
In principle, enteral tube feeding formulas are to be classified under customs tariff heading 2202, as with other non-alcoholic beverages. Accordingly, the standard rate of value-added tax applies.
This is because, as already mentioned, the term “beverage” covers all liquids suitable and intended for human consumption, unless they are classified elsewhere. The method of consumption, the quantity consumed or the intended use is irrelevant.
In this respect, the particular purpose of use for tube feeding formulas is also irrelevant. Although its ingredients are intended for human consumption, it is not a food preparation within the meaning of heading 2106 of the CN.
The form of distribution is equally irrelevant: it does not matter that the food is sold in plastic bags, for example, or that it is intended to be administered by means of a tube.
Furthermore, for classification as a beverage, it makes no difference whether the product is neutral in taste and not enhanced by the addition of an aroma.
The situation is different in the case of tube feeds for purely medical purposes administered under medical supervision. This product is classified as a medicinal product under customs tariff heading 3004.
Prerequisite: tube feeds are administered by stomach tube to persons under medical supervision as part of the fight against a disease or condition. The aim is to prevent or eliminate malnutrition in these persons.
However, this does not change the tax rate: medicines under heading 3004 of the CN are also subject to the standard rate.
Food supplements in tablet form
In the case of food supplements sold in dose form, such as tablets or pills, classification as a food preparation under heading 2106 of the customs tariff is easier since 2018:
The ECJ ruled as early as 2009:
“Food preparations for use as food supplements consisting mainly of vegetable or animal oil to which vitamins have been added, put up in measured doses (in capsules), are to be classified under heading 2106 (“Food preparations not elsewhere specified or included”)”. – ECJ, C-410/08 to C-412/08
The decisive feature of classification is therefore above all the form in which the product is prepared, marketed and ultimately consumed. A capsule shell is one such characteristic. It determines the dosage and the mode of action.
Based on this ECJ case law, the European Commission has regulated the classification of certain food supplements as food preparations under item 2106 (HS) in 2018.
Difficulties have been encountered in particular in the case of food supplements consisting of products in Chapter 15 of the Combined Nomenclature – animal and vegetable fats – and marketed in measured doses.
The Commission decided that such products should not be classified in Chapter 15, i.e. as animal fats and oils, but as food preparation products under tariff heading 2106.
The classification of food supplements depends not only on their ingredients but also on the actual form in which they are administered.
Dietary Supplement or Medicinal Product?
Another problem often arises in the distinction between food supplements and medicinal products. The correct classification of amino acids also plays a role here.
It is questionable whether they should be classified under heading 3003 because of their therapeutic or prophylactic use as medicaments. Or whether they are products for human consumption, which therefore fall under tariff heading 2106 as “food preparations“.
In 2015, the ECJ laid down essential criteria for classification as medicinal products:
“Products may be classified as medicinal products only if, by virtue of their characteristics and properties, they have a therapeutic or prophylactic effect of their own or are at least intended for medical use.”
The existence of a medicinal product can be based alternatively on two different criteria:
- Pharmacological effect (often referred to as functional medicinal product) or
- Presentation and packaging of the product (often referred to as presentation drugs)
The pharmacological action may consist of both therapeutic and prophylactic properties of the product. In this case, the action of the product must always be focused on a very specific function of the human organism.
Alternatively, the extent to which the product is intended to prevent or treat a disease or condition to be specifically mentioned must be specifically defined.
Goods classified as pharmaceutical products must therefore be tested for the following:
- Do they have clearly defined therapeutic and prophylactic properties?
- Is the effect concentrated on certain functions of the human organism?
- Can they be used to prevent or treat a disease or condition?
The packaging and presentation must be such that the consumer has the impression that the product is a medicinal product.
Note: Products which do not have any therapeutic or prophylactic effects of their own but which are suitable for preventing or treating a disease or condition also fulfil a therapeutic or prophylactic purpose. Provided that they are specifically intended for that use. For example, tube feeding.
However, the following products are not medicinal products within the meaning of the customs tariff:
- Products which are not intended to treat the allergy & are merely a substitute for the protein causing the allergy
- Products which are not a necessary part of medical treatment and whose use does not require additional medical supervision by a specialist
- Products manufactured solely as food supplements which are part of the daily human diet or contain only nutrients
Specialist medical opinion not decisive for classification as a medicinal product
The customs tariff and its substantive provisions also take precedence over a specialist medical opinion for tariff classification purposes. For example, the opinion of a medical specialist in the field of osteoporosis treatment has no legally binding effect on the classification of the goods.
In one case concerning a preparation used in the treatment of osteoporosis, a court has determined the classification of the goods on the basis of the tariff provisions and has considered the medical scientific evidence presented in the expert’s opinion to be irrelevant.
Furthermore, it is not decisive whether the preparation is designated as a medicinal product in other legal circles or in the pharmaceutical sector. The only relevant question is therefore whether the product meets the tariff conditions necessary for it to be classified as a medicinal product under tariff heading 3004.
Vitamin capsules: Intended use irrelevant for classification
In 2018, the German Federal Fiscal Court made a statement on the effectiveness of high-dose vitamin capsules composed of vitamins and trace elements. Their mode of action was also stated on the packaging and in the package insert. The main issue here is the distinction between food preparations and pharmaceuticals in the customs tariff sense.
The classification of vitamin preparations also has an impact on sales tax. Food preparations classified under heading 2106 in the customs tariff are subject to the reduced rate of VAT. For pharmaceuticals, on the other hand, the standard rate of tax is due.
Customs tariff number for dietary supplements
- For the classification of a product in the customs tariff, the objective characteristics and properties of the goods are decisive.
- Wichtig: Die Erläuterungen und Einreihungsavise der Europäischen Kommission für den Zolltarif hingegen sind mehr Auslegungshilfe als Warendefinition und stellen daher keine rechtsverbindliche Aussage dar.
- Furthermore, the Federal Finance Court considers the intended use of the goods to be of only secondary importance. “The intended purpose, which the manufacturer himself states for his goods, is in principle of secondary importance for the tariff classification.”
- Thus, the latter may only be used for classification if reference is made to it in the customs tariff or the corresponding explanations. It is therefore only relevant if the intended use itself can also be recognised as an objective characteristic or feature of the goods.
- According to the Bundesfinanzhof, the way in which the manufacturer describes the goods, the circumstances under which the goods are sold or how they are actually described in commercial transactions is in principle of secondary importance for tariff classification.
- Equally irrelevant for classification are definitions in dietary regulations or similar regulations that describe goods such as pharmaceuticals or food supplements. These are also only indications for the determination of objective characteristics of the goods.
- However, things such as the packaging and the package insert or detailed order or delivery documents etc. are nevertheless to be taken into account as indications for a more precise purpose of the goods.
- In concrete terms this means that the manufacturer can indeed describe the product as a “food supplement” – but the classification as a food supplement or food preparation does not necessarily have to follow from this.
Important: The explanations and classification notices of the European Commission for the customs tariff, on the other hand, are more of an aid to interpretation than a product definition and therefore do not constitute a legally binding statement.
Exception for the intended use of medicinal products
There are however exceptions to the purpose of use in the case of medicinal products consisting of mixed or unmixed products intended for therapeutic or prophylactic purposes.
In such cases, the specific intended use is taken into account. In this situation, the information on a label, the packaging, and the package leaflet may be used as an indication of the tariff classification of the product.
Note: For classification as a medicinal product, it is not necessary for the term “mechanism of action” to be used on the product. Goods which do not contain a description of the product’s mode of action may also be a medicinal product.
However, there are also restrictions here: There are some vitamin preparations which are certainly designed to prevent disease or promote healing. But that does not necessarily make them a medicine.
In any case, it must be made clear that the active ingredient in its specific form of distribution is not suitable for a diet in the traditional sense. This means that the recommended daily dose must be higher than the daily dose recommended for maintaining general health or well-being.