I am writing to you concerning a possible systemic error at the Hungarian Post Office concerning how they determine the country of origin for postal packages arriving in Hungary. This information is used by NAV to determine tax and duty liabilities, if any. As a result of this error, postal recipients may be incorrectly charged for duties and/or taxes they do not owe.

I stumbled upon this problem recently when an item I ordered from a company in Italy was delivered by our postman with a bill for nearly 6000 forint, which represented 27% VAT. I was surprised, as I was under the impression that Italy was also in the EU, and I had already paid 22% VAT when I purchased the item via eBay.

When I inquired why I was being asked to pay this money, I was told by the post office that it was because the item was shipped from Switzerland. After I insisted the package originated in Italy, I was told that as far as the post office was concerned, it originated in Italy because the postal tracking number ended in “CH,” which is the country code for Switzerland. The fact that the package was cleared marked “Community Goods” and “EU — Origin” and “ITALY” didn’t seem to have any impact on the post office. All they were interested in was the two-letter country code at the end of the tracking number.

I found this to be quite interesting, and decided to investigate further. A little online research took me to the web site of the Universal Postal Union, which is the organization responsible for the international tracking number standard, which is called “UPU S10, Identification of postal items – 13-character identifier.” It explains in excruciating detail all the components that make up the familiar international tracking numbers we see on most packages, including information on the country codes.

I also found an older version of this standard from 2003, which contained slightly different information about country codes. It is this critical difference that I believe is responsible for the errors the post office is making.

The older version of the standard specifically mentions the country code as representing the “country of origin of a package.” This is in line with how the Hungarian Post Office uses it.

However, newer versions of the standard, including the most current one, do not say that the country code represents the country of origin. Instead, they include this information:

Operators that have extraterritorial offices of exchange (ETOEs) or military offices of exchange may issue S10 identifiers for use in the countries where their ETOEs or military offices of exchange are located. In these cases, the operator is a designated operator, but not a designated operator of the country in which the ETOE or military office of exchange is located. The country code used is that of the UPU member country of which they are a designated operator. This implies that the country code at the end of an S10 identifier cannot be used as a reliable indicator of the geographic origin of an item.

EXAMPLE Swiss Post operates ETOEs in several countries. It uses S10 identifiers with country code CH for items despatched from its ETOEs.

In other words, even though a postal tracking code ends in CH, it could originate from any of the other countries in which Swiss Post (in this instance) has an extraterritorial office of exchange (ETOE).

And this is exactly what has happened in my case. My package originated in Italy and was shipping via a company called Asendia, which is a partnership of Posta Italia and Swiss Post — i.e., an ETOE of Swiss Post that is authorized by Swiss Post to use the CH country code on packages originating from its ETOE in Italy!

As a result of this revised standard, the Hungarian Post Office can no longer rely solely on the country code to determine country of origin, yet they continue to do so, and they continue to erroneously charge recipients for taxes they do not owe.


Mark Haas

Source: Mark Haas

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