diff --git a/SAX2.c b/SAX2.c
index a5ef2436..753e6df3 100644
--- a/SAX2.c
+++ b/SAX2.c
@@ -977,10 +977,6 @@ xmlSAX2StartDocument(void *ctx)
 	    if (ctxt->options & XML_PARSE_OLD10)
 	        doc->properties |= XML_DOC_OLD10;
 	    doc->parseFlags = ctxt->options;
-	    if (ctxt->encoding != NULL)
-		doc->encoding = xmlStrdup(ctxt->encoding);
-	    else
-		doc->encoding = NULL;
 	    doc->standalone = ctxt->standalone;
 	} else {
 	    xmlSAX2ErrMemory(ctxt, "xmlSAX2StartDocument");
@@ -1009,6 +1005,8 @@ void
 xmlSAX2EndDocument(void *ctx)
 {
     xmlParserCtxtPtr ctxt = (xmlParserCtxtPtr) ctx;
+    xmlDocPtr doc;
+
 #ifdef DEBUG_SAX
     xmlGenericError(xmlGenericErrorContext,
 	    "SAX.xmlSAX2EndDocument()\n");
@@ -1020,13 +1018,25 @@ xmlSAX2EndDocument(void *ctx)
 	ctxt->valid &= xmlValidateDocumentFinal(&ctxt->vctxt, ctxt->myDoc);
 #endif /* LIBXML_VALID_ENABLED */
 
-    /*
-     * Grab the encoding if it was added on-the-fly
-     */
-    if ((ctxt->encoding != NULL) && (ctxt->myDoc != NULL) &&
-	(ctxt->myDoc->encoding == NULL)) {
-	ctxt->myDoc->encoding = ctxt->encoding;
-	ctxt->encoding = NULL;
+    doc = ctxt->myDoc;
+    if ((doc != NULL) && (doc->encoding == NULL)) {
+        const xmlChar *encoding = NULL;
+
+        if ((ctxt->input->flags & XML_INPUT_USES_ENC_DECL) ||
+            (ctxt->input->flags & XML_INPUT_AUTO_ENCODING)) {
+            /* Preserve encoding exactly */
+            encoding = ctxt->encoding;
+        } else if ((ctxt->input->buf) && (ctxt->input->buf->encoder)) {
+            encoding = BAD_CAST ctxt->input->buf->encoder->name;
+        } else if (ctxt->input->flags & XML_INPUT_HAS_ENCODING) {
+            encoding = BAD_CAST "UTF-8";
+        }
+
+        if (encoding != NULL) {
+            doc->encoding = xmlStrdup(encoding);
+            if (doc->encoding == NULL)
+                xmlSAX2ErrMemory(ctxt, "xmlSAX2EndDocument");
+        }
     }
 }
 
diff --git a/include/libxml/tree.h b/include/libxml/tree.h
index 4e5bf434..efada857 100644
--- a/include/libxml/tree.h
+++ b/include/libxml/tree.h
@@ -573,7 +573,7 @@ struct _xmlDoc {
     struct _xmlDtd  *extSubset;	/* the document external subset */
     struct _xmlNs   *oldNs;	/* Global namespace, the old way */
     const xmlChar  *version;	/* the XML version string */
-    const xmlChar  *encoding;   /* encoding from XML declaration, if any */
+    const xmlChar  *encoding;   /* actual encoding, if any */
     void           *ids;        /* Hash table for ID attributes if any */
     void           *refs;       /* Hash table for IDREFs attributes if any */
     const xmlChar  *URL;	/* The URI for that document */
diff --git a/include/private/parser.h b/include/private/parser.h
index bc4bc0d1..50cf2187 100644
--- a/include/private/parser.h
+++ b/include/private/parser.h
@@ -23,7 +23,8 @@
 #define XML_INPUT_AUTO_UTF16LE      (2u << 1)
 #define XML_INPUT_AUTO_UTF16BE      (3u << 1)
 #define XML_INPUT_AUTO_OTHER        (4u << 1)
-#define XML_INPUT_8_BIT             (1u << 4)
+#define XML_INPUT_USES_ENC_DECL     (1u << 4)
+#define XML_INPUT_8_BIT             (1u << 5)
 
 XML_HIDDEN void
 xmlErrMemory(xmlParserCtxtPtr ctxt, const char *extra);
diff --git a/parserInternals.c b/parserInternals.c
index df720b24..c5cfd4b8 100644
--- a/parserInternals.c
+++ b/parserInternals.c
@@ -1590,13 +1590,15 @@ xmlSetDeclaredEncoding(xmlParserCtxtPtr ctxt, xmlChar *encoding) {
         xmlCharEncodingHandlerPtr handler;
 
         handler = xmlFindCharEncodingHandler((const char *) encoding);
-        if (handler != NULL) {
-            xmlSwitchToEncoding(ctxt, handler);
-        } else {
+        if (handler == NULL) {
             __xmlErrEncoding(ctxt, XML_ERR_UNSUPPORTED_ENCODING,
                              "Unsupported encoding: %s\n",
                              encoding, NULL);
+            return;
         }
+
+        xmlSwitchToEncoding(ctxt, handler);
+        ctxt->input->flags |= XML_INPUT_USES_ENC_DECL;
     } else if (ctxt->input->flags & XML_INPUT_AUTO_ENCODING) {
         static const char *allowedUTF8[] = {
             "UTF-8", "UTF8", NULL