The EU Commission is concerned with the current customs framework, where legislation and tariffs are set at the EU level with implementation at a national level, leading to discrepancies in approaches between Member States. These discrepancies lead to differing levels of controls across Member States and give non-compliant businesses/individuals the ability to select entry points to the EU where they believe controls are the weakest. The creation of an EU Customs Authority and the EU Customs Data Hub are designed to combat these concerns.
The establishment of the EU Customs Data Hub will enable the EU Customs Authority to possess a risk analysis capability by allowing the exploitation of the vast amounts of data that the new Data Hub will hold. National Customs Authorities will continue to carry out national risk analysis and management, however, control recommendations will be issued by the EU Customs Data Hub.
The introduction of the EU Customs Data Hub will enable the creation of what will in effect be a Single Trade Window, providing a single point of access to submit customs information and requests. Use of the EU Customs Data Hub will become mandatory from 1 January 2038 onwards. It will, over time, replace the customs IT infrastructure in all EU member states. The introduction of the EU Customs Data Hub is expected to save billions of Euros in IT maintenance and development costs.
Other significant changes include the introduction of a new status for the most trusted traders of Trust and Check traders who will be able to release goods into the EU without them being subject to any customs intervention at import. It appears that the Trust and Check scheme will build upon the existing AEO programme. Trust and Check traders will be able to move goods via “green lanes” under what resembles a self-assessment regime. To qualify as a Trust and Check trader a business will need to operate electronic systems which make real-time data available on the movement of consignments to the EU Customs Data Hub.
Another change is the removal of the relief for customs duty on consignments with a value of €150 or less, which the EU Commission believes has been subject to widespread abuse. To enable this a simplified 4 category method will be used to calculate the duty on low-value consignments.
E-commerce platforms will become the deemed importer for goods sold directly to consumers with the responsibility to charge and collect customs duty at the point of sale similar to the VAT approach adopted under IOSS. This customs duty will then be paid over to the relevant Member State. This approach will enable EU consumers to have full visibility of costs at the time of purchase.
To achieve the aims stated above the Union Customs Code will be repealed and replaced with a new regulation.
Whilst the full impact of the proposed reforms remains to be seen, the direction of travel is clear. Both in terms of efforts towards digitisation and standardisation of customs systems, as well as the importance and use of customs data. Gaining access to the most facilitative customs regimes will rely on the ability of a business to capture and share accurate customs data from their systems.
For e-commerce platforms, the increased obligations, in the form of collecting customs duty and ensuring the compliance of goods sold via the platform, will result in the need for increased compliance activity and the need to redesign certain systems.
Alongside the proposed reforms the EU Commission is seeking to develop a common framework for customs penalties, noting that currently customs infringement treated as criminal in one Member State can be treated as administrative in another. The adoption of a common framework for penalties would give businesses certainty on the consequences of non-compliance and remove concerns of a practice accepted in one Member State being rejected in another.
Although the implementation of this proposed reform may seem too far away, businesses involved with importing goods into the EU should start analysing how the proposed changes may affect them and also keep abreast with any further changes in this area. Please contact any one of our dedicated team should you wish to learn more.
