European Union: Changes in the Custom Code

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The European Union will introduce a new custom code by May 1, 2016. The Union Customs Code (UCC) will leave main parts of recent EU customs regulations untouched. However, there are certain changes which have to be considered. There will be major changes to the status Authorized Economic Operator (AEO). We focused on these changes in a previous article. However, other changes must also be observed.

Today’s customs code forces negative consequences if custom import obligations have not been complied with. Misconduct or errors result in import duties. These duties occur even in situations where normally no duties would have been due if customs obligations would have been followed in an appropriate manner and sometimes these are not very visible! Import duties are customs duties, import-VAT and for certain types of goods excise taxes or agricultural duties. Non-compliance with customs legislation can be caused by the following:

  • Introduction of non-Union goods into the customs territory of the EU breaching customs legislation (e.g. smuggling)
  • Unlawful removal of non-Union goods from customs supervision
  • Movement, admission, storage or disposal of non-EU goods in customs territory without permission of custom authorities
  • Other violations of customs regulations

Every person who is required to fulfil custom obligations is liable to import duties. This can be the owner of the goods, the importer or exporter but also any other person legally involved. This might be for example the company which carries out a processing or repair of a machine under inward processing customs arrangement. Normally there are no import duties due if the machine will leave the EU after finishing the processing or repair. If the company moves the machine to another plant without customs authority’s permission input duties will be due.

Under the new law additional persons will be liable to import duties:

  • Any person who is aware or should be reasonably aware that custom obligations have not been fulfilled
  • Any person who transfers information in connection with customs declarations which lead to an import duty evasion and this person is aware or should be reasonably aware of the duty evasion

This means for example that logistic companies may be liable to import duties of customers. This could be the case if they put monetary positions into import declarations which are obviously too low and lead to an evasion of import duties. Whether this is also the case if the customer provides false data remains to be seen. Final implementing provisions by the European Commission will clarify this issue.

Under certain preconditions import duties will be remitted or refunded if the misconduct was minor and the custom formalities are fulfilled subsequently.

A new EU-wide sanction system is planned although the respective EU directive has not finally been agreed on.

Other changes of custom regulations 2016 will be in the following fields:

  • binding tariff information
  • first sale for export rule
  • custom debt and guarantee

Authors: Peter Scheller, German Tax Adviser – Master of International Taxation –; Susanne Zaczek, German Customs Expert -


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