EU customs reform – proposals of the European Commission

On May 17, 2023, the European Commission presented the first package of changes to EU customs law. The draft focuses in particular on EU-wide coordinated risk management, facilitating customs procedures for reliable traders and adapting customs regulations for e-commerce transactions.

Harmonised risk management

The European Commission proposes the creation of EU Customs Authority. The task of the authority will be to help Member States in harmonizing the course of customs controls, managing both financial and non-financial risks.

The EU Customs Authority will also be responsible for managing the EU Customs Data Hub.

In addition, the authority will be engaged in protecting the integrity of the EU single market, in particular by creating recommendations on actions and omissions that violate customs law regulations and by preparing a package of sanctions other than criminal ones for violations – uniform for all EU countries.

However, at this stage it is not envisaged to replace national authorities with a unified EU customs service, which was somewhat contemplated at the public consultations stage of the customs reform held in 2022.

Facilitations for entrepreneurs

According to the Commission, the greatest facilitation for entrepreneurs will be the creation of a single EU customs interface. As customs data are going to be transferred exclusively to the EU Customs Data Hub, it will replace the multiple interfaces from separate systems currently in operation throughout the European Union.

It should be emphasized that the Commission assumes that the obligation to submit standard declarations will be abolished and replaced with an obligation for certain entities to provide relevant information in a timely manner, which in the future may result in a reduction of costs in customs clearance.

We assume, however, that before such fundamental changes start to be perceived by participants in international trade in goods as facilitating, they will first require a number of preparations on the part of entrepreneurs, including in the area of attention to data quality in the systems.

Trust & Check Trader

The new type of entrepreneur proposed by the Commission – Trust & Check Trader – is a kind of extension of the AEO authorisation. Entities covered by this authorisation will be required to grant customs authorities full access to their systems, records and operations. Entrepreneurs under this permit will be allowed to, i.e., pay customs duties periodically without paying the duty for each consignment, which further may have a positive impact on cash-flow and streamlining of internal processes.

A new approach to e-commerce

E-commerce platforms, as proposed by the European Commission, will act as deemed importers which will make them responsible for collecting VAT and customs duties already at the moment of sale of the goods and paying them to the relevant customs authorities.  

The role of platforms in customs clearance is closely related to the obligations of platforms introduced in the VAT regulations in recent years, however it requires to be clarified with regard to the specifics of customs obligations.

At the same time, one of the ideas presented by the European Commission is to introduce the option of exercising a simplified method for calculating customs duties on imports of low-value goods caused by the abolition of the customs exemption for goods with a value of up to EUR 150. A four-step ad valorem tax scale based on HS has been proposed:

• 5% – e.g., for toys, household goods;
• 8% – e.g., for silk products, glassware;
• 12% – e.g., for cutlery, electrical machinery;
• 17% – e.g., for footwear.

Timetable for the implementation of the changes

The e-commerce industry is expected to be the first to be affected by the changes – with e-commerce entrepreneurs be bound by the provisions on harmonised customs rates for small consignments and the EU Customs Data Hub in 2028.

By 2032, the Commission plans to make the use of the EU Customs Data Hub optional for all entrepreneurs, while from 2038 the use of the EU Customs Data Hub will be made mandatory for all.

However, before the presented draft will be brought on the legislative track, it will go through an additional round of public consultations, which is currently ongoing. Please contact us if you wish to contribute to this consultation and comment on the Commission’s proposals.