May 1st 2016 : Labour day, Orthodox Easter… and enforcement of the European « Union Customs Code » (UCC)

« Le code des douanes [1]est mort, vive le code des douanes[2] » !

In compliance with the norms imposed by the Lisbon Treaty[3] ,the UCC [4] (published in  2013 ) is completed by both a Delegated Regulation[5] and a Commission Implementing Regulation [6] (both published in late 2015).

This new corpus of nearly 1,400 pages will henceforth rule the customs treatment of the flows of goods which reflect the global trading of this teen-aged XXIst century.

This initial idea calling for a new Customs Code for the EU  was dual :

–          Improving the operation of the European Customs Union (with 28 Member States) which faces too many internal implementation disparities when enforcing the same text and uneven means and performance as far as controls are concerned.

–          Render the International Supply-Chain safer (see the WCO’s SAFE program).

The ambition of the UCC is to reach this goal by :

1° investing in the full dematerialisation of exchanges (E-Customs), based on the inter-operability of the 28 Customs authoritirs’ IT systems, planned for Dec 2020…

2° rendering the AEO[7] certification a more an more required pre-requisite for the operators of international trade, since the UCC provisions reserve a certain number of Customs facilitations to the sole AEO certified operators.  [8].

MAIN CHANGES MADE BY THE UCC[9]

1° CHANGES RESERVED TO AEO CERTIFIED ENTITIES[10]

 -Centralised Clearance (CC) [11] which permits [12] to declare with one single Customs authority in the EU the overall flows of the pre-defined perimeter (n Member States plus France for a French based company) ;

– Self Evaluation[13] of the amount of duties and taxes due upon importation ;

– Setting up a single global guaranty so as to reduce its cost ;

– The single window principle

– The possibility of filing its one’s Customs declaration by simply posting the movement in one’s customs books

– Lighter Customs audit process (advance notification, choice of place of ausit, possible planning, etc…)

2° OTHER CHANGES APPLICABLE TO ALL

The Unique Consignment Reference (UCR)[14]: uninterrupted surveillance, tracing and audit tool , better cooperation between Customs authorities, better tracing of its supply-chain by the operator.

Notorious change of two provisions relating to Customs Valuation[15] :

–          The use of the « first sale » price is no longer permitted (« première vente »)[16]

–          Royalties for brand licences must now in most cases be integrated in the  Customs value.

Changes relating to Binding Information (Tariff or Origin) (BI):

– Period of validity now limited to three years[17]

– A BI is now binding for both parties : the Customs authorities AND the operator.

– The conditions of issuance of BIs is now harmonized.

– One operator may now only apply for one BI for a given item throughout the EU : Member State’s Customs have 120 days to reply.

– Reference to such BI must be made in the importation declarations (in box 44 of the SAD) [18].

BI issued prior to May 1st 2016 become binding for their holders as from May 1st 2016. (with henceforth mention in box 44 of the SAD) .

Changes regarding Special Procedures[19] (SP)

–          Process under Customs control is now part of the Inward Processing Relief (IPR) Customs SP

–          The IPR Special Procedure [20] no longer imposes the obligation to re-export[21]

–          The End-use[22] becomes a Special Procedure[23]

–          The delay for issuing an authorization for a special procedure is now 2 months in France( 3 months for Customs Warehouse)[24].

–          The beneficiary of the TRANSIT (SP) now has to satisfy criteria close to the AEO criteria[25] ; Transit SP might enjoy the benefit of declarations by anticipation and electronic transportation documentation.

–          As far as the Customs Warehousing function is concerned :

  • The type D private warehouse no longer exists, type C and E still exist. One is no longer required to justify his need for warehousing.
  • The Free Zone  is now a Special Procedure. Free warehouses and Free Zone of type II no longer exist.
  • Good in temporary storage  must either be placed under a customs procedure or be re-exported within 90 days.

–          The placement of the goods in Free Circulation when discharging Temporary Admission or Inward Processing Relief no longer entails the payment of interest.

–          A guaranty is now required for all Special Procedures with an amount of referecne and a defined rate.

Changes regarding CUSTOMS REPRESENTATION : end of the monopoly (in France) for Direct Representation of agreed Customs brokers.

Any Customs representative may now, if he is a certified AEO, operate thoughout the EU.

This competitive market might reveal advantageous for the operators…

Changes regarding the STATUTE OF LIMITATION

In the French penal oriented customs context, the enforcement of the UCC extends the statute of limitation regarding customs duties to 5 years[26].

The statute of limitation regarding other taxes (of which VAT)  remains 3 years.

A particular case of exension of these statutes of limitation up to 10 years has been created « in case of the discovery of facts in the context of a court  litigation or administrative procedure »

The prescription of penal condemnations (including tax fines) remains 3 years.

Other  Changes

–          The criteria retained to define which Customs authority is competent for a given customs issue have been slightly modified (place of storage, of  inward processing  or place where commercial customs postings & books are kept)

–          The notion of Suspension[27] of a decision has been added to those of revoking and  annulment.

–          A restriction has been made to the conditions for granting retroactivity : the UCC provides 3 types of retroactivity with certain changes (Notably to the date of approval of an application and no longer to its date of filing with the authorities).

3° TRANSITION PERIOD[28]

Considering the importance of participating Member States and given the size of the project, a transitional period  terminating on December 31st 2020 has been provided by the texts .

During this period the 28 Customs authorities and the EU Commission will work at tuning the interconnexion of their respective IT systems[29], necessary prerequisite for the operability of the UCC new procedures.

Existing granted procedures remain valid until their expiration or review and until May 1st 2019 at the latest.

CONCLUSION

With a going concern consideration of their international trade operations, operators, wishing to have a lean supply-chain operating in a compliant environment now have :

–          To review accordingly and adapt their processes and procedures,

–          To perform an up-dating/cleaning of their contracts,

–          To conduct an analysis so as to have a visibility on their volumes and related risks.

Me Bertrand RAGER

CUSTAX & LEGAL-PARIS

April 27th 2016

brager@custax.com



[1] Community Customs (1992)

[2] Union Customs Code (2013-2015)- CDU ( Code des Douanes de l’Union) in French.

[3] (Articles 289, 290 et 291 of the TFEU)

[4] Regulation (EU) 952/2013 Oct 9th  2013 (EUOJ L269 dated October 10th 2013)

[5] Delegated Regulation (EU)  2015/2446  July 28th 2015 (EUOJ  L 343 dated  December 29th 2015)

[6] Commission Implementing Regulation  (EU) 2015/2447 November 24th 2015 (same EUOJ of Dec 29th 2015)

[7] Art 38 & follow. of the UCC

[8] Hardly 1.500 AEO in France to-day as opposed to nearly 6,000 in Germany out of a total of 13.000 AEO for the whole EU.

[9] NB : All comments made herafter express the author’s French point of view which may need to be adapted to the implementation/interpretation made by the reader’s own EU Member State’s Customs authorities…

[10] Who will henceforth have to justify  having internal competence(s) in Customs law and their penal history will now also be taken into account when considering their application for an AEO certification…

[11] Art 179 of the UCC

[12] This presupposes indeed on the one hand that the efficient interoperability of the 28 Member States’ Customs’ IT systems be in place and, on the other hand, that these 28 MS Customs authorities have a more cooperative than competitive attitude… which is not obvious considering the budgetary impact of such Centralised Clearance.

[13] The enforcing details of which remain to be defined

[14] RUE (« Reference Unique d’Envoi » ) in French

[15] Art 69 and follow. of the UCC

[16] The principle established by Art 147.1 of the 1992 CCC’s IP ) thereby disappears.

[17]  5 years under the CCC provisions

[18] Omitting this element will entail sanction for « maneuver with the purpose of reducing the taxation »

[19] Ex « Suspensive arrangements and customs procedures with economic impact »

[20] Art 256 of the UCC

[21] De facto avoiding the payment of interest

[22] « Destination Particulière » in French

[23] The T5 procedure disappears ; it is now possible to export eventhough End-Use has not been satisfied; the  notion of equivalence has been extended to End-Use.

[24] 120 days  if involves several Member States .

[26] Using the issuance of notices to interrupt the computation of the statute of limitation may no longer extend enquiries beyond the 10th year (plus the current year) following the incurrence of the customs debt.

[27] Article 16 of Delegated Regulation  2015/2446

[28] Delegated Regulation  2016/341 (33 pages of text and some 280 pages of annexes) and its rectifications (example : Regulation 2016/651)

[29] See Commission Implementing Regulation 2016/578 dated April 11th 2016