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New Union Customs Code

"The rules have become more stringent"

The new Union Customs Code replaces the European customs legislation as of 1st May 2016 – with some controversial changes. These changes have resulted in an increased risk of liability for carriers in the area of customs debt law. Andreas Beckmann, customs law expert, answers the most important questions in this interview. He is currently training many companies on how to deal with the complexities associated with this topic.

Andreas Beckmann

Mr Beckmann, what does the new Union Customs Code mean exactly for companies?

There are many points to consider, including centralised customs clearance in the future. Companies will be able to register goods that have to be declared at a centralised location. The Nagel-Group could henceforth submit registrations to a central customs authority. It does not matter if the goods are in Genoa, Rotterdam or Hamburg. A big advantage is that the company only needs to be able to access the national system and through this it can clear the goods anywhere. Needless to say, the new system is subject to conditions.

That sounds like a good change, per se. Are all changes so progressive?

We are expecting significant changes in the coming weeks and months. If you look at the Union Customs code, it is very clear that the rules have become more stringent - particularly for economic operators and service providers. Liability for service providers is going to be greater – especially in terms of customs debt law. Through this, the legislator is compelling companies to create an effective interface between service provider and represented companies.

Who is going to profit most from the new Union Customs Code?

At the end of the day those who already operate in accordance with customs laws will reap the benefits. This refers to companies that have already drawn up service contracts, proper power of attorney related to customs matters, and made similar arrangements with their customers. Legislators want everyone to adhere to this. What they don't want anymore are service providers who offer all-round carefree packages for customs matters, although they don't know anything about the subject. Unfortunately, you can still find many such operators.

Where exactly do you see the need for action?

There are still obstacles in some areas. For example, one problem is that member states still have to agree on the following: in which country the customs debt will be incurred, and how high the import sales tax is going to be. If tax is levied in Germany, what percent will be calculated? For example, is it 21% as is the case in the Netherlands where the product comes from or is it 19% as is the case in Germany? This example demonstrates that a system has been created whereby the policy is good, but so far difficult to implement in practice.

Another focal point of the new Union Customs Code is the complete digital processing of customs operations. Transitional rules will continue to apply till 31st December 2020 to allow necessary integration of different software programs in all participating countries.

The German system Atlas has to be able to communicate with the Dutch system Sagitta. The IT interfaces have not been created so far.

Is the proposed deadline realistic?

I personally don't think that the deadline will be met.

It is unrealistic. The time period mentioned here has been set by law, namely article 278 of the UCC. The article states that the legal requirements have to be implemented in all EU member states by 31st December 2020. If the deadline is not met, the law will have to be changed, and this won’t be so easy. However, it seems they want to put pressure on administrations by stating the deadline in the code.

How should logistics companies prepare for the changes?

Firstly, there are rules that already came into force on 1st May 2016. These are now binding. For instance, if I have binding tariff information, I have to indicate this additionally in the customs declaration as of 1st May. Specifically, this means the company has to collaborate closely with its customers and ask them whether they have binding customs tariff information. If yes, then clarify for which item this applies, and how long the information is valid. Other regulations will follow soon. Going back to the example for centralised clearance: export-wise, the system will run until 2019, import-wise until the end of 2020.

Nevertheless, the company has to prepare for the fact that it will only get an approval if it has an AEO status (Authorised economic operators). This is virtually the foundation on which all approvals depend.

You are busy preparing employees from customs area in seminars on how to deal with the many changes. What topics are important to you when you impart training on this subject?

You have to adapt the training to suit the needs of the company. Since the customs system is new, all topics covering this subject will be broached at least once. The following topics are of particular importance: the extended liability of the service provider in the customs debt law, new regulations for safekeeping and special procedures - particularly in customs warehousing and transit - as well as new stipulations, as to how custom authorities make their decisions.

About Andreas Beckmann

  • Managing partner at the AWB Steuerberatungsgesellschaft mbH (tax consultancy)
  • Lecturer at the AWA AUSSENWIRTSCHAFTS-AKADEMIE GmbH (AWA FOREIGN TRADE ACADEMY)
  • Former customs administration officer
  • Diplom-Kaufmann, Diplom-Finanzwirt (FH)
  • Contributor to the trade magazine "AW-Prax Außenwirtschaftliche Praxis" - a leading journal of external trade and customs law published by Bundesanzeiger Verlag (publisher of the German Federal Gazette )

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