New customs legislation from 1 May 2016

 

On 1 May 2016, new customs legislation will come into force in the shape of the Union Customs Code (“UCC”). The final drafts of the implementing provisions were also made available just a short time ago. Although the European Parliament and the Council still have the opportunity to make amendments, fundamental changes are no longer to be expected. So what do companies have to bear in mind?

I. Reassessment of existing authorisations

Contrary to what some people are claiming in the market, the authorisations granted to companies will not become invalid on 1 May 2016. Instead, there is a transitional period until 2019 during which the main customs offices have time to “reassess” these authorisations. This means that they will review whether the authorisations can also be granted under the new, partly stricter, regulations. This applies in particular to approval as an authorised exporter. Although this will no longer exist in the present form, it will still be granted in a simplified centralised procedure in the form of a simplified customs declaration, i.e. the local clearance procedure with exemption from the need to present the goods.

II. Customs value: broader scope for adding royalties

Royalties can currently only be added to the customs value if they constitute a condition for the sale of the goods. It is undisputed that this requirement was generally not met in particular in situations where the seller of a good and the licensor were different entities. One typical example of such an import is a T-shirt with a cartoon character printed on it. In this area, the implementing provisions have been changed in a way that might make it possible for the customs authorities to include the relevant royalties in the customs value in the future. Thus importers of this type of goods should respond to this change in the law at an early stage.

III. Temporary storage only possible in approved storage facilities in future

The customs procedure for temporary storage is relevant if the goods arrive in the EU, for example at a port, and it first has to be decided how these goods should be dealt with from a customs point of view. Up to now, it was possible to use the temporary storage procedure and then send the goods on to their planned destination. In future, this will only be allowed in approved storage facilities. Apart from this, a guarantee will have to be provided for the storage facilities. These rules will lead to new challenges above all for logistics companies.

IV. Guarantees

In future, guarantees can also be provided as a comprehensive guarantee for different procedures such as temporary storage and other special procedures (referred to up to now as “customs procedures with economic impact”) such as transit, storage, use or processing. The reference amount for this guarantee can potentially be reduced to 50%, 30% or even 0%.

V. Proof of status using invoices or freight papers

The German Ministry of Finance describes the retention of the simplified procedure for giving proof of status using an invoice or freight papers, which will now even be possible up to a ceiling of 15,000 euros instead of the current 10,000 euros, as the “only step forward”. This is significant when applying for the transit procedure, for instance.

Beside the five changes referred to above, there are numerous other amendments to details ranging from simple name changes (“customs procedures with economic impact” are to become “special procedures”) to relaxations of the provisions on strict liability under customs-related contract law. The planned major reform and modernisation of customs law has, however, not materialised. The simplification sought has turned out to be just the opposite: rather than having to deal with two acts (the Customs Code and the Customs Code Implementing Regulation) those affected will in future have to juggle with a variety different acts, namely the UCC as well as the implementing legislation in the form of the Delegated Act (“DA”) and the Implementing Act (“IA”). However, the transitional provisions (“TDA”) and the Work Programme regarding IT-related implementation, which is also legally binding, will also apply until at least 2019. On top of this, many rules are also contained in the annexes to these acts. A representative of the German Ministry of Finance noted that only an “experienced bingo player” would find their way around this maze.

Conclusion

In summary, it is important to use the months remaining before the new legislation comes into force to review what impacts the UCC and the implementing provisions will have on individual companies. Above all, it is necessary to ensure that the criteria for a successful reassessment of authorisations are in place.