The New Customs Code – the trigger of revolution or maybe evolution?
Importers and exporters are about to face a customs revolution. In the place of the provisions of the Community Customs Code, the provisions of the EU Customs Code (hereinafter: EUCC), adopted on 9 October 2013 by Regulation (EU) No. 952/2013 of the European Parliament and the Council, are to take effect. Its provisions shall apply from 1 May 2016 when delegated and implementing acts referring to the EUCC have been adopted and entered into force. Therefore, economic operators conducting foreign trade have to be prepared for significant changes.
The inclusion of new regulations in the provisions of the EU customs law is intended to:
- simplify customs legislation,
- unify goods trading services with foreign countries across the European Union through the harmonisation of the principles regarding the exchange of information and the scope of data,
- facilitate customs procedures through the facilitation aimed at increasing the efficiency of customs transactions in line with contemporary needs,
- introduce the management of business processes in a fully electronic environment - both for customs administrations and for the entities engaged in foreign trading,
- support reliable and trustworthy business entities - Authorised Economic Operators (AEO).
The most important changes introduced by the EUCC
Due to the very broad range of the amendment affecting many areas - we present the most important ones in the category in which changes can be expected, along with the direct reference to the website of the Ministry of Finance which posts descriptions of individual issues in terms of changes applicable from 1 May 2016:
- Customs representation
- Issuing customs decisions under the EUCC
- Reassessment of authorisations issued prior to 1 May 2016
- Authorised Economic Operator (AEO)
- Common Customs Tariff and tariff classification of goods
- Binding Tariff Information (BTI)
- Origin of goods
- Binding Origin Information (BOI)
- Customs value of goods
- Customs debt
- Customs debt guarantee
- Model amendment to the guarantee
- Destruction and abandonment of goods
- Entry of goods into the customs territory of the European Union - the import summary declaration
- Temporary storage facility
- Places approved for the presentation of goods and temporary storage
- Confirmation of the EU customs status of goods
- Authorisation to use the simplified procedure in the form of a simplified declaration
- Authorisation for centralised clearance conducted in the country
- Authorisation for the entry into the declarant's register
- EU transit and TIR transit
- Customs warehouse
- Free zone
- Temporary admission
- Intended end use
- Inward processing
- Outward processing
- Export of goods outside the customs territory of the EU
The most severe consequences
In our opinion, the most important changes for entrepreneurs introduced by the new regulations concern, inter alia:
- customs warranties - pursuant to the provisions of the EUCC, in the majority of cases warranties will be compulsory, which means that many economic operators who are currently using this procedure and do not have to submit financial security, e.g. a bank guarantee, will be obliged to do so in the future. The obligation to provide the security is a direct result of EU regulations relating to individual customs procedures or governing the situation of goods in a different manner and it may be a condition for the issuance of an authorisation to use a specific customs procedure. Moreover, Art. 91 of the EUCC entitles customs authorities to require the submission of a security in cases where the submission of the security is not obligatory when they consider that it is not certain whether the amount of import or export duties corresponding to a customs debt and other charges has been paid within the prescribed period of time;
- principles of the functioning of customs procedures - for instance: the processing procedure under customs control will cease to operate and its function will be served by inward processing;
- binding tariff information – the BTI decision is a commodity decision which shall provide legal certainty as to the classification of goods in the Customs Tariff nomenclature. Therefore, the BTI system is to be much more unified to avoid the situation where the same good is assessed differently by two countries. Documents confirming the customs code of a specific good will be issued for 3 years (today they are issued for 6 years) and will be binding both for the authority and for the economic operator and not as it is today - only for the authorities. However, BTIs issued before 1 May shall remain valid;
- obtaining the status of an Authorised Economic Operator (AEO);
- determination of the customs value.
The AEO status is granted to credible and solvent economic operators whose organisation, infrastructure and applied security of IT systems and places for goods storage, or means of transport respectively, provide safety of locations and goods and protect against unauthorised access.
The AEO status is related to the possibility to use the simplifications set forth by the customs law regulations and the simplifications with respect to customs control.
From 1 May this year
The institution of an authorised consignee in the light of the introduced EUCC will not be significantly modified. The most significant change from the point of view of an economic operator is adding a new criterion for the entity applying for the AEOC authorisation – the standard of competence or professional qualifications. Customs officials will examine the professional competence of persons responsible for key operations from the point of view of the AEO. The criterion for the compliance with the law will be also changed through the extension of tax law regulations and the absence of conviction for a serious criminal offence related to the business operations of the applicant. Other AEO criteria will be also slightly modified. This change is connected with the necessity of reassessment of the AEO statuses granted so far. Attention should be also paid to the name change. We will no longer talk about the AEO certificate but about "AEO authorisation".
Pursuant to Art. 38 of the EUCC, an economic operator with its registered office in the customs territory of the European Union who meets the criteria specified in Art. 39 of the EUCC may request the status of an authorised economic operator. It includes the following types of authorisations:
- authorised economic operator in the field of customs simplifications, which allows the economic operator to benefit from certain simplifications in accordance with the customs legislation - AEOC;
- authorised economic operator in the field of safety and security, which entitles the economic operator to benefit from the simplifications concerning safety and security - AEOS.
It is possible to hold both types of authorisations AEOC/AEOS. A joint certificate shall maintain its current letter symbol AEOF.
Conditions and criteria
The criteria and conditions that an entity applying for AEO status shall meet are specified in Art. 39 of the EUCC and they include:
- compliance with legal regulations - the lack of serious violation or repeated violations of the provisions of the customs law and tax regulations, including absence of conviction for a serious criminal offence related to the business operations of the applicant;
- relevant system of register management - demonstration by the applicant that he/she has a high level of control of its operations and movement of goods ensured by the management system of the commercial register and - where appropriate - the transport register, which allows for conducting proper customs controls;
- financial solvency - solvency that is deemed to be proven when the applicant has a good financial standing that allows the applicant to fulfil the obligations, according to the type of conducted business operations;
- standards of competences or professional qualifications - in relation to the authorisation referred to in Art. 38(2)(a) - applies to AEOC - compliance with practical standards with respect to competences or professional qualifications directly related to the conducted business activity;
- security and safety standards - with regard to the authorisation referred to in Art. 38(2)(b) - applies to AEOS - relevant security and safety standards which are considered to be met if the applicant demonstrates that he/she maintains adequate measures to ensure security and safety of the international supply chain, including in the area relating to physical integrity and access control, logistics processes, processes related to handling of specific types of goods, in the area relating to the personnel and in the area of identification of business partners.
It is worth applying for AEO
The aforementioned criteria constitute an extension of the conditions of holding a privileged status in relation to the present state. Nevertheless, the benefits of holding a certificate are so important that it is worth going through the verification process. As a result of that, the economic operator will benefit from simplifications provided for in the new code (centralised clearance, self-assessment, clearance without presentation of goods to the authorities). Due to the centralised clearance, the economic operator will be able to perform physical clearance of goods across the EU. At the same time, applications will be presented in one, always the same customs office, competent for the place of registered office of the economic operator. It is a great convenience in logistics terms. And self-assessment allows the economic operator to independently perform some checks that normally are performed by customs authorities. This, in practice, should speed up the clearance process. Clearance without the presentation of goods to customs authorities is possible even today; however, in the future, the authorisation for failure to present goods to authorities during the clearance procedure will be granted only to economic operators with the AEOC certificate. The AEO will be also entitled to submit a lower security in case of using, e.g. special procedures. In some situations, the AEO will be even released from this obligation. Additionally, if the AEO applies for an authorisation for a special procedure (e.g. inward processing) or for managing a temporary storage facility, pursuant to the new regulations it can be assumed that certain conditions for obtaining these authorisations have been met and do not need to be re-examined.
Stricter regulations for the unauthorised
Another argument in favour of applying for the AEO status is the unfavourable change in the regulations on mandatory securing of the customs debt for economic operators without such status. Currently, it is possible to use the inward processing procedure, which allows for the non-payment of custom duties on imported components if goods manufactured with such components are exported outside the EU. In the future, this procedure will also be available. However, now it is not required to secure (e.g. with a deposit or a bank guarantee) the potential amount of the customs debt that could occur if, for instance, the goods have not been exported. In the future such security will be mandatory - therefore, one has to take into account additional costs, for instance, in the form of a bank commission. For the AEO such costs could be reduced or avoided. The processing procedure is only an example of where such security will be mandatory, but in principle, any operations that may result in the generation of a customs debt should be covered with a security.
In the next issue of Tax Alert we will inform you about the results concerning VAT and resulting from the amendment of the aforementioned customs regulations.
If you have any questions or need to discuss the topic, you are strongly encouraged to contact our expert, Przemysław POWIERZA.
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