On 10 October 2013, the EU published the new Union Customs Code (Regulation (EU) No. 952/2013 of the European Parliament and of the Council, “UCC” in short).By doing so, the EU took a great leap forward and put an end to the recodification process of the past years. Although the UCC enters into force on 1 November 2013, these changes will not be effectively rolled-out until the date set by the implementing provisions to the UCC which have yet to be adopted. It is expected that the UCC changes will be implemented in phases. Nevertheless, there are important changes economic operators should bear in mind from now on. Let us look at them in more detail.
Guarantees – The UCC is introducing a mandatory guarantee requirement for all traders wishing to make use of the simplified customs procedures. This measure has a major cash-flow impact on businesses. Nevertheless, a full waiver will be available for companies that have AEOC (Customs simplifications) or AEOF (Full) status or that meet the AEOC criteria. As such, the importance of the AEO certificate has reached the long envisaged level yielding tangible benefits to the economic operators throughout the EU.
Centralised Clearance – This procedure allows an AEOC or AEOF operator to declare goods electronically and pay customs duties at the place where they are established, irrespective of where the goods actually entered or exited the EU. Due to a number of issues such as the IT infrastructure needed to support this and how to handle VAT and excise issues, it is expected that this change will be implemented at a later stage of the roll-out process.
Self-Assessment – This procedure is a simplified regime allowing AEOC or AEOF traders to make import/ export entries in their records as opposed to submitting full import/ export declarations.
Penalties – Under the UCC, the diversity of penalties provided for by each Member State in the case of failure to comply with customs legislation has not been resolved. The European Commission has, however, announced that it will be making a separate proposal regarding the harmonisation of customs penalties later this year.
A decision relating to binding information – The period of validity of binding tariff information rulings (BTIs) has been reduced from six years to three years. By doing so, it has been harmonized with the validity period of the binding origin information rulings (BOIs). Nevertheless, it also implies that economic operators relying on BTIs for master data purposes have to be alert in keeping an eye on data management.
What else is to come?
Valuation – Two key valuation issues have not been fully settled by the UCC yet; these relate to whether “first sale” will be maintained and whether new royalty provisions will be introduced potentially resulting in a wider range of royalties being dutiable. The implementing provisions are expected to provide the final answer to these questions.
Changes affecting the shipping industry – Commissioner Semeta announced in 2013 the strategy called ‘Blue Belt’ relating to the ease of custom formalities for ships reducing red tape, cutting delays in ports and making the sector more competitive. For ships carrying both EU and non-EU goods and stopping frequently at EU and non-EU ports too, the Commission is proposing to significantly improve customs procedures by putting in place a system which can distinguish between the Union goods on board (which should be swiftly discharged) and the non-Union goods on board, which must go through the appropriate customs procedures. For this purpose, the Commission will bring forward a proposal to create a harmonized electronic cargo declaration. The details will have to be tied to the much awaited Implementing Provisions.
Having caused uproar by being delayed and postponed over a long period of time, the much-awaited UCC has met the high expectations of the customs community. Nevertheless, the tangible benefits or potential hurdles will manifest themselves once the Implementing Provisions come to light. After all, ‘there’s no such thing as a free lunch’.