European Union, cross border supply of goods

Impact for Swiss businesses with activities within the European Union or with cross border supplies of goods

The Union Customs Code (UCC) was adopted on 9 October 2013 as EU Regulation No 952/2013. It is treated as a general guideline. However, the UCC was never really applied in practice. As per 1 May 2016, the UCC rules will now finally enter into force.

History and implementation

It was a hard working process by the EU Commission and the EU Member States. The modernised UCC has two additional pillars:

  • Delegated Acts – The Commission has certain competences within a limited scope and the EU Member States are kindly invited in expert groups to be part of the discussions.
  • Implementing Acts – The Commission has a full responsibility regarding the harmonised implementation procedure within the EU.

http://ec.europa.eu/taxation_customs/customs/customs_code/union_customs_code/index_en.htm

In addition, the Transitional Delegated Act includes a transition period until 31 December 2020 for certain areas which need to be considered. The above mentioned provisions are the pillars of the UCC.

Goals

The UCC sets the following goals:

  • Streamline customs legislation and procedures
  • Offer greater legal certainty and uniformity to businesses
  • Increase clarity for Customs officials throughout the EU
  • Simplify Customs rules and procedures and facilitate more efficient customs transactions in line with modern-day needs
  • Paperless Customs procedure and fully electronic environment
  • Reinforce swifter customs procedures for compliant and trustworthy economic operators (Authorised Economic Operators)

What is new per 1 May 2016?                                                                                

  • Transition rules: existing rulings and licences approved by the national Customs Authorities are still valid. Applications regarding the customs procedure will be continuously reviewed by the relevant Customs Authorities until 1 May 2019. New assessments are expected. Applications before the 1 May 2016 without having binding approvals will be evaluated based on the new UCC.
  • IT- infrastructure: during the transition period new IT -tools will be created in order to govern all necessary steps at Union and Member States levels to ensure full electronic implementation (until 31 December 2020). The transitional delegated act describes the new customs procedure within the EU.
  • Centralised clearance: the main idea of the centralised clearance is to harmonise and to coordinate the communication between the authorities and economic operators. The big advantage is to have only one customs office irrespective of the EU Member State in which the goods are entering into or leaving the EU. However, the reality will show the disadvantage as minimum 3 authorities will be involved in respect of the cross border transaction, which often lead to multiple customs audits.
  • Binding tariff information („BTI“) and binding origin information („BTO“):Newly, BTI or BTO decision shall be valid for a period of 3 years (instead of 6 years) from the date on which the decision takes effect. Customs authorities and businesses with such decisions are once more forced, as the current decisions need to be monitored and re-newed, if applicable. This regulation is in force as per 1 May 2016.
  • Non-preferential origin: additional rules are introduced in case of the importation of goods into the EU.
  • New electronic data processing for the Customs status of goods (T2L, T2LF):The proof of Customs status of the Union goods resp. the future Union goods will be supported by the new eletronic data processing instead of using paper documentation. The paper documentation as proof of  status of the Union goods should be replaced by the new electronic data processing as of 2017. However, paper documentation as proof for Customs status of Union goods (invoice declaration or shipping documentation) will be still acceptable and available until EUR 15‘000 as a minimum value of the goods, instead of the current value of EUR 10‘000.
  • Supplier declaration having preferantial origin status of good: supplier declarations issued before 1 May 2016 are still valid. From 1 May 2016 long-term supplier declarations are valid for 2 years beginning of the date of issuance. Retroactive supplier declarations are possible, provided that the beginning of the supply of goods dates back maximal 1 year. There are no other restrictions for supplier declaration for single use.
  • Customs procedure: Newly, 3 Customs procedures are available. Free circulation, exportation and special Customs procedures. The provision of guarantee is mandatory for all Customs procedures for potential or existing customs debt. Current approvals for the chosen Customs procedure will be successively reviewed until 31 December 2017. Customs authorities will contact licence owner in their own motion.  
  • Temporary storage: temporary storage is always available for non-Community goods (non-EU goods) which are brought into the customs territory of the EU. Therefore, all importations of non-EU goods into the EU are involved. The Customs authorities may require the holder of the goods to provide a guarantee with the view to ensuring payment of any potential customs debt or charges, if applicable. Further, goods under the temporary storage procedure shall be stored only in specific places authorised for tempotary storage. The implementation of this regulation can lead to additional questions in the practice e.g. how to define and to characterise authorised places. The maximal duration of storage is 90 days. This regulation is in force as per 1 May 2016.
  • Free zone and storage: The EU Member State may designate parts of the Customs territory of the Community as free zone. Newly, the free zones shall be enclosed and the free zone can be subject to Customs supervision. New structure of warehouse storage is expected.
  • Export: Verbal Customs procedure is possible for commercial shipment  up to EUR 1‘000, if certain conditions are met. This regulation remains unchanged.
  • Customs valuation and liability: So-called First-Sale-Rules are not applicable anymore. Newly, royalty payments need to be considered and calculated into the Customs value, if certain conditions are met. Existing contracts need to be reviewed and updated from Customs valuation and liability perspective. This regulation is in force as per 1 May 2016.
  • Authorised Economic Operator (AEO): In order to be able to use the waiver of the obligation for the goods to be presented under the customs clearance procedure companies need to apply for AEO authorisation. Already approved AEO certificates will still have their validity. However, the practical and professional capability of the operator need to be in line with its current business activity i.e. practical experience of a minimum of 3 years, continued professional training education are expected. If you are currently considering to apply to the AEO status, it is recommendable to wait until 1 May 2016, as the requirements for the AEO status will  be reviewed.

Who is concerned in Switzerland?

Swiss businesses with existing operations in the EU and/or planned cross border transactions within the EU need to consider and to review their transactions with regard to UCC conformity.