On 17 May 2023, the Commission submitted for adoption by the European Parliament and the Council a comprehensive proposal to reform the Union Customs Code to address the current pressures faced by customs authorities. Customs authorities are faced with a huge increase in import trade volumes, especially in low-value consignments sold online. Other challenges include the growing number of EU standards and regulations that need to be controlled at the border and EU sanctions taken in the context of geopolitical crises that need to be managed and enforced.
The Commission proposes to replace the customs declaration with a data-driven approach using modern technologies that simplify customs procedures for economic operators and provide customs authorities with tools and resources to improve risk management and customs controls.
The reform will touch on economic operators to some greater or lesser degree, either as an importer or exporter or as part of a supply chain. It will improve compliance of online platforms with customs obligations and strengthen the protection of EU economic operators against unfair competition from imports from third countries.
The proposed reform consists of three pillars.
The EU Customs Data Hub and “trust and check” traders
The EU Customs authority
The new approach to e-commerce
The EU Customs Data Hub and “trust and check” traders
Under the reformed Union Customs Code, importers and exporters will be able to log in all relevant information about their products and supply chain in a single online platform called the EU Customs Data Hub (HUB). Information only needs to be provided once for multiple shipments, and stable supply chain data that does not change in the short time can be used repeatedly for subsequent imports / exports. In addition to importers and exporters, other stakeholders involved in the transportation and warehousing of goods will also input relevant information into the HUB. The Commission notes that the level of detail of the data required from economic operators remains unchanged compared to the data required today.
The existing Authorised Economic Operator concept will be improved by a ‘Trust and Check’ trader concept. These traders must adhere to strict criteria, including full transparency of their operations and supply chains. They will be able to import goods into the EU without active customs’ intervention. They will also be allowed to clear all their imports with customs authorities in their country of establishment, regardless of where the goods enter the EU. A review by the Commission in 2035 will decide whether to extend this privilege to all businesses by 2038.
Businesses will have the option to use the HUB on a voluntarily basis from 2032. From 2038, the use of the HUB will be mandatory for all businesses importing goods into the EU.
The reform will significantly reduce the time and costs associated with customs clearance bring in compliance costs savings for businesses estimated at €2.7 billion per year.
EU Customs Authority
The Custom reform proposal foresees the creation of an EU Customs Authority that will oversee the HUB. Data entered by businesses into the HUB will be processed using machine learning, artificial intelligence and human intervention giving authorities a comprehensive overview of the supply chains and movements of goods. The EU Customs authority will pool information and expertise to help Member States to prioritise the risks and to coordinate checks and inspections. The new regime should significantly improve cooperation between customs and market surveillance and law enforcement authorities at EU and national level. The reform will also improve collection of duties and taxes to the benefit national and EU budgets.
A modern approach to e-commerce
From 2028, online platforms selling to the EU will enter customs-related information on all their sales into the HUB. This will eliminate the need to submit a customs declaration for each individual package. Customs authorities will thus have a complete overview of the packages and be able to enforce compliance with tax and product-specific requirements through risk management analysis.
The current customs system puts the responsibility on carriers and individual consumers for products directly imported from non-EU online platforms. In future online platforms will be the importers and will be responsible for ensuring that customs duties and VAT are paid at purchase.
At the same time, the reform abolishes the current threshold whereby goods valued at less than €150 are exempt from customs duty. This measure is also aimed at preventing fraud, as the Commission estimates that up to 65% of packages imported into the EU are currently undervalued.
The new e-commerce regime brings additional customs revenues estimated at €1 billion per year.