The new Union Customs Code (UCC)
The new Union Customs Code (UCC) and the provisions for its implementation came into force on 1st May 2016.
The new UCC represents a significant change to customs procedures. It is needed to update rules that have applied for over 25 years and also to adapt to new electronic systems that will be introduced gradually over the next few years.
The new framework is based on simplifications to customs which will benefit operators but, at the same time, demand more responsibility of them in terms of managing their risks.
To benefit from the various types of simplification and from reductions in or waivers to guarantees, it is necessary to meet almost all of the requirements involved in obtaining Authorised Economic Operator (AEO) status for customs simplification.
The following is a list of the main changes under the new rules, affecting all international trade operators:
1. CHANGES TO CUSTOMS PROCEDURES
To simplify customs procedures, the new UCC concentrates on two main groups:
- Release for free circulation.
- Transit: internal and external.
- Storage: customs warehousing and free zones.
- Specific use: temporary admission and end-use.
Processing: inward processing and outward processing.
The following will no longer apply:
- Processing under Customs Control (PCC). This will be integrated into the inward processing procedure.
- The inward processing drawback system.
- Type II free zones.
- Free warehouses.
2. DECISIONS RELATED TO THE APPLICATION OF CUSTOMS LEGISLATION
The UCC is uniformly applied across all member states to regulate customs procedures, as opposed to national legislation such as the Spanish General Taxation Law.
3. BINDING TARIFF INFORMATION AND BINDING ORIGIN INFORMATION RULINGS (BTI AND BOI)
These rulings are binding, not only for the various member state authorities but also for the holders. They are valid for three years and should be explicitly identified on customs declarations.
4. A NEW DEFINITION OF EXPORTER
The exporter is no longer required to be the owner of the goods. However, the exporter should, in principle, have a contract with the purchaser of the goods in the third country or at least have the power to decide to have the goods transported outside the EU.
The requirement to be an EU resident in order to export and to appear as the exporter on customs declarations remains. If this is not the case, a customs representative who will provide indirect representation should be named.
5. CUSTOMS VALUE
The following changes regarding the customs value of the goods are worth noting:
In the case of successive sales, using the customs value of the first sale is no longer an option.
The value of the goods will be determined upon acceptance of the customs declaration, on the basis of the transaction made immediately prior to the goods being declared for release for free circulation.
There will be a transitional period until 31st December 2017.
The aforementioned provisions will be adjusted for royalties and licence fees. These should be included in the customs value, i.e., the royalties and licence fees the buyer is obliged to pay, either directly or indirectly, as a condition of sale of the goods will be included in the customs value.
Related companies’ transactions need to be looked at to determine whether they have influenced the price of the goods.
The Registered Exporter system (REX), in which the origin of goods certification is provided by the exporter, comes into force on 1st January 2017.
The REX system will be applicable in Generalised System of Preference (GSP) countries or in EU countries that wish to export to GSP beneficiary countries.
Once the new REX system comes into effect in each of the GSP countries, proof of origin will have to be communicated electronically via a statement on origin which will replace the current Form A. There will be a transition period to allow countries to adapt their systems until 31st December 2017.
7. NEW STORAGE TIME FRAME
Goods that are in temporary storage will be placed under a customs procedure or will be re-exported within 90 days. The previous regulation allowed 45 or 20 days, depending on the mode of transport the goods arrived in.
8. CUSTOMS SIMPLIFICATIONS
New customs simplifications established by the UCC include:
- Centralised clearance of goods at a European level.
- A new self-assessment system.
- The redefinition of local clearance as an “accounting entry in the declarant’s records.”
To benefit from these simplifications, it is necessary to meet requirements similar to those involved in obtaining Authorised Economic Operator status for customs simplification.
To protect the EU’s financial interests, a new definition of guarantee is established which differentiates those guarantees covering actual (compulsory) debts from those covering potential (elective) debts.
In addition, two types of guarantee are established, individual and comprehensive, depending on whether the guarantee relates to one operation or a group of operations.
Authorised Economic Operators who meet the requirements or who are AEOs for customs simplification can benefit from a reduction in guarantee costs of between 50% and 70%, or indeed the competent authority may waive the costs altogether.
10. AUTHORISED ECONOMIC OPERATOR (AEO)
With the coming into force of the new customs regulatory framework, the role of authorised economic operator becomes vital to benefit from all of the simplifications and advantages introduced.
There are two types of certification which can be combined:
- AEO status for customs simplification.
- AEO status for security and safety.
To obtain AEO certification, a series of requirements must be met. Only one change has been made to these requirements, which is the need to prove an adequate level of staff competence or qualifications.
To ensure that operators who obtained the certification prior to 1st May 2016 meet the new requirement, they will be reassessed over the next few years.
One of the main objectives of the new regulatory framework is the simplification of international trade.
Through the use of new IT systems, all customs operations will be processed electronically in all member states and customs controls will be applied uniformly across all countries by December 2020 at the latest.
The aim is to get the right balance between customs regulations and the facilitation of international trade.