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Reform to rejig ‘struggling’ EU Customs Union

The European Commission is proposing new legislation that it describes as “the most ambitious and comprehensive reform of the EU Customs Union since its establishment in 1968”.

The EU body says that the union is currently “too complex” for authorities and traders to navigate efficiently, adding that it was “struggling to deliver effectively on all of its tasks”.

It cites a surge in goods entering the EU because of e-commerce, a huge increase in the number of EU standards that must be enforced, and the need to react to geo-political crises.

“EU importers need to deal with 27 national customs administrations, and more than 111 separate interfaces and IT systems, all of which are expensive for authorities to run and are not necessarily interconnected,” the EU body says, adding that there is no central EU customs database or EU supply-chain supervision.

Under the proposals, a new EU Customs Authority will oversee an EU customs data hub, which the commission says will act as “the engine” of the new system.

Over time, the intention is that the data hub will replace the existing customs IT infrastructure in EU member states.

The commission estimates that this will save states up to €2 billion a year in operating costs.

Single portal

Businesses that want to bring goods into the EU will be able to log all the information on their products and supply chains into the new data hub, which will provide “a 360-degree overview” of supply chains and the movement of goods across the EU.

“At the same time, businesses will only need to interact with one single portal when submitting their customs information and will only have to submit data once for multiple consignments,” the commission states.

According to the plans, some ‘trusted traders’ will be able to release goods into the EU without any active customs intervention.

Under the proposals, the data hub will open for e-commerce consignments in 2028, followed, on a voluntary basis, by other importers in 2032.

There will be a review in 2035, and the system will become mandatory from 2038.

Bid to reduce fraud

The commission also plans to shift responsibility for complying with EU customs rules from individual consumers and carriers to online platforms, who will be responsible for ensuring that customs duties and VAT are paid at purchase.
 
In a move aimed at reducing fraud, the new system will also scrap the current rule that exempts goods valued at less that €150 from customs duty.

“Up to 65% of such parcels entering the EU are currently undervalued, to avoid customs duties on import,” the commission says.

Small parcels

The reform also simplifies customs-duty calculation for the most common low-value goods bought from outside the EU, reducing the thousands of categories down to only four, making it easier to calculate duties for small parcels.

The EU body believes that its plans for e-commerce trading will bring in extra customer revenues of €1 billion a year.

“This far-reaching reform will reduce red tape and compliance costs for businesses, create more transparency and certainty for EU citizens when shopping online, and introduce simpler and innovative processes for the authorities,” said Commissioner Paolo Gentiloni.