Updated: Oct 12
Customs Brokers or customs intermediaries are essential elements in each country’s trade ecosystem. The diverse EU market, consisting of 27 states, necessitates a deep understanding of EU and international trade rules applied by each state’s individual customs administration. While duties are harmonised at the union level within the EU, VAT and excise remain national prerogatives.
The EU has an ambitious customs strategy to establish a single trade window and further harmonise customs law by creating an EU Customs Authority. Currently, each of the 27 states maintains their own customs authority with an individual IT customs system.
The Directorate General for Taxation and Customs (DG TAXUD) of the European Commission manages and oversees the Customs Union, formulating common strategies, rules, and procedures in the EU.
The European Anti-Fraud Office (OLAF) is mandated to detect and investigate fraud impacting EU finances, with many investigations initiated by OLAF leading to the recovery of uncollected funds from member states to the EU.
Before the UK’s exit from the European Union, UK customs brokers were governed by the Union Customs Code, which has since been replaced by the Cross Border Customs Act. The roles and functions of customs brokers in the UK remain relatively unchanged but are now governed by UK law.
Customs representation is not a licensable activity in either the EU or the UK, but there is ongoing consultation in the UK regarding a voluntary code for customs brokers.
According to the European Union Customs Code, a customs representative is a person appointed by another to fulfil the formalities required by customs regulation. Representatives can be either direct or indirect, impacting the level of responsibility and liability assumed by the broker.
Customs brokers intending to operate in the EU must be established within the European Union. This stipulation enables them to act as indirect representatives for entities active but not established in the European Union, imposing a substantial degree of responsibility and risk on customs brokers.
Role and Responsibilities
Customs brokers help in identifying applicable commodity codes, explaining customs valuation, and the rules of origin. They liaise with customs authorities to address any enquiries and can be held liable for customs debt in specific circumstances, highlighting the need for accurate instructions and broker diligence.
In the EU, customs decisions are issued by national authorities. These authorities can render rulings to ascertain tariff classifications, the origin of goods, or the valuation of goods at the behest of traders.
Within the Customs Authority: Initially, traders have the right to seek a review or reconsideration of a decision made by customs officials within the customs authority itself.
National Courts: Should traders remain dissatisfied post administrative review, they may appeal to the national courts of the respective member state for a judicial examination of the decision.
Court of Justice of the European Union (CJEU): In cases involving interpretations of EU law, escalating the matter to the CJEU may be viable, either through a direct action or via a referral from a national court, ensuring uniform application of EU law across member states.
European Ombudsman: Beyond formal legal processes, aggrieved traders can lodge a complaint with the European Ombudsman if they perceive maladministration in the handling of their case by an EU institution or body.
For example, a trader in Germany contesting a customs classification decision may seek a review within the German Customs Authority initially, appeal to the German Finance Court if unsatisfied, and potentially refer the case to the CJEU if it pertains to questions of EU law.
Customs brokers in the EU may participate in the Authorised Economic Operator programme instituted by the Union Customs Code. Participants enjoy privileges such as reduced controls, advanced notifications for physical controls, and the ability to request a specific control location. The EU maintains mutual recognition agreements regarding AEOs with several countries, including Andorra, China, Japan, Norway, Switzerland, US and UK.
Challenges and Opportunities
Customs brokers in the EU confront a myriad of challenges, including complex trade sanctions, numerous free trade agreements, and new sustainability and anti-slavery legislations. Effective from 1st of October 2023 EU Carbon Border Adjustment Mechanism (CBAM) coming into force.
Despite these hurdles, the EU market enjoys the support of a diverse network of qualified customs brokers, who resolve challenges associated with the international movement of goods daily.
To get customs clearance processes and customs brokers compliant with EU cross-border regulation and supply chain requirements please join our customs compliance and trade compliance management programme.