The filing of electronic customs declarations will no longer be an option, but an obligation

Indirect Tax Alert, June 2016, Issue 3

New customs regulations in force from 1 May 2016

As of 1 May 2016, a new Union Customs Code (UCC)* came into force.

The basic principles of customs procedures remain unaffected by the new customs legislation, i.e. goods imported from non-EU countries and exported back to these countries are still subject to customs clearance. However, there are several changes, some of which are fundamental, related to new benefits and the tightening of certain rules.

The primary change consists of the obligation to use the paperless customs environment. In practice, this means the complete electronization of customs clearance. The filing of electronic customs declarations under the new legislation will no longer be an option, but an obligation.

Customs procedures rules have been unified and harmonized. The Union Customs Code repeals some procedures (customs warehousing - type D, inward processing regime - drawback system, processing under customs control, free zone type II). The Union Customs Code now distinguishes four separate procedures - transit, storage, specific use and processing. For the inward processing regime, compensatory interest and the obligation to re-export goods were cancelled, so this customs procedure will become available to more applicants than before.

The concept of the Authorised Economic Operator (AEO) has become more significant. What were previously formal advantages, now become benefits for AEO holders, which should significantly simplify cross-border trade. For example, AEO holders will benefit from institutes such as self-assessment, international centralized customs clearance and the waiver of the obligation to present goods when entering evidence of a declarant, which will only be available to AEO holders. There are new rules for the certification of applicants for AEO, which will now include a review of tax and criminal integrity and professional competence. Certification will become more difficult, but the AEO benefits will be more significant. Currently valid AEO certificates must be revised and harmonised with the new rules by 1 May 2019.

As regards customs valuation, the current “first sale principle” will be replaced by a new rule of a “last sale”. The conditions have also been changed for calculating the customs value for royalties. Although it will be possible to use the “first sale principle” in a transitional period, provided there is a binding contract containing a reference to this principle concluded before 18 January 2016, it is important to review the calculation of the customs value and harmonise it with the new rules. Otherwise, there is a risk of penalties for the incorrect application of customs legislation related to the assessment of the customs debt, which is one of the most common violations.

With regard to the new, stricter penalties and interest rates for the re-assessment of inaccurate customs debts, the timely and detailed revision of customs procedures following the new customs legislation is the only option to prevent undesired penalties and possible administrative or criminal proceedings.

If you would like to review your compliance processes with regard to the new customs legislation, or you want to be certain you are benefiting from all customs simplifications, please contact Zuzana Šátková. 

Amendment to the VAT Act

In compliance with the above-stated amendment to EU customs legislation, several laws including the Slovak VAT Act (“the VAT Act”) were legislatively and technically amended with effect from 1 May 2016. The changes primarily affect the definition of tax liability in respect of the import of goods and reflect changes in terminology in the context of a new definition of customs processes, regrouping of customs procedures and updating references to the articles of the new EU regulation establishing the Union Customs Code.

* Established by Regulation (EU) no. 952/2013 of the European Parliament and of the Council of 9 October 2013. Previously applied customs legislation, the Community Customs Code established by Council Regulation (EEC) No. 2913/92 of 12 October 1992 and some related legislation were abolished as of 1 May 2016. The detailed rules for implementing certain provisions of the Union Customs Code are laid down in Commission Delegated Regulation (EU) 2015/2446 of 28 July 2015, Commission Implementing Regulation (EU) 2015/2447 of 24 November 2015. Transitional rules for certain provisions of the Union Customs Code where the relevant electronic systems are not yet operational are laid down in Commission Delegated Regulation (EU) 2016/341 of 17 December 2015.