The European Commission discusses a reform to its customs system

May 22, 2023 by
Frank Calviño

The European Commission considers it time to reform its customs system, set up 55 years ago when e-commerce still needed to be fully developed or relatively almost nonexistent and was more of a futuristic idea. 

Aware of the current challenges, the EU seeks to implement new regulations to ensure compliance with EU health and environmental standards, preventing consumers from buying products that do not comply.

In addition, it is proposed to approve the payment of duties on shipments of less than 150 euros, which would strengthen the collection of public revenues and contribute to the public coffers. This measure also seeks to close a loophole in which customs fraud has occurred since, until now, duties were not required to be paid on shipments of lower value.

The proposed measures are based on a report submitted thirteen months ago by a committee of international trade experts. Adopting some of the proposed measures will reduce cumbersome customs procedures, replacing traditional declarations with a smarter, data-driven approach to import monitoring. At the same time, customs authorities will have the tools and resources to properly assess and stop imports that pose real risks to the EU, its citizens, and its economy.

Shipments under 150 euros will now pay tariffs

The central pillar of this new reform is the collection of customs duties - tariffs - on shipments under 150 euros. This will prevent fraudsters from taking advantage of these goods since "up to 65% of these packages entering the EU are undervalued to avoid import customs duties". 

In addition, platforms will have a very relevant role because "they will be responsible for ensuring that customs duties and VAT are paid at the time of purchase, so consumers will no longer have to face hidden charges or unexpected paperwork when the package arrives." 

The second pillar of this reform relates to data control. Companies wishing to bring goods into the EU can register all information about their products and supply chains in the new EU Customs Data Center. 

It will collect data provided by companies and, through machine learning, artificial intelligence, and human intervention, will provide authorities with a 360-degree overview of supply chains and the movement of goods. When the 'Trust and Check' seal is achieved, they can sometimes release their goods into circulation in the EU without any active customs intervention.

Collective customs are the goal of the European Commission

The third pillar is cooperation between countries. With the new system, all member states will have access to real-time data and will be able to pool information to respond to risks more quickly, consistently, and effectively. It will also help ensure the proper collection of duties and taxes to the benefit of national and EU budgets.

The implementation of the reform will be gradual. The e-commerce sector data center will start operating in 2028 with information concerning purchases and sales through digital channels. In parallel, the EU Customs Authority will be created, which will be decentralized and draw on the resources of the Member States. However, the implementation process will last until January 1, 2038, as all sectors will be progressively added.

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