The EU aims to comprehensively reform the customs union to reduce cumbersome customs procedures. However, not everyone is enthusiastic. The German Freight Forwarding and Logistics Association (DSLV) sees significant disadvantages for freight forwarders.
In March, the European Parliament adopted the draft reform of the EU Customs Union, aiming to simplify and streamline customs procedures. This reform is driven by the immense pressure on EU customs authorities due to the sharp increase in trade volume.
The core of the new system will be an EU customs data platform, monitored by a newly created EU customs authority. The platform is intended to gradually replace the existing IT infrastructure of customs authorities in EU member states. From this, the EU expects better risk assessment, more effective customs controls, as well as annual savings of up to 2 billion euros in operating costs.
Companies that import goods into the EU will enter all the information about their products and supply chains into the new EU customs data platform. This means they only need to communicate via a single portal and can transmit data for multiple shipments once.
Another element of the reform is the introduction of the Trust & Check merchant status. In certain cases where their business processes and supply chains are completely transparent, particularly trustworthy traders can place their goods on the market in the EU without active intervention by customs authorities.
The data platform is expected to be available voluntarily for e-commerce shipments from 2028 and for all other importers from 2032. “Trust & Check” traders will be allowed to process imports with the customs authorities of the member state in which they are established, regardless of where the goods arrive in the EU.
Later, in 2035, the EU plans to examine whether this possibility can be extended to all economic operators. Then, from 2038, the platform will be mandatory for everyone.
A key difference from the current customs system is that responsibility previously rested with individual consumers and carriers. In the future, customs duties and VAT will be paid at the time of purchase, so consumers are not surprised by hidden fees or unexpected formalities when the shipment arrives.
The EU is also addressing the fact that up to 65 percent of goods are currently declared with a value that is too low to avoid customs duties. For this reason, the threshold for duty exemption for goods under 150 euros will be lifted in the future.
Forwarding Companies Face Additional Burdens
The German Freight Forwarding and Logistics Association (DSLV) has analysed the EU Commission’s proposal for a reform of the EU Customs Union regarding the effects on freight forwarders and logistics service providers. They published their findings in a report a few weeks ago that identified significant disadvantages.
As part of the reform, importers and exporters will assume responsibility for tax and non-fiscal compliance regulations under the “everything from a single source” principle. However, if these companies are not based in the EU, freight forwarders and logistics service providers must act as indirect representatives, thus being considered importers or exporters.
Verified trusted economic operator (T&C) status will generally only be available to importers and exporters. Logistics companies can only obtain this status as indirect representatives, while direct customs representatives can only benefit from T&C status if their customer is also T&C certified. This will significantly impact small and medium-sized enterprises (SMEs) that are not T&C certified.
“The incomprehensible abolition of the Authorized Economic Operator for Customs Simplifications (AEOC) and the transition to the T&C regime follows an ‘all or nothing’ approach: companies that are not T&C certified are hardly granted any advantages. This will particularly negatively impact freight forwarders, logistics service providers, and SMEs,” states the DSLV.
To illustrate the problem, the association cites a special report from the European Court of Auditors (13/2023: Authorized Economic Operators) and estimates that in 2022, 18,210 companies across the EU had certification as Authorized Economic Operators. Of these, 74 percent were involved in total EU imports and 83 percent in total EU exports. As many as 80 percent of the approved economic operators were freight forwarding and logistics companies, 97 percent of which handled customs clearance directly, with only 3 percent in indirect representation.
According to the DSLV, the consequences of abolishing the AEO regime and replacing it with “Trust & Check” status (T&C) are clear: companies that do not qualify for this status will be severely disadvantaged. This could be particularly difficult for freight forwarders and logistics service providers who have previously benefited from the AEO regime as direct customs representatives.
The DSLV also finds the proposal to classify trading platforms as fictitious importers problematic. In the case of trading platforms without an EU branch, liability is transferred to freight forwarders and logistics service providers as indirect representatives.
“It seems downright absurd that freight forwarders and logistics service providers, who in most cases are SMEs themselves, should assume the non-fiscal risk and liability for third-country eCommerce platforms, some of which are worth billions, just because they do not have a branch in the EU,” the association alarmed in the statement.
If the proposals for reforming the EU Customs Union are not revised, the DSLV sees the reform as a threat to the competitiveness of SMEs and freight forwarders.
