News from customs and foreign trade

Software and customs clearance? A colleague from my network asked me the following question, which I would like to address: "Is there anything that needs to be considered when software (especially without hardware) is delivered abroad? This question is interesting from two points of view: From a customs perspective, software does not constitute goods. No customs declaration is therefore required for the import and export of software, provided it is sent via the internet, cloud, download, etc. However, if the import/export takes place on hardware (DVD, EProm, control unit, laptop, etc.), a customs declaration is required for the hardware. It should be noted that the value of the software must be added to the value of the hardware. From an export control perspective, software is a technology whose export may well be subject to authorisation if the software is to be considered dual-use goods or is otherwise subject to country-specific sanctions. Caution is therefore advised here! So you can see that the topic of software is definitely relevant in the context of customs and foreign trade. Have you ever been in a similar situation? You are also welcome to write me a message.

What options are there for AEOs to reduce the securities for customs procedures? I recently received this question from my network. A basic distinction must be made between two types of collateral: 1️⃣ Collateral for customs debts already incurred A classic example of this is the current deferment of payment. The customs debt is already incurred on the day of import, but as the import duties are not paid until the following month, security must be provided for the deferred payment 2️⃣ Collateral for customs debts that may arise This form of security is usually known from the transit procedure, the customs warehouse or other special procedures. As long as the goods are in the respective customs procedure, no customs debt has yet been incurred; it could possibly arise, e.g. through the release for free circulation or through an offence such as a withdrawal from customs supervision. Why is this distinction important when we talk about reduction? An AEO can be completely exempted from providing a security for any customs debts that may arise (reduction to 0% of the reference amount). However, this is not provided for in the case of security for customs debts already incurred. This can be reduced to a maximum of 30 % of the reference amount. For this reason, it is important to differentiate between these two types! Two/three stages are provided for the reduction/exemption of the security deposit: 1️⃣ Reduction to 50 % of the reference amount2️⃣ Reduction to 30 % of the reference yield3️⃣Für Any customs debts that may arise: Exemption from the provision of security The extent of the reduction depends on the conditions that the economic operator fulfils (see Art. 84 UCC-DA) An AEO fulfils the requirements for exemption or reduction to 30%. In practice, however, customs authorities often only grant the exemption in stages, e.g. reduction to 50 % after one year, further reduction after 3 years, exemption after 5 years. In my opinion, however, there is no legal basis for this step-by-step procedure! If the economic operator has an AEO certificate and sufficient liquidity, the conditions for immediate exemption are met. What is your experience regarding the granting of the reduction/exemption? I look forward to your comments!

It's time to answer another question from my network: "Why can't I just select the "cheaper" customs tariff number and what exactly is binding tariff information (BTI)?" Each product can be assigned a customs tariff number. This harmonised (classification) system of the WCO - the World Customs Organisation - is used to determine the correct import duty rates and other measures such as import restrictions. It is precisely for these reasons that I cannot simply choose the "more favourable" tariff number, as this could result in import duties being withdrawn or other measures being circumvented. For the correct classification in the customs tariff, some basic rules have therefore been laid down, the so-called "general rules" numbers 1 to 6. The application of these rules is intended to rule out the possibility of there being several or different tariff numbers for one and the same product. If there are any doubts or uncertainties about the correct classification, you can apply to the customs authorities for binding tariff information. This officially determines which tariff number applies to the goods in question. It is generally valid for three years and, once issued, is binding for both parties, i.e. the economic operator and the customs authorities throughout the Union. In practice, however, some classification decisions are not always comprehensible and sometimes very surprising. I look forward to hearing about your experiences and examples. Feel free to write me a comment!

The coronavirus pandemic and the war in Ukraine have led to a massive increase in freight costs for all types of transport. As freight costs are part of the customs value, this also leads to an increased tax burden when importing goods. Many companies do not realise that there are design options here. I would like to discuss these today: The transport costs incurred in the third country must be added to the customs value. In the case of sea freight, these are the costs up to the first port of call in the EU.It is now often customary to add the total sea freight costs, e.g. from India to the port of Hamburg, as these can easily be taken from the freight invoice or the B/L. However, if you take a closer look, you realise that many ships head for a port in Greece, for example, as their first port of call in the EU. If you now look at the distances, the sea route India ➞ Hamburg is around 7,000 nautical miles. The distance to the first port in the EU, in our example India ➞ Greece, is around 3,500 nautical miles. As a result, the customs duties that apply to the freight costs can be reduced by 50 per cent thanks to this option, as only half of the freight costs have to be added. In the past, freight costs may not have had a significant impact on customs duties. However, due to the significant increase in freight costs, this structuring option takes on a completely different significance. How are the increased freight costs impacting your business and are you already utilising this option? I look forward to your comments!

In the current Atlas-Info 0352/22 (see link below), the customs administration points out that a large number of export customs declarations are cancelled because the follow-up procedure known as follow-up is not used by the exporter/declarant or their representative. This can lead to negative consequences for the declarant/exporter in many respects. The so-called exit note of a duly completed export procedure serves as proof of a tax-free export delivery under VAT law. If this proof is missing, VAT is incurred for this delivery. If everything goes smoothly, the export declaration is completed electronically at the customs office of exit and the declarant automatically receives the electronic exit endorsement. If this electronic completion is not successful, the follow-up procedure is initiated. In my newsletter of 23 February, I go into detail about the follow-up procedure. You can find the link to the newsletter here: https://lnkd.in/ei2FDA9E How do you ensure that the export procedure is completed retrospectively? What is the rate of transactions that are not completed automatically? Link to the Atlas-Info 0352/22: https://www.zoll.de/SharedDocs/Downloads/DE/Links-fuer-Inhaltseiten/Fachthemen/Zoelle/Atlas/2022/info_0352_22.pdf?__blob=publicationFile&v=3]

In this post I would like to give you more information on the new requirements of air freight forwarders and express courier services regarding the transmission of the 6-digit HS code and the EORI number of the consignee. The background to this requirement is the Import Control System 2 (ICS2) created by the EU, which comes into force in various stages. An Entry Summary Declaration (ENS) must already be submitted for every import consignment destined for the EU. In Germany, this is also known as the ESumA (entry summary declaration). From 1 March 2023, the extended ICS2 data ring for the ENS/ESumA must be used for air freight consignments, which now also includes the 6-digit HS code and the EORI number of the consignee. Some carriers are therefore already asking companies to submit this data. Who has to provide the data The ENS/ESumA must be submitted by the carrier, i.e. the air carrier/air freight forwarder. However, the carrier is dependent on the data of the consignor or consignee for certain information. While the 6-digit HS code could generally also be provided by the sender, the recipient's EORI number can of course only be transmitted by the recipient. I consider the requirement for the EORI in the ENS/ESumA to be problematic. Many importers do not hand over their EORI to the freight forwarders, as this information can be used to submit an import customs declaration without a power of attorney having been issued. This has already led to problems for all parties involved on several occasions in the past. In my opinion, the customs administration is required to map the issuing of a power of attorney electronically in order to better prevent misuse. If the administration requests certain sensitive data from an economic operator, it is also responsible for ensuring that it cannot be misused.

The EU Commission has updated its FAQs regarding sanctions against Russia. The document was published on 13.07.2022. As always, you can find the link to the document here. The Commission would like to point out that this document does not constitute a legal act. It is intended as a tool to help national authorities and EU economic operators to apply the regulations correctly. The new questions that have been included in the document can be found at the very end. What is your experience of dealing with the national authorities? Are there any procedures in your area that differ from the Commission's FAQs? I look forward to your comments! Link: https://ec.europa.eu/info/sites/default/files/business_economy_euro/banking_and_finance/documents/faqs-sanctions-russia-consolidated_en.pdf

Dear customs community, As I have received a lot of follow-up questions after my post on ICS2 here on LinkedIn, I would like to dedicate this newsletter to ICS2 once again and provide you with some more background information. In this article, I would primarily like to discuss how the ICS2 initiative will affect both logistics companies and importers, what deadlines need to be observed for implementation and what data/information will need to be provided in the future. Above all, however, I would like to provide specific answers to the questions I have been asked: What is the purpose of the EU Commission's ICS2 initiative? ICS2 was developed to more reliably protect the European single market and its citizens from threats, while facilitating "legitimate trade". As is well known, ICS2 is a new IT system whose functionality is essentially based on analysing security-relevant data at the earliest possible stage to enable the customs authorities to intervene at the right time and in the right place. The modern architecture should also help to facilitate the exchange of information between economic operators and EU customs authorities. The introduction of ICS2 will be completed in three phases. What changes do we need to be prepared for? What deadlines need to be observed? Each phase of ICS2 affects different economic operators and modes of transport, with the first phase having already entered into force on 1 March 2021. Economic operators must declare their goods to ICS2 depending on the type of services they provide. The first phase concerns express and postal services in air transport (before loading) and came into force on 15 March 2021. The second phase affects all air freight as well as express and postal services (in full) and comes into force on 1 March 2023. Phase 3 will come into force on 1 March 2024 and will then also affect the sea route as well as road and rail. For many companies, especially importers, this phase has passed by almost silently. Why is that? The main reasons for this are likely to be as follows: Firstly, the first phase only implemented measures relating to the period before loading. Controls or other measures are therefore generally still implemented in the third country. As a rule, the importer will not be aware of this. Phase 1 also initially affects express and postal services - in other words, from the importer's perspective, external service providers who handle the registration. As there are also no interfaces to national systems such as the ATLAS IT procedure (e.g. no registration as a preliminary document), there are no points of contact here either. The two pieces of information in particular, the consignee's EORI number and HS code, are not usually available to the carrier. How can it be ensured in practice that the information is available at the right time so that there are no delays in the supply chain? In fact, the required data elements themselves have not changed much. What is new, however, is the time sequence and the relevant requirements. After all, with ICS2, certain data must be available before loading and transmitted in corresponding declarations. This is precisely where the additional complexity comes from. Smooth and delay-free processing will therefore require efficient processes more than ever. For some companies, the key could also lie in what is known as "multiple filing". Different parties in the supply chain can complete the application, but must of course reference each other seamlessly. As a general rule, of course, the EORI number can usually only be provided by the consignee. However, the 6-digit HS code should also regularly be provided by the exporter. After all, the exporter knows the technical specifications of the goods best. Who is legally responsible for the accuracy of the data? The person who submits the application is initially responsible - but in fact anyone else who has provided information is also responsible. What measures should our readers take to ensure that the introduction of ICS2 goes smoothly? Firstly, it is necessary to build up the necessary expertise about ICS2 and to fully understand the relevant requirements and innovations. Furthermore, IT systems and processes should be reviewed with regard to the new requirements and adapted if necessary. It will also be essential to check the interfaces to the relevant other parties in the supply chain and, if necessary, to set up the additional exchange of information. Dear readers, have you already prepared for the introduction of ICS2? How are you dealing with the challenges? I look forward to your comments and a constructive dialogue with you!

A member of my network has asked me to explain the advantages of the simplified customs declaration. I would like to answer this question today as best I can in a short post like this. ✅ A standard customs declaration must contain all the data and information required for placing the goods under the relevant customs procedure. In addition, all documents must also be submitted at the time the goods are presented. There are essentially two types of information and documents: 1️⃣ Concerning the nature of the goods -> Keyword: Prohibitions and restrictions on imports 2️⃣ required for the calculation of import duties -> Keyword: Duty collection The simplified customs declaration now divides the customs declaration into precisely these two sections, so to speak. The information relating to the goods is required in the initial declaration, which is submitted with the presentation of the goods. Documents that also relate to the characteristics of the goods (e.g. phytosanitary certificate) or that are required for a customs inspection must also be submitted at this time. However, details and documents relating to the collection of import duties, such as the commercial invoice, proof of preference, etc., can be submitted at a later date (usually 10 days) in the so-called supplementary customs declaration (SCD). If these documents and information are regularly not available at the time of import, delays in customs clearance can be avoided by using this simplification. If you make a large number of imports, the ECC can also be summarised, for example for all imports made within a calendar month. This means that even longer deadlines can be used and all import duties for a month can be summarised in a single payment. This optimises internal processes and reduces costs. Do you already use the simplified customs declaration? I look forward to your comments!

Attention - limited places - First Come - First Serve! Dear customs experts,As announced in our live interview "DDP - a delivery condition with pitfalls!", the two experts Matthias Kern and Jan Olaf Leisner are still available to support us in the correct handling of this complex delivery condition in terms of customs and tax law. The speakers will be available to answer your questions in a 90-minute webinar on three dates. You can register for your preferred date via the following link.https://www.pasani-academy.de/zoll-kurse/logistik-webinar-ddp-sendungen/ But don't wait too long, the number of participants is limited! I look forward to your participation! Yours, Patrick Nieveler