International trade is of crucial importance to the world economy. Producers, businesses, consumers and governments worldwide are dependent on the smooth running of international supply chains. In 2021 alone, the European Union (EU), a major player in international trade, has seen a substantial increase of 18.4% in extra-EU imports and 13.9% in exports.[1] With each import, the Customs Authorities of all the EU Member States are bound by EU legislation to check whether the goods are compliant with EU legislation:
“It is the role of customs to check if goods entering or leaving the EU comply with all these rules, which cover a great variety of policy areas ranging from product safety, health rules, animal welfare and environmental requirements to waste shipments.”[2]
In addition to ensuring that the goods comply with a myriad of requirements, Customs Authorities, which form part of the national Departments of Finance, must ensure that import and other taxes are levied, as found under article 201(2) of the Union Customs Code (UCC):
“(a) the collection of any import duty due;
(b) the collection, as appropriate, of other charges, as provided for under relevant provisions in force relating to the collection of those charges;
(c) the application of commercial policy measures and prohibitions and restrictions insofar as they do not have to be applied at an earlier stage; and
(d) completion of the other formalities laid down in respect of the import of the goods.” [3]
Compliance with these verifications and other import procedures takes time and can pose various obstacles for each participant in the supply chain. Consequently, an increasing number of companies use the simplified customs clearance processes, which are granted after obtaining customs permits.[4]
The EU provides for several customs permits to facilitate businesses by reducing customs formalities and controls before goods are released.[5] These range from permits in relation to administrative simplifications[6] to authorised weighers of bananas.[7] However, one of the most beneficial permits to obtain is the so-called Authorised Economic Operator (AEO) permit, which makes the particular business a ‘privileged user of simplified customs procedures’.[8] The AEO permit is an increasingly popular permit within the EU, with more than 27.000 applications issued since its introduction in 2008 and over 4.000 authorisations issued in 2021.[9]
Once this status is obtained, the business, in addition to being eligible for utilising simplified procedures, has the right to not be subjected to checks of elements part of the AEO permit.[10] Before the AEO permit is granted, the business has to undergo a rigid and in-depth compliance check on a wide array of aspects such as: business critical systems, financial solvency, operational processes, supplier and cooperation partners, employees, management and safety and security.[11] Once granted, the AEO permit holder must only monitor and prove its internal control measures as well as report any significant internal changes to the Customs Authorities.[12] Considering the indefinite validity and scarce re-evaluations, this is a small price to pay. [13]
The AEO permit, in addition to the limited business controls, has other benefits in relation to the supply chain. These include: easier access to (other) customs simplifications, fewer controls, prior notifications when goods are subjected to physical or customs controls and mutual recognition with countries outside the EU.[14] Mutual recognition, in particular, provides for unprecedented benefits in the rapidly developing world of international trade and customs.
AEO permit holders have been granted great advantages in the new and upcoming Brexit regulations, as well as in the upcoming changes in the Customs Systems of the Dutch governmental authorities of 2023. These developments and the respective benefits for AEO holders shall be elaborated on below.
The Brexit
Brexit has resulted in considerable tightening of customs requirements which are being implemented in so-called phases.[15] Since the 1st of January this year, the UK has put in place stricter customs controls and a requirement for mandatory pre-notifications concerning agricultural and food products.[16] In the upcoming ‘phases’ the UK shall put in place physical controls and other certifications for goods imported into the UK.[17] These measures would have been implemented earlier, however, they have been delayed for “businesses to focus on their recovery from the pandemic rather than have to deal with new requirements at the border”.[18]
Due to mutual recognition, the AEO permit holders are authorised to (keep on making) use of deferment accounts, which allow for the monthly payment of duties, making the import process considerably quicker.[19] AEO permit holders are allowed to defer customs duties, import VAT and other excise duties up to an amount of £10.000 a month, without providing a guarantee.[20] Other than making the import processes faster, it significantly reduces administrative and other procedural burdens for the businesses in the international supply chain.[21] In light of the upcoming physical controls and requirements of safety, standards and other certifications, the AEO permit provides for a reputable quality mark for the pre-checked and trusted businesses.[22]
The new Dutch customs system
Currently, an approximate 50% of the incoming customs declarations within the EU take place in the Netherlands, 95% of which are made in accordance with the written and periodic declarations.[23] This means that customs declarations can be ‘bundled’ into a monthly overview and declared at once.[24]
As of now, this simplification provided by the Dutch customs authorities along with its respective system, is found to be unfulfilling of the requirements as laid down by European law. The UCC and Regulation 2015/2446(EU) state that all declarations to the customs authorities must be exchanged electronically.[25] Furthermore, the presence and possibility for customs controls are lacking within this system.[26] It is for these reasons that the Dutch customs authorities have decided to implement a new customs system, which shall suspend the written and periodic declarations as of January 2023. This system is set to provide several changes for businesses making use of the written and periodic declarations.[27] This brings about a number of noteworthy changes with significant benefits for AEO holders in terms of customs enforcement.[28]
Specifically, the new customs system will require the live sharing of information by means of updated datasets in three different scenarios.[29] Consequently, the customs authorities are going to be updated in real time.[30] The datasets will be subjected to a risk assessment to determine what goods shall be selected for checks and additional customs controls by means of live updates of the customs authority.[31]
Apart from the risk assessment of the dataset, customs authorities will divide the businesses into two different categories: green and blue. The green category consists of businesses submitting complete datasets or businesses that are AEO certified. The permit holders will only be subjected to minimal checks in the logistical chain and occasional sample checks to determine the actuality of the declarations. The blue category consists of non-AEO certified companies and AEO certified companies not qualifying under the green category. Within this category, risk-based checks shall be performed. AEO certified businesses, however, shall be subjected to approximately 50% fewer controls than non-certified businesses.[32]
The preceding analysis illustrates that the AEO permit entails a thorough examination of a wide range of factors. Whereafter the permit is granted for an indefinite period of time and is recognized in a number of non-EU countries. The AEO permit has become increasingly valuable, particularly in light of recent changes in customs laws, such as Brexit and the recent changes of the legal framework in the Netherlands. The AEO permit provides significant benefits in the world of international trade and its changing nature: from the use of deferment accounts, reductions, and fewer checks to quality control, faster processes, and minimal supply chain disruptions. The advantages of the AEO permit are growing in relevance, and it remains yet to be seen how much more traction and importance the AEO permit will obtain in the rapidly changing world of customs and trade.
[1] European Commission Eurostat, ‘Euro area international trade in goods surplus €36 bn ‘ (Eurostat, 16 December 2021) <https://ec.europa.eu/eurostat/web/products-euro-indicators/-/6-16122021-ap> accessed 17 January 2022.
[2] European Commission, ‘The Role of Customs’ (European Commission) <https://ec.europa.eu/taxation_customs/role-customs-0_en> accessed 17 January 2022.
[3] Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down the Union Customs Code [2013] OJ 2 269/1, article 201 (2).
[4] Ministry of Finance Customs administration of The Netherlands, ‘Overview of customs authorisations ‘ (Customs Administration of the Netherlands) <https://www.belastingdienst.nl/wps/wcm/connect/bldcontenten/belastingdienst/customs/authorisations/customs-authorisations/overview-of-customs-authorisations/overview-customs-authorisations> accessed 17 January 2022.
[5] European Court of Auditors, ‘Are Simplified Customs Procedures For Imports Effectively Controlled?’ [2010] Special Report No 1 // 2010 <https://www.eca.europa.eu/Lists/ECADocuments/SR10_01/SR10_01_EN.PDF> accessed 17 January 2022
[6] Ministry of Finance (n 4).
[7] ibid.
[8] European Court of Auditors (n 5), p.8.
[9] European Commission, ‘Authorised Economic Operator (AEO)’ (Taxation and Customs Union, 2021) <https://ec.europa.eu/taxation_customs/authorised-economic-operator-aeo_nl> accessed 17 January 2022.
[10] Deloitte, ‘AEO Scan – Insight in your AEO status’ (Deloitte) <https://www2.deloitte.com/nl/nl/pages/tax/solutions/aeo-digiscan-indirect-tax.html#> accessed 17 January 2022.
[11] Belastingdienst, ‘Vragenlijst en toelichting voor de AEO-zelfbeoordeling (SAQ)’ (Belastingdienst) <https://www.belastingdienst.nl/wps/wcm/connect/bldcontentnl/themaoverstijgend/programmas_en_formulieren/vragenlijst-toelichting-aeo-zelfbeoordeling-saq> accessed 17 January 2022.
[12] Customs Administration of the Netherlands Customs administration of the Netherland, ‘Maintaining your AEO status’ (Customs Administration of the Netherland, Customs Administration of the Netherland) <https://www.belastingdienst.nl/wps/wcm/connect/bldcontenten/belastingdienst/customs/aeo/authorised_economic_operator_aeo/maintaining-your-aeo-status/> accessed 17 January 2022.
[13] Consolidated text: Commission Delegated Regulation (EU) 2015/2446 of 28 July 2015 supplementing Regulation (EU) No 952/2013 of the European Parliament and of the Council as regards detailed rules concerning certain provisions of the Union Customs Code (1) [2015] OJ 2 343/1, article 15.
[14] European Commission (n 9).
[15] Get ready for Brexit, ‘Aan de Britse grens’ (Get Ready for Brexit, 05 January 2022) <https://www.getreadyforbrexit.eu/at-the-uk-border/> accessed 17 January 2022; Cabinet Office and the Rt Hon Lord Frost CMG, ‘Government sets out pragmatic new timetable for introducing border controls’ (GOVUK, 14 September 2021) <https://www.gov.uk/government/news/government-sets-out-pragmatic-new-timetable-for-introducing-border-controls> accessed 17 January 2022.
[16] Cabinet office, ‘Policy paper The Border Operating Model’ (GOV.UK, 16 December 2021) <https://www.gov.uk/government/publications/the-border-operating-model> accessed 17 January 2022; Ministerie van Financiën, Ministerie van Financiën , ‘Brexit: hoe zit het met de douaneregels in het VK?’ (Ministerie van Financiën – Ministerie van Financiën) <https://www.belastingdienst.nl/wps/wcm/connect/nl/brexit-douane/content/brexit-hoe-zit-het-met-de-douaneregels-in-het-vk> accessed 17 January 2022.
[17]Get ready for Brexit (n 15);; Cabinet Office (n 16); Nederlandse voedsel- en warenautoriteit, ‘Exporteren dierlijke producten naar Verenigd Koninkrijk vanaf 1 januari 2022’ (Nederlandse Voedsel- en Warenautoriteit – Ministerie van Landbouw, Natuur en Voedselkwaliteit) <https://www.nvwa.nl/onderwerpen/brexit/exporteren-dieren-en-dierlijke-producten-naar-verenigd-koninkrijk-na-brexit> accessed 17 January 2022.
[18] Lord Frost, Minister of State at the Cabinet Office ‘Press release Government sets out pragmatic new timetable for introducing border controls’ (GOVUK, 14 September 2021) <https://www.gov.uk/government/news/government-sets-out-pragmatic-new-timetable-for-introducing-border-controls> accessed 17 January 2022.
[19] Hm revenue & customs, ‘Guidance Check which type of account to apply for to defer duty payments when you import goods or release goods from an excise warehouse’ (GOVUK, 18 March 2021) <https://www.gov.uk/guidance/check-which-type-of-account-to-apply-for-to-defer-duty-payments-when-you-import-goods> accessed 17 January 2022.
[20]Cabinet Office (n 16).
[21] ibid.
[22] ibid.
[23] Douane – ministerie van financiën, ‘Hoe gaan GPA- en SPA-bedrijven straks aangifte doen?’ (Douane – Ministerie van Financiën, 2021) <https://douane-inzicht.nl/article/328904538> accessed 17 January 2022.
[24] Stratech, ‘GPA – Geautomatiseerde Periodieke Aangifte’ (Stratech, 2022) <https://www.stratech.nl/logistiek-en-industrie/douanesoftware/maandaangifte-gpa/> accessed 17 January 2022.
[25] Commission Delegated Regulation (EU) 2015/2446 of 28 July 2015 supplementing Regulation (EU) No 952/2013 of the European Parliament and of the Council as regards detailed rules concerning certain provisions of the Union Customs Code, Annex B Regulation [2015] OJ 2 343/1.
[26] Stratech, ‘Van GPA en SPA naar DMS | Wat gaat er veranderen?’ (Stratech, 2022) <https://www.stratech.nl/logistiek-en-industrie/nieuws/van-gpa-en-spa-naar-dms-wat-gaat-er-veranderen.html> accessed 17 January 2022.
[27] Douane (n 23).
[28] Douane – ministerie van financiën, ‘Van AGS en G(S)PA naar DMS’ (Douane – Ministerie van Financiën) <https://www.belastingdienst.nl/wps/wcm/connect/bldcontentnl/belastingdienst/douane_voor_bedrijven/naslagwerken_en_overige_informatie/aangiftesysteem_ags/van-ags-en-gspa-naar-dms/van-ags-en-gspa-naar-dms> accessed 17 January 2022.
[29] Douane – belastingdienst, ‘Informatiedocument Aangifte Diensten IIAA’ (Douane – Belastingdienst) <https://download.belastingdienst.nl/douane/docs/infodoc-aangiftediensten-iiaa-do7301z1fd.pdf> accessed 17 January 2022.
[30] Douane (n 23).
[32] Douane – ministerie van financiën, ‘Van AGS en G(S)PA naar DMS’ (Douane – Ministerie van Financiën, 21 April 2021) <https://channel.royalcast.com/douanenl/#!/douanenl/20210421_1> accessed 17 January 2022.
[31] Douane (n 29).
Corax Foundation 