Customs Undervaluation Through the Prism of the Proposed Reform of the EU Customs Code

Fabry, Valérian

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Customs Undervaluation Through the Prism of the Proposed Reform of the EU Customs Code

Fabry, Valérian

2024 • In Global Trade and Customs Journal, 19 (6), p. 371-375

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Keywords :

douane; customs; undervaluation; customs law; droit douanier

Abstract :

[en] Customs undervaluation poses a persistent challenge within the European Union (EU), prompting actions at both EU and national levels. With customs duties being a key revenue source, the EU Commission has a vested interest in combatting undervaluation. Recent proposals to reform the Union Customs Code aim to address this issue, focusing on three main solutions. Firstly, the abolition of the €150 de minimis threshold aims to eliminate abuse of low-value consignments. Secondly, a simplified tariff and value treatment are proposed to streamline import formalities. Lastly, the creation of a European Union Customs Authority and an EU Customs Data Hub seeks to enhance risk analysis and coordination among Member States. However, the effectiveness of these solutions remains uncertain. The effect of abolishing the minimum threshold is doubtful. Similarly, the scope and cost of the proposed simplification may limit its impact. Nonetheless, the establishment of an EU Customs Authority and data hub represents a significant step forward. By facilitating data sharing and analysis, these initiatives have the potential to improve risk assessment and enforcement across the EU, aiding Member States in accurately levying customs duties.

Disciplines :

Tax law
European & international law

Author, co-author :

Fabry, Valérian ; Université de Liège - ULiège > Département de droit > Droit matériel européen

Language :

English

Title :

Customs Undervaluation Through the Prism of the Proposed Reform of the EU Customs Code

Publication date :

June 2024

Journal title :

Global Trade and Customs Journal

ISSN :

1569-755X

eISSN :

1875-6468

Publisher :

Kluwer Law International, Alphen aan den Rijn, Netherlands

Special issue title :

Special Issue: EU Customs Reform

Volume :

Issue :

Pages :

371-375

Peer reviewed :

Editorial Reviewed verified by ORBi

Funders :

F.R.S.-FNRS - Fonds de la Recherche Scientifique

Available on ORBi :

since 13 December 2024

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Bibliography

1 EUROPEAN COURT OF AUDITORS, Special Report N°19. Import Procedures: Shortcomings in the Legal Framework and an Ineffective Implementation Impact the Financial Interests of the EU 36 (2017), n°91; EUROPEAN COURT OF AUDITORS, Special Report N°12. E-commerce: Many of the Challenges of Collecting VAT and Customs Duties Remain to Be Resolved 29 (2019), n°82.
2 E.C.J., judgment of 8 Mar. 2022, Commission v. United Kingdom (Combating undervaluation fraud), C-213/19, EU:C:2022:167.
3 Corr. Liège, div. Liège (18e ch.), 20 Apr. 2023, unpublished, R.G. n°21L001656; Corr. Liège, div. Liège (18e ch.), 14 Sep. 2023, unpublished, R.G. n°22L003023.
4 Council Decision (EU, Euratom) 2020/2053 of 14 Dec. 2020 on the system of own resources of the European Union and repealing Decision 2014/335/EU, Euratom, OJ, L 424, 15 Dec. 2020, Art. 2, (1), littera a).
5 Ibid., Art. 9 (2).
6 E.C.J., supra n. 2.
7 The reasons for Member States to be released from the obligation to place at the disposal of the Commission the traditional own resources are in fact strictly defined in Council Regulation (EU, Euratom) N°609/2014 of 26 May 2014 on the methods and procedure for making available the traditional, VAT and GNI-based own resources and on the measures to meet cash requirements (Recast), OJ, L 168, 7 Jun. 2014, Art. 13. See below.
8 This proposal includes a package of legislative texts.
9 Council Regulation (EC) No 1186/2009 of 16 Nov. 2009 setting up a Community system of reliefs from customs duty, OJ, L 324, 10 Dec. 2019, Art. 23. As stipulated in Art. 24 of the same Regulation, alcoholic products, perfumes and toilet waters, and tobacco are not eligible for relief.
10 T. Matsudaira & M. Daly, Chapter 2. How Trade and Tax Policies Are Shaping Customs, in Customs Matters Strengthening Customs Administration in a Changing World 38 (A. Azael Pérez Azcárraga, T. Matsudaira, G. Montagnat-Rentier, J. Nagy & R. James Clark eds, International Monetary Fund, Washington DC 2022).
11 EUROPEAN COURT OF AUDITORS, supra n. 1, at 29, n° 82.
12 Council Directive (EU) 2017/2455 of 5 Dec. 2017 amending Directive 2006/112/EC and Directive 2009/132/EC as regards certain value added tax obligations for supplies of services and distance sales of goods, OJ, L 348, 29 Dec. 2017, Art. 3.
13 Proposal for a Council Regulation amending Regulation (EEC) No 2658/87 as regards the introduction of a simplified tariff treatment for the distance sales of goods and Regulation (EC) No 1186/2009 as regards the elimination of the customs duty relief threshold, COM (2023), 259 final, 17 May 2023, Art. 2. See M. L. Schippers, Proposals to Reform the EU Customs Union, EC Tax Rev., Vol. 32, 257 (2023), doi: 10.54648/ECTA2023031.
14 E. van Doomik, Is the EU Proposal for a Bucketing System; A Simplification or a Band-aid Solution?, Global Trade & Cust. J., Vol. 18, 434 (2023).
15 This theory is supported by the (criminological) theory of rational choice. See T. T. Newburn, Criminology, Willan publishing, Devon 580 (2007).
16 In fact, it seems quite logical that the suspicions of the customs authorities are directed more towards very low declared values than towards values declared close to the real value.
17 Provided that the declared value is below the de minimis threshold.
18 It is assumed that the risk analysis has not been modified.
19 On this simplification, see van Doomik, supra n. 14, at 431–436.
20 M. Lux, The Ambitious Customs Reform Package Proposed by the EU Commission, Global Trade & Cust. J., vol. 18, 415 (2023), doi:10.54648/GTCJ2023049.
21 Proposal for a Council Regulation, supra n. 13, Art. 1er.
22 Council Directive 2006/112/EC of 28 Nov. 2006 on the common system of value added tax, OJ, L 347, 11 Dec. 2006, Art. 14, (4).
23 New means of transport are defined in Art. 2(2) of Council Directive 2006/112/EC of 28 Nov. 2006 on the common system of value added tax, OJ, L 347, 11 Dec. 2006.
24 Proposal for a Council Regulation, supra n. 13, Art. 1er.
25 Commission staff working document impact assessment report [] accompanying the document Proposal for a Regulation of the European Parliament and of the Council establishing the Union Customs Code and the European Union Customs Authority, and repealing Regulation (EU) n°952/2013, SWD (2023), 140 final, 17 May 2023.
26 E. van Doomik, supra n. 14, at 433.
27 Regulation (EC) No 471/2009 of the European Parliament and of the Council of 6 May 2009 on Community statistics relating to external trade with non-member countries and repealing Council Regulation (EC) No 1172/95, OJ, L 152, 16 Jun. 2009.
28 Proposal for a Council Regulation, supra n. 13, Art. 1er. The optional nature is also confirmed by Art. 156(2) of the draft Union Customs Code, which refers to a choice by the importer to apply the simplified tariff treatment.
29 Annex to the Proposal for a Council Regulation, supra n. 13.
30 Proposal for a Regulation of the European Parliament and of the Council establishing the Union Customs Code and the European Union Customs Authority, and repealing Regulation (EU) N°952/2013, COM (2023), 258 final, 17 May 2023, Art. 156, (2). It should be noted that Schippers has reservations about the validity of this proposal in the light of Art. 8(2)(a) of the Valuation Agreement. (Schippers, supra n. 13, at 258).
31 See E. van Doomik, supra n. 14, at 431 à 436.
32 Proposal for a Regulation of the European Parliament and of the Council establishing the Union Customs Code and the European Union Customs Authority, and repealing Regulation (EU) N°952/2013, COM (2023), 258 final, 17 May 2023, Art. 80. See also Schippers, supra n. 13, at 257.
33 For an example, see E. van Doomik, supra n. 14, at 433.
34 Council Directive (EU), supra n. 12, Art. 86(1)er, a).
35 Explanatory Memorandum to the Proposal for a Regulation of the European Parliament and of the Council establishing the Union Customs Code and the European Union Customs Authority, and repealing Regulation (EU) N°952/2013, COM (2023), 258 final, 17 May 2023.
36 Missions, objectives and tasks to be performed by the EU Customs Authority are detailed in Ch. XII of the proposal.
37 M. L. Schippers, supra n. 13, at 256.
38 See E.C.J., supra n. 2.
39 Council Regulation (EU, Euratom), supra n. 7, Art. 13.
40 M. Schippers & W. de Wit, The Use of Statistical Values to Combat Undervaluation in the European Union, J. World Trade 253 (2023).
41 Explanatory Memorandum to the Proposal, supra n. 35.
42 Proposal for a Regulation of the European Parliament and of the Council establishing the Union Customs Code and the European Union Customs Authority, and repealing Regulation (EU) N°952/2013, COM (2023), 258 final, 17 May 2023., Art. 51, (5).
43 Proposal for a Regulation of the European Parliament and of the Council establishing the Union Customs Code and the European Union Customs Authority, and repealing Regulation (EU) N°952/2013, COM (2023), 258 final, 17 May 2023, COM (2023), 258 final, 17 May 2023, Art. 51, (6), (h). See Lux, supra n. 20, at 408.
44 Schippers & de Wit, supra n. 40, at 254.
45 E.C.J., judgment of 16 Jun. 2016, EURO 2004. Hungary Kft. v. Nemzeti Adó- és Vámhivatal Nyugat-dunántúli Regionális Vám- és Pénzügyőri Főigazgatósága, C-291/15, EU:C:2016:455; E.C.J., judgment of 20 Jun. 2019, «Oribalt Rīga» SIA v. Valsts ieņēmumu dienests, C-1/18, EU:C:2019:519; E.C.J., judgment of 9 Jun. 2022, «Baltic Master» UAB v. Muitinės departamentas prie Lietuvos Respublikos finansų ministerijos, C-599/20, EU:C:2022:457; E.C.J., judgement of 9 Jun. 2022, FAWKES Kft. v. Nemzeti Adó- és Vámhivatal Fellebbviteli Igazgatósága, C-187/21, EU:C:2022:458; E.C.J., supra n. 2.