What is the Union Customs Code (UCC) and how does it affect yachts?
The UCC is an update to customs legislation across the EU, and will introduce a number of revisions to existing requirements. The UCC was formalised with Regulation (EU) No 952/2013, and started to apply on 1 May 2016 when associated Delegated and Implementing Acts came into force.
A number of transitional phases are following until full implementation in 2020. These measures are captured in the Transitional Delegated Act (TDA). The main reason for the transitional measures is that the IT systems that need to support the UCC are not complete.
Whilst the UCC is a significant update, no dramatic changes should affect the way goods are entered into the EU and yachts operated within EU waters. Most of the changes are technical and affect mainly traders and agents in the background.
The significant changes include bringing the wider customs industry and administrations into the digital aera, and reviewing the certification of traders and approvals they may hold.
More specifically, the UCC:
- streamlines customs legislation and procedures across the EU;
- offers greater legal certainty and uniformity to businesses and increase clarity for customs officials;
- simplifies customs rules and procedures to make customs transactions more efficient and modern;
- completes the shift to a paperless and fully electronic and interoperable customs environment;
- introduces more speedy customs procedures for compliant and trustworthy businesses.
How yachting might be affected?
Temporary Admission / Declaration
No real change here.
Despite the initial texts issued, there is no need for non EU privately registered yachts to fill a formal application for authorisation or customs declaration to claim relief when entering / leaving the EU at the first port of call or departure to be placed under TA. The mere crossing of the frontier of the Customs territory of the EU would still be sufficient.
Entering the territorial waters (the 12-mile limit) of the first EU member state without making a customs declaration will be treated as:
- a declaration that the vessel which is imported is eligible for relief
- an application for TA authorisation
No further declaration will be required but owner must be able to provide details of when and where the vessel first arrived in the EU if asked.
Same prior or on departure.
Attached you will find the amendment to the Union Customs Code which removes the necessity to fill such a formal declaration.
Import / Export formalities
Import / Export formalities have been clarified:
Export / re import formalities will be required for non EU registered yachts applying the return good relief regime (VAT paid yachts and commercial yachts which have been imported and put into free circulation)
No specific export / re-import formalities will be required for EU registered yachts.
Customs procedures and Inward Processing Relief
One of the most significant areas of change under UCC is the treatment of customs procedures that allow traders to delay or defer payment of import duty and / or VAT when goods are imported under specific circumstances – currently known as Customs Procedures with Economic Impact. Under the new code, these will be subject to major changes, some of which may be beneficial for traders, but many likely to involve additional administration and cost.
Up until now, traders using Inward Processing Relief (IPR) have been able to suspend payment of customs duties when goods, components or raw materials are imported for processing and subsequent re-export outside the EU. Under the UCC, this procedure will be combined with Processing under Customs Control – another system, which allows imported goods to be processed without payment of duty under specific circumstances. The new process will be known collectively as ‘Processing’, and will operate with a number of changes. Other procedures, such as Custom Warehousing and End Use are also changing.
Is it changing for better or worse?
Both! One positive change for traders using IPR is that goods will not now have to be re-exported outside the EU after processing. In the past, traders using IPR were subject to ‘compensatory interest’ – a form of penalty charge – if the processed goods were not re-exported, or otherwise disposed of under approved methods within a specific timeframe. The new regime will allow goods to be entered into home use, i.e. into free circulation after processing, without any penalty, provided that correct procedures are followed.
Another positive change is that authorisation for the use of the IPR has been opened as well to applicants which are established outside the Customs Territory of the Union and to those who may supervise the works (ie: Captains) removing therefore the initial supremacy of the local yards.
Finally, no customs debt shall be notified to the debtor after the expiry of a period of three years from the date on which the customs debt was incurred.
And the bad news?
A less welcome change for traders is the news that those using the new Processing regime, as well as other ‘Special Procedures’ (such as customs warehousing), will now have to provide Authorities with financial guarantees. These cover the value of all real and potential customs debt on goods covered by the procedure (in other words, import duty and VAT).
An exemption will be given to companies who are authorised as Authorised Economic Operators (Customs) – AEO (C). They will be allowed to apply for a waiver of guarantee for potential debts.
Another significant change means that traders who apply for Processing, or other ‘Special Processes’ (or who renew existing authorisations under the new regime), will have to conform to more rigorous requirements. These effectively mirror those for AEO (C) Accreditation, but without the full benefits of AEO (C) status. This, combined with the enhanced guarantee waivers mentioned above, is already leading many traders to seek AEO (C) status.
The status of authorized economic operator (‘AEO’)
One of the more important provisions of the UCC as above highlighted is the increased prominence of the AEO. The UCC includes a number of benefits for businesses with AEO status or that meet AEO status criteria. These include reduced guarantees and easier access to customs simplifications which could result in a competitive advantage.
The status of authorized economic operator (‘AEO’) will be granted by an authorization rather than a certificate. These changes are more form than practice. The real change is that in order to make use of certain customs simplifications, the authorization AEO Customs Simplification (‘AEO (C)’) becomes mandatory. New conditions and criteria apply to obtain AEO (C). They relate to the practical standards of competence or professional qualifications. In respect of the standards of competence, one can think of a minimum of three years practical experience on customs matters.
Anyone involved in the international supply chain that carries out customs related activities in the EU can apply for AEO status irrespective of the size of their business.
- freight forwarders
- warehouse keepers
- customs agents
- others (for example, port operators, secure freight parking operatives, airline loaders)
To become an AEO, a trader must have a solid record of compliance, a satisfactory system to manage both commercial and transport-related data, adequate record-keeping capabilities, proven business solvency and maintain high safety standards. An AEO trader should also ensure that they have technology in place that is capable of facilitating audit-based controls and that can properly identify customs statuses. Under the UCC, they should also be able to show they have practical standards of competence or professional qualifications relating to the customs activities which they carry out.
For more information contact: Janet Xanthopoulos of Rosemont Yacht Services at