Overview of key changes to the EU customs rules that will be implemented from 1 May 2016 through the implementation of the Union Customs Code (UCC)

1. Baker & McKenzie LLP is a member firm of Baker & McKenzie International, a Swiss Verein with member law firms around the world. In accordance with the common terminology
used in professional service organisations, reference to a "partner" means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an "office" means an
office of any such law firm.
© 2015 Baker & McKenzie LLP
Jennifer Revis, Of Counsel, London
5 November 2015
Annual International Trade & Compliance Conference
Thursday 5 November and Friday 6 November 2015
Customs and Import Regulatory
Developments Panel – EU Update

2. The Union Customs Code

3. © 2015 Baker & McKenzie LLP
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Union Customs Code and Implementing Provisions
3
• UCC was adopted in 2013 -– Regulation 952/2013
• Framework regulation for customs rules and procedures
• Entered into force on 30 October 2013 (but only to allow negotiations)
• Requires implementing legislation –
• Delegated Act (DA)
• Implementing Act (IA)
• UCC along with DA and IA will apply from 1 May 2016 - Changes will be phased in
from 1 May 2016 to 31 December 2020
• Until then, Community Customs Code and its implementing provisions continue to apply

4. © 2015 Baker & McKenzie LLP
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IA / DA Timeline
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28 July 2015 4 August 2015
Late November /
Early December
2015
1 May 2016
• Commission
adopted DA
• EP and Council to
review
• 2-month review
period started on
20 August 2015
• Final draft of IA
released by
Commission
• Vote on the IA
scheduled for 6
November
• Earliest expected
date for
publication of
DA/IA in OJ
• May be pushed
back to end of
January / mid-
February 2016
• UCC along with IA
and DA come into
force (subject to
transitional
arrangements)

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Key changes
• All communications between customs & operators to be electronic
• Authorised Economic Operator (AEO) criteria
• Guarantees for special procedures & temporary storage (TS)
• Customs procedures
• Valuation
• Introduction of Centralised Clearance & Self Assessment

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AEO – What is changing?
Two types outlined in UCC:
Holding both is equivalent of current AEOF status
• New criteria for practical standards of competence or professional qualifications
• Criteria expands to include compliance with customs
and taxation activity of the applicant.
• Transition – Current authorisation holders will be
re-assessed by 30 April 2019
AEOC
Customs
Simplifications
AEOS
Security &
Safety

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AEO interaction across UCC
• Comprehensive guarantee
• Guarantee reductions/waivers
• Simplified Customs Declarations
• Entry in Declarant’s Records (EIDR)
• Valuation simplifications
• Simplified Import VAT Accounting
(SIVA)
• Temporary storage
• Transit simplifications
• Special procedures
AEOC criteria to be met

8. © 2015 Baker & McKenzie LLP
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AEO interaction across UCC
• Duty deferment guarantee reduction
• Movements within a TS authorisation
between different MS
• Centralised Clearance
• Self Assessment
• EIDR – presentation waiver
Certain AEO(c)
criteria must be met
AEOC Mandatory

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Guarantees
Under current legislation Member States have discretion to decide when a
guarantee is or is not required, but under UCC this will change
• Mandatory for authorisations to operate certain procedures
• Required for Potential and Existing customs debts
• Level of guarantee shall be based on a reference amount and must be sufficient at all
times

10. © 2015 Baker & McKenzie LLP
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Comprehensive Guarantees
Reduced Guarantees and Guarantee Waivers available only
Reduction or Waiver
for potential debts
Reduction for actual debts
e.g. deferment
Where AEOC status
is held or criteria met
Where AEOC is held

11. © 2015 Baker & McKenzie LLP
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Streamlining customs procedures
• IP Drawback & Type D customs warehouses no longer available
• Processing under Customs Control (PCC) merged with Inward Processing (IP) and no
requirement to re-export using IP
• Greater flexibility between procedures aimed at reducing levels of post-clearance action
• CPEI becomes Special Procedures:
External
& Internal
Customs
Warehousing
& Free Zones
Temporary
Admission
& End-use
Inward
& Outward
Specific
Use
StorageTransit Processing

12. © 2015 Baker & McKenzie LLP
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Transition Arrangements: Special Procedures
• Current authorisations may continue until their expiry date but not beyond 30 April 2019
• For those authorisations with no expiry date – reassessment must be completed before
1 May 2019

13. © 2015 Baker & McKenzie LLP
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Valuation
• Earlier sales (also called First sales) option
withdrawn
• Significant changes to royalties and licence
fees - All royalty payments will be dutiable
irrespective of the relationship between the
manufacturer and third party licensor

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Valuation | Earlier sales
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• Both Sale 1 and Sale 2 could constitute a “sale for export”
• Using Sale 1, the amount used for customs purposes is 25% lower (excludes the
parent’s costs and margin)
EU
retailer
EU
distributor
Sale 1
75
Sale 2
100
Physical delivery
Parent
(Singapore)
OEM
(Malaysia)

15. © 2015 Baker & McKenzie LLP
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Transition Arrangements: Valuation
Earlier Sales – so called ‘sunset clause’
• Article (IA 341) applies until 31 December 2017
• Declarant must prove, to the satisfaction of the customs authorities, that they are bound
by a contract concluded prior to the entry into force of the IA (i.e. 20 days after its
publication in the Official Journal)
• Contract must reference the earlier sales agreement

16. © 2015 Baker & McKenzie LLP
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How to prepare your company for UCC
implementation on 1 May 2016
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Assess:
What Special Procedures you intend to use from 1 May 20161
Impact of changes to Special Procedures
(inc. amendments needed to your internal control/ processes)2
Whether you will require a guarantee and, if so, cost of this3
Benefits of applying for AEOC and timeframe for application if this is to be in place by 1
May 20164
Impact of the customs valuation changes on your business5
• Transitional arrangements for existing authorisations –
when do you need to re-apply?

17. Any Questions?

18. Baker & McKenzie LLP is a member firm of Baker & McKenzie International, a Swiss Verein with member law firms around the world. In accordance with the common terminology
used in professional service organisations, reference to a "partner" means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an "office" means an
office of any such law firm.
© 2015 Baker & McKenzie LLP
Jennifer Revis, Of Counsel, London
Jennifer.revis@bakermckenzie.com
5 November 2015
Annual International Trade & Compliance Conference
Thursday 5 November and Friday 6 November 2015
Customs and Import Regulatory
Developments Panel – EU Update