The UCC and the uncompromising practice
On 1 May, after years of preparation, the Union Customs Code (UCC) entered into force. Where, for a long time, all discussions were about the letter of the law, now the moment of the concrete shaping of it had arrived. And this did not prove to be quite that simple, Customs staff member Mariët van Nieuwland and representative of the business community Dominique Willems well know.
“Mutual understanding is of the utmost importance in the relationship between Customs and the business community,” says Willems, representative of customs agents, freight forwarders and logistic service providers at Dutch trade organisations FENEX and TLN. “On 1 May, trade and industry were not yet 100 percent ready for the introduction of the UCC – which is something that Customs has to understand. Conversely, the business community could not expect Customs to have everything specified to the letter by that date.” Van Nieuwland – employed by the Oil and Gas Team of the Tax and Customs Administration and involved in customs and excise matters of all major oil and gas companies – agrees with Willems’ words. “We will continue to [...] get together around a table in order to discuss the effects of the UCC and to set a time limit within which the modifications have to be implemented.”
What hampers the implementation of the UCC even more, is that it has taken so long before it became clear what the new legal framework would exactly look like. Even now, after 1 May, many questions remain about the exact interpretation of the law. How entrepreneurs experience this? “It is what it is”, says Willems.
In the run up to 1 May, the umbrella organisations and Customs often joined forces. This is illustrated by the roadshows set up to inform companies. During these sessions Willems was part of a panel consisting of Customs staff members to answer any questions. Both parties also joined forces in drafting the legislation, even if each party had its own interests and views. Van Nieuwland: “We do not always have the same opinions and sometimes things get heated. We agree to disagree.”
“However, from the perspective of a type of partnership”, Willems claims. “We are, after all, both faced with this new code. Together we seek to achieve the best possible outcome for everyone. This is unique.” The best example for this, he thinks, is Schiphol, where the Free Zone type 2 fell through with the introduction of the UCC. It was an industry-led initiative to formulate a working group in finding a solution for this, and at the request of the entrepreneurs, Customs decided to participate. “We came up with a concept, and Customs checked to see if this could fit in their procedures. This is a far-reaching type of collaboration.”
Customs valuation point of concern
Up and till the last moment, there was confusion about the new legislation, including the provisions on customs valuation. In mid-April, the European Commission published a draft guidance about this subject, which, in fact, differed from the position the Netherlands had previously assumed. Van Nieuwland: “As it is a concept, there is still room for discussion on this matter. If, in a few months’ time, Customs observes that a company has not used the correct valuation calculation, it may be that a penalty or additional tax is imposed. However, an entrepreneur who is to receive such a payment notification, can lodge an appeal, and it could be that other conclusions will then be drawn.”
This is not a course of action that is quite satisfactory for the business community, according to Willems. After all, following this track costs time, money and energy. “Mistakes will initially always be made after the introduction of new laws or systems – on both ends. I therefore do not expect any difficulties over this during an inspection a year later. However, this continues to be a point of concern. We can all agree on this at policy level, but what it comes down to in the end is what happens in practice.”
Finding solutions together
The interpretation of the UCC – as also the speed with which it is implemented – may vary for each member state. It even appears that the introduction of the new legislation has not been impressed everywhere. Willems, for example, hears stories about French civil officers who continue to ask for a stamped T5 document, even after 1 May. “In France, they still demand such a stamp, while companies in the Netherlands can no longer obtain it. As a result, a freight transport thus sometimes may be subject to a delay for one day or even several days. This clearly does not benefit a shipment of fish or flowers…”
The example with the stamp is not an isolated incident, according to Willems. “It goes much further than that. Under the demanding time constraints, the focus point in the run-up to the UCC has mainly been on policy issues, thereby neglecting the execution a little. This is why these problems now occur.” For Customs, it is important that the umbrella organisations inform them what problems the companies are faced with, emphasizes Van Nieuwland. “It is then that we can see how best to deal with this until all member states share the same understanding.” Willems assures that the umbrella organisations will certainly continue to do so: “There is no other way. Together we have to, in all fairness, find practical solutions. Luckily, we are both – business community and Customs – well represented in Brussels. We can make our voice heard.”