Can you guarantee that?
If a business wants to import goods from outside the EU or place them in a warehouse, for example, Customs will require a guarantee. What does this financial arrangement entail, and what can Dutch Customs do for businesses in this area? Two staff members of the National Guarantees Unit tell us more about this.
“Together with our customs colleagues from the Businesses Contact Points – BCPs – and the Customer Management department, we ensure that customs authorisations and related guarantees are issued as quickly as possible,” Evert Hogenbirk (on the left in the picture) from the National Guarantees Unit says. “To arrange this, we are in direct contact with businesses requesting this, but also with institutions that stand surety for customs debts.”
Deposit or bank guarantee
“In principle, a guarantee is required for each situation in which a customs debt is incurred,” Hogenbirk continues. “In case of a comprehensive guarantee, we will make an arrangement for this. Suppose you contact Customs as an entrepreneur because you started a new business. On the one hand, you want to import goods directly from China and, on the other, place goods in a warehouse. And we are talking about a substantial volume of 100 containers per day. In that case, of course, you do not want to queue up for each container in order to pay your customs debt, but you opt for a comprehensive guarantee. Our administration will then assess whether your business is solvent and reliable, and whether we already have you in our systems. What type of goods are we talking about, what rights are attached to them, is any excise duty levied? And how much tax is due if the shipment remains in EU territory? If your business is able to stand the test of criticism, you and Customs will agree on a periodic guarantee amount, let’s say 1 million euros, to be paid at the end of each month. Once we have received a copy of the authorisations issued, we will ask you to provide us with a guarantee for the amount agreed upon. Our unit will then arrange for that guarantee together with you.”
“The most common options – together accounting for 90 percent – are a bank guarantee and a cash deposit,” says Hogenbirk’s colleague Egbert van der Werff (on the right in the picture). “In case of the first option, you ask a bank to act as surety – there are only a few financial institutions that are allowed to assume this role. In case of the second option, you transfer the agreed amount to our payment centre in Apeldoorn. You will be given one month to arrange for the guarantee. We will check the payment or bank guarantee and keep it in our records. If everything is correct and Customs agrees, you can start using your authorisations.”
Additional payment requested
What if, for some reason, a business did not meet its financial obligations? “It could very well be that business is going so well that the amount agreed upon appears to be insufficient,” Hogenbirk says. “With each declaration that is made, our system deducts a certain part from the total guarantee amount for import as agreed between the business and Customs. As soon as the balance is zero, you have to make an additional payment, otherwise your declarations will no longer be approved. If such a deficit occurs regularly, you must permanently increase the monthly amount in consultation with Customs. This is normally preceded by a re-assessment. In urgent situations, we will contact the payment centre in Apeldoorn. It could be that the payment centre has already received the additional payment from the business, but it is not yet visible in the system. In that case, the relevant business may be ‘in the red’ for a while, in order for the customs system to accept declarations from that party again.”
And what if business is not going so well? Van der Werff: “If a company has failed to pay, Customs will send a reminder and, if necessary, a second reminder, followed by a demand for payment… If all this is unsuccessful, our unit will take action. If a bank guarantee has been issued, we will inform the surety that a market player has not fulfilled its obligations and that we would like to receive our money from the surety. As a company, however, you certainly do not want to find yourself in this situation, because then the surety will abandon its trust in you and will withdraw the guarantee. Should you be in need of a bank guarantee later… The first question in the application form will be: have you ever been refused a bank guarantee, or has a bank guarantee been withdrawn? If the answer is ‘yes’, you can forget about a guarantee.”
Rebates and exemptions
Not everyone is required to arrange for a deposit or payment. “Small beer breweries, or customers who import a few boxes of wine worth several hundred euros from France, may require an excise authorisation, but not a guarantee,” Van der Werff explains. “For instance, our administration may grant an exemption in case of a customs debt of less than 2,000 euros in the last category – which we call ‘registered consignee’. That customs debt must, of course, be paid.”
Apart from exemptions, rebates are granted at different rates: 50%, 30% and 0% respectively. For this purpose, a business with a comprehensive guarantee must meet a number of requirements, which can be compared with the criteria for AEO certificate holders. The amount of the rebate depends, among other things, on the compliance measures taken by the business.
Meticulousness is paramount
In short: these are complex matters. Moreover, billions of euros in customs debts are outstanding under European authorisations – even though the actual guarantee to be provided is much lower than the reference amount because of said rebates. “Because of the major financial interests, you really have to pay attention to what you are doing,” Van der Werff says. “Has the application been filed properly, has all information been correctly recorded in the system, has the guarantee been drawn up correctly? Does it contain a takeover clause, are the signatures from the bank correct, is the bank employee authorised? We check all this very meticulously to ensure that things do not go wrong. At the same time, we want to help businesses as quickly as possible. As said, businesses are given one month to arrange the guarantee. A bank can send the document detailing the bank guarantee to us by courier if desired. As a rule, everything will be arranged within one to two weeks, and even sooner if possible.”
More and more people know where to find the National Guarantees Unit. “Customers contact at us if they want more information about authorisations and sureties, for example”, Hogenbirk says. “It is usually lawyers and notaries who ask the really difficult questions, for example about mortgage collateral. This is a less common option that involves business premises serving as guarantee. This way, we have slowly but surely grown into a knowledge centre. We are happy to fulfil that role – also internally, for our customs colleagues. We want to maintain the expertise in the field of guarantees at a certain level within our organization.”
Van der Werff: “So apart from a controlling function, we are clearly a service provider as well. In the end, it is about serving our target group well. Although we can stop a lorry in Rotterdam at the push of a button, that is, of course, not our starting point. All parties benefit from good agreements and a smooth flow of logistics.”
National units in the spotlight
Dutch Customs has several national teams and units, all of which focus on specific tasks and have highly specialist in-house expertise. As knowledge and advice centres, they support the customs regions and often customs clients as well (be it directly or indirectly). Some of these organisational units (such as the Central Import and Export Service, the Central Excise Unit and the National Customs Help Desk) have been discussed in Customs NL inSight before; other units have so far received less attention. In this issue, we will highlight five of the latter group of units: our national units that deal with valuation, tariff classification, origin, guarantees and clearing respectively.
As a standard, each declaration requires that a guarantee be provided. In calculating the related amount, this should be equal to the customs debt which may arise. The calculation should also be based on the highest import duties, taxes and levies applicable to goods in the Netherlands (customs duties, turnover tax, excise duty, consumption tax on non-alcoholic beverages and coal tax). This is also called a deferred customs debt.