1. 1
Damco eGuide
UNION CUSTOMS CODE (UCC)
The new face of EU Customs procedures
Arjen Noordijk, Customs Product Manager

2. 2
Table of Contents
01. INTRODUCTION3
02. HISTORY AND TIMELINE 3
03. AUTHORISED ECONOMIC OPERATORS 4
04. VALUATION5
05. BTI/BOI6
06. REGISTERED EXPORTERS (REX) 7
07. BONDED WAREHOUSES 7
08. REPRESENTATION AND AGENCY 8
09. SPECIAL PROCEDURES 8
10. PRECLEARANCE9
11. SUMMARY9

3. 3
01. INTRODUCTION
In 2016 the 28 nations of the European Union commenced the introduction of a new Union
Customs Code. This will be fully implemented by 2020, at which time the customs process
will also have become almost completely electronic. The changes affect any entity importing,
exporting or transiting goods through one or more EU countries.
The new Code is intended to make customs procedures simpler, speedier, more certain in
their outcome and cheaper to administer. They will however create significant changes for
many organisations in the way they organise and administer their customs affairs, not always
in obvious ways, and many areas of customs practice which have previously been subject to
guidelines now fall under mandatory rules. In some cases businesses may need to reconsider
their business processes and models in order to gain the maximum benefit.
It is self-evident that a true single market requires a unified system to levy and account for
customs, tariffs and other duties on goods imported, exported or passing through the member
states.
From May 2016, the European Union has introduced a new Union Customs Code to achieve
just this, and there are implications for almost every importer, exporter, freight handler and
logistics service provider.
Note that the UCC has no relationship to the Uniform Commercial Code which governs
interstate commerce in the USA. UK readers should also realise that the UCC applies to
them despite the recent ‘Brexit’ vote: presumably the extent to which UK importers and
exporters can continue to take advantage of the provisions from ‘the other side of the fence’,
for example by retaining Authorised Economic operator status, will form part of future ‘Brexit’
negotiations.
02. HISTORY AND TIMELINE
Part of the European Union strategy laid out in the Lisbon Treaty of 2000, superseded in 2009
by the EU2020 strategy, involves various initiatives to facilitate trade, including a program
called Customs2020. This has the objectives of:
• Streamlining customs legislation and procedures
• Giving greater legal certainty and uniformity to businesses while increasing clarity for EU
customs officials
• Creating rules, procedures, and efficient forms of transaction that meet modern-day needs
• Moving customs to a fully electronic, paperless and interoperable environment
• Reinforcing the provision of speedier customs procedures for compliant and trusted
economic operators (AEOs).

4. 4
The previous Customs Community Code (CCC) dated back to 1992. This was only a partial
solution, still retaining many national differences in practice and interpretation. It didn’t reflect
the changes inherent in the move from a European Economic Community to a full European
Union, nor the expansion of the Union to 28 members. It did not reflect or support modern
trade and commercial practices and formed an unsuitable basis for comprehensive electronic
operation.
A Modernised Customs Code was published in 2008 with a ‘live’ date planned for 2013, but
it soon became clear that this was unsatisfactory: while some of the proposed legislation
had rapidly become out of date, on the other hand neither governments, businesses nor IT
systems providers could be ready in time. A new approach – the UCC, which addresses these
issues – was published in 2013, with implementing legislation approved in November 2015,
and a ‘live’ date for implementation of the core elements of 1 May 2016.
This Code is thus now, in its essentials, already in effect. There will however be a phased
introduction of some elements, especially around automated systems, and around the
‘homologation’ (a classic EU word) of national legislation and procedures until the process is
fully complete in 2020.
The principal areas of change under the new UCC concern:
• Status and benefits of Authorised Economic Operators (AEOs)
• Rules on the point at which the value of a transaction is determined
• Binding Tariff/Origin Information (BTI/BOI)
• The Registered Exporter Scheme
• Bonded warehouse operation
• Representation by customs agents.
03. AUTHORISED ECONOMIC OPERATORS
AEOs are companies engaged in international trade, including importers, exporters and also
many logistics and shipping companies such as Damco. These are certified by the customs
authorities as trustworthy and compliant with the rules according to a self-assessment
questionnaire. The principle advantages to the AEO have been of simplified procedures, fewer
examinations and audits whether of Physical goods or of administration, and pre-notification
of these. There can also be mutual recognition of AEO status with third countries.
Under UCC there is also now a reduction, or in some cases elimination, of bonds and sureties
for bonded warehouses, a reduction in the bond on import duties, the possibility of arranging
for pre-clearance, and relief from the safety data administration in a re-export clearance.
However, the process for becoming an AEO has been made more rigorous. The self-
assessment questionnaire, which used to form a set of guidelines, is now obligatory and
the resulting AEO certificate is now a license, the AEO being legally bound to observe the
conditions of the license. On the other hand, AEO status is now effective 5 days after approval,
rather than 10 as before.

5. 5
There are further requirements. The person in the AEO responsible for customs compliance
must now hold a relevant qualification in customs work, or show three years of relevant
experience and competence. (It is not currently clear what courses of study will be acceptable
under this provision). Customs responsibility can be outsourced to a representative but the
same conditions apply.
There is also a responsibility to appoint a person responsible for safety/security and in fact
under the rules at present, the customs and security licenses for AEO-F (Customs Safety)
companies are separate.
AEOs also face stricter administration requirements, auditable by customs, including written
procedures for dealing with import and export restrictions. Again, the same requirements
apply if customs activity is outsourced.
There will be an exchange system allowing authorities in all member states to consult registers
of AEOs.
04. VALUATION
Under the former CCC, the rules for determining the point at which customs and other duties
become payable (and thus of course the value of the transaction) were somewhat confused
and open to interpretation. For example, if a Chinese manufacturer sold goods to a US
company but these were to be shipped directly to a customer in the European market, then
if the invoice mentioned the EU this could be used to determine the customs value, even
though the value ascribed to the goods on arrival in the EU would necessarily be somewhat
higher.
This is no longer allowed. The new UCC works on the transaction that actually brings the
goods into the EU and so the valuation point is the invoice between the US company and
its European customer. The principle is shown in Example 1, where ‘Sale 2’ represents the
commercial transaction that brings the goods within the scope of EU customs as this is
the last transaction before the goods enter the EU and therefore determines the customs
valuation. This will increase the duties payable for a number of companies.
Buyer D
BE
Importer C
NL
Manufacturer A
China
Dealer B
USA
Sale 1
Sale 2 Price 13000$
Price 10000$
Price 16000€
Sale 3
Delivery
Commodity: Cars

6. 6
A less obvious case is shown in Example 2. Here, goods have been brought into a bonded
warehouse in the EU, but remain the property of a Swiss (i.e. non-EU) customer until they are
sold. In this case the customs value is the value of the transaction between the manufacturer
and the Swiss company since there is no other transaction (and not, as might be supposed,
the value when the goods are sold out of bond to an EU end-user).
EU Bonded WHS in NL
(Swiss customer)
Buyer B
Switzerland
Manufacturer A
China
EU
Customer
EU Border
Sale 1
Sale 2
WHS
UCC also makes clear that the customs valuation must include any royalty fees, licence fees
or other intellectual property payments if these are not already included in the price of the
goods and the payment of these fees is a condition of sale.
There is provision for companies to apply to customs for a license covering Binding Valuation
Information, for example in circumstances where cost elements such as freight or insurance
charges can fluctuate unpredictably and rapidly. The range of factors included is expected to
be widened, although the way in which the process will work is not yet clear, and it is fair to
say that the customs authorities do not yet have the requisite systems in place.
A further easement is that, whereas before the currency exchange rates applied by customs
might fluctuate with the markets, these will now be fixed on a monthly basis.
05. BTI/BOI
Binding Tariff Information and Binding Origin Information are tools created by the European
Union to give economic operators greater certainty as to their liabilities and obligations without
the risks of retrospective challenge by the authorities.
BTIs helps importers or exporters obtain the correct tariff classification for goods, which in
turn determines the scale of any customs duties, export refunds and so on. The BTI is issued
by a member state but is valid and binding across the EU. The BTI status cannot be changed
by the authorities during its period of validity, but this period has been reduced from 6 years
to 3 years. BTI applications now have to be made electronically, using an EORI number. BTI
references now have to be filed with customs entries and can now be applied for by groups of

7. 7
companies rather than just individual entities. The EU will now be monitoring the use of BTIs.
BOIs work similarly in establishing the true country of origin (and thus the status of goods
under the many multilateral and bilateral free trade agreements). Unlike BTIs, application for
BOIs is still currently a paper process.
06. REGISTERED EXPORTERS (REX)
From 1 January 2017 there will be a new self-certification system for exporters and current
documentation will be replaced by statements of origin provided by exporters. The exporter
will have to obtain a registration number from the country enjoying the trade preference and
this will enable statements of origin to be provided to customers. A system allowing operators
to verify the validity of such statements will need to be created. Exporters of small shipments,
valued below EUR 6000, can make a statement of origin on their invoices without registration.
07. BONDED WAREHOUSES
UCC introduces significant changes in the operation of bonded warehouses, so there will now
be just four categories of bonded warehouse rather than the former eight.
Private bonded warehouses are used by the licensee who is also responsible for customs
compliance.
There are three types of public bonded warehouses. As the name implies these are available
for use by anyone, the difference lies in where the responsibility for customs compliance rests
(Type III, incidentally, covers warehouses controlled by the customs authorities themselves).
Significantly, free bonded warehouses, and the various forms of Free Zone, (as for example
at Schiphol) are no longer permitted – users will have to find a different form of bonded
warehouse operation, probably a private bonded warehouse, or alternatively use an Area for
Temporary Storage.
An area of temporary storage does define a Customs status. It is a location under customs
supervision wherein non-EU goods can be stored for a maximum of 90 days (an increase on
previous arrangements) while they are waiting either to enter the EU through customs, or to
be re-exported. This procedure has lower administration and data requirements with customs
than using a bonded warehouse but, as noted, is strictly time-limited so may not be suitable
for all traffic.
There are also changes in procedure for the re-export of non-EU goods being stored in bond
prior to export outside the EU. Previous transit documentation is replaced by a mandatory
re-export declaration. This requires additional data, some of which the bonded warehouse
operator may not have. A mismatch between goods leaving bond, and leaving the EU, or a
mismatch between the two sets of documentation, could incur fines and penalties. Bonded
warehouse operators are therefore likely to face an increased administrative workload.
Although in general the UCC is intended to help and simplify trade, it appears that bonded
warehouses and their users face particular challenges. In some cases, this may suggest the
need to rethink business strategies, for example the locations at which goods are held when
in transit or where the ultimate customer has not yet been determined.

8. 8
08. REPRESENTATION AND AGENCY
For many, and especially smaller or occasional importers and exporters, outsourcing of
customs activity to specialists, perhaps including logistics service providers such as Damco
if appropriate, makes sound sense in terms of cost, administration and access to specialist
knowledge. The UCC allows for this in a number of forms, which may vary among member
states (for example because laws on legal liabilities vary) providing they conform to the
fundamentals of the UCC.
Essentially, anyone can choose to use a customs representative, but the latter now have to
meet certain criteria – essentially those that would apply to an AEO. (A company applying for
AEO status presumably believes it has the skills, expertise and capacity to manage customs
themselves, although it is open to AEOs to use representatives for some or all of their activities).
The agent or representative, however, must be able to show that:
• They have no record of repeated or serious violations of customs and tax regulations, or of
other serious offences linked to their economic activities
• They are in full control of the procedures and flows of goods they represent, and can
demonstrate this in a way that can be audited by customs
• They can demonstrate their financial solvency
• They can prove their competence in the specific activities involved (although as mentioned
above, the nature of proof required through qualification or otherwise is currently somewhat
obscure).
Representation can be direct or indirect. A direct representative can make declarations in the
name of – and on behalf of – another legal person (but this is limited to EU operators – you can
employ your financial advisor in Frankfurt for this, but not your advisor in Panama).
An indirect representative can make declarations in its own name but on behalf of another
legal entity, who may be based anywhere, not necessarily in the EU.
There are, and may continue to be, different national interpretations of this: as above, this
is partly because of the need to reflect national laws around commercial (and conceivably
criminal) liability. For some special customs procedures (like inward or outward processing)
only direct representatives are allowed.
09. SPECIAL PROCEDURES
The UCC brings in new or revised rules for a number of more unusual procedures, including
inward processing (where for example goods already sold have to be brought back into the
EU for repair; various forms of processing under customs control, such as the import of
non-EU goods for destruction, and outward processing, where goods may be sent outside
the EU or treatment but will be re-imported: an example might be sending German steel to
Switzerland for specialised heat treatment. To avoid paying unnecessary duties, licences are
required, as is specialist advice.

9. 9
10. PRECLEARANCE
Rules allowing declaration and settlement of goods prior to their arrival in the EU already exist.
Similar rules are being put in place to cover export and transit, and declarations can be made
up to 30 days before arrival. In practice most shipments are not even shipped by then so a
timeframe of seven days sounds more realistic.
11. SUMMARY
The UCC is intended to make trade into, through and out of the EU simpler and less
burdensome, while at the same time enhancing customs’ ability to secure the revenues that
are properly due. The principle rules are already in effect, but the full move to purely electronic
activity, and the homologation of national rules, will take some years and so the fine detail will
be in a state of flux for some time.
The changes potentially affect all but the smallest or most occasional traders. If they do not
already have adequate in-house expertise, they should be seeking professional advice since,
while compliance with the new rules will in most cases make life much easier, failure or inability
to comply (for example by not being able to file electronically) may bring risks in delays,
inspections, administration costs, unnecessary payments of duties and tariffs, and potentially
fines and other penalties.
Logistics service providers (LSPs) such as Damco are necessarily exposed to the UCC
themselves and could well be your first port of call for advice and for reference if required to
more specialist sources. In many cases of course LSPs already act for clients as customs
representatives or agents, and you may wish to explore such an arrangement with your local
Damco office. In the meantime, some of the issues outlined above were also explored in a
recent Damco webinar, available here

10. 10
About the author
Arjen Noordijk is Customs Product Manager at Damco Benelux. With nearly 20
years experience in Customs brokerage, legislation and documentation in the
Transport and Logistics sector, he joined Damco in 2008 and since then has
taken various roles in operations management.
About Damco
Damco, one of the world’s leading third party logistics providers, specialises in
delivering customised freight forwarding and supply chain solutions. The
company has more than 300 offices in over 100 countries and employs 11,000+
people. Damco is part of the Maersk Group. More information about Damco
can be found on www.damco.com
All rights reserved. No part of this document may be reproduced or transmitted in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of Damco
International BV.