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EU Seeks to Standardize Penalties for Customs Law Violations

Monday, December 16, 2013
Sandler, Travis & Rosenberg Trade Report

The European Commission proposed Dec. 13 a directive that specifies acts that would have to be considered infringements of the European Union’s customs rules as well as a framework for imposing punitive sanctions. The Commission states that this proposal would ensure that violations of the updated Union Customs Code, which sets forth the customs rules and procedures that will be applied throughout the EU beginning in 2016, are properly and more uniformly penalized.

A Commission press release states that while EU customs legislation has been fully harmonized since 1992, the bloc’s 28 member states have widely differing definitions for customs infringements and apply different types and levels of sanctions. For example, penalties for certain infringements range from small fines in some countries to imprisonment in others. The financial threshold for deciding whether an infringement is criminal ranges from €266 to €50,000, and time limits for penalizing customs offenses vary from one to 30 years, with some members having have no time limit at all.

According to the Commission, this system results in legal uncertainty for businesses, vulnerabilities in revenue collection, and weaknesses in enforcing policies such as consumer protection and agriculture in relation to the import and export of goods. Moreover, it can result in different interpretations of what constitutes compliant and trustworthy economic operators, who are allowed to benefit from EU-wide facilitations and simplifications.

To address this problem, the Commission’s proposal sets down a common list of acts that constitute breach of EU customs rules. These are differentiated by level of severity and some are categorized as to whether there was intent or negligence. Examples of the listed infringements include non-payment of customs duties, failure to declare goods to customs, falsifying documents to obtain preferential treatment, removing goods from customs supervision without authorization, and failing to present the proper documentation. Inciting, aiding and abetting an infringement would also be punishable.

The proposal also provides a scale of sanctions to be applied depending on the infringement. These range from a fine of 1% of the value of goods for inadvertent or administrative errors to 30% (or €45,000 if not related to specific goods) for the most serious breaches. When applying these penalties EU member states would have to consider the nature and circumstances of the infringement, including the frequency and duration, whether a trusted trader is involved, and the amount of evaded duties. Harmonized time limits would be set for pursuing breaches, and administrative procedures would have to be suspended if a criminal procedure is opened on the same case.

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