Requirements for Customs Representation.
Direct or indirect representatives are required by the Union Customs Code to meet the criteria for authorized economic operator, commonly referred to as the Authorized Economic Operator (AEO), when making a customs declaration for another person.
An authorised economic operator is an economic operator (e.g. freight forwarder, customs agent, exporter or importer) who holds an AEO authorisation and is considered reliable in customs transactions throughout the European Union. In addition to the possibility of representation, the AEO status grants the holder of an AEO authorization facilities related to security-related customs controls (hereinafter referred to as "AEO authorisation security") and/or for customs simplifications provided for in the customs legislation (hereinafter referred to as "AEO authorisation customs simplifications"). Requirements are imposed on the AEO status. Its criteria may also apply to other customs authorizations. Below we elaborate on the AEO criteria for customs representatives, which have been made public by Customs. The criteria below are therefore additional to the AEO requirements, which are generally applicable.
Criterion of proper administration
A representative must keep proper records. Using the following steps, we outline what this criterion entails:
1. Acceptance client and/or represented
- There is a distinction between the principal and the represented (in fact, the principal to make the declaration is not always the one being represented);
- The representative should be screened on a number of points. As a minimum, the EORI number, VAT number and extract from the Chamber of Commerce1 of the representative must be checked.
- The power of representation (authorization) must be present.
Note: if it is subsequently found that it cannot be proved that power of representation was granted then the customs representative is deemed to be acting in his own name and on his own behalf
- A representative can be expected to be alert to dubious or rogue transactions
- Details of the representative, the authorization and how they were screened should be recorded and retained
- Periodically, the data of those represented (still active) should be checked.
- The representative should have a procedure to follow if there are doubts about the screening of the representative or the authorization. If principals/representatives are refused, this should be recorded.
2. Creation of declaration order
- If specific agreements have been made between representative and represented party regarding the manner in which the declaration order is issued then this must be recorded
- Because the customs representative is responsible for the accuracy and completeness of the declaration, the representative must have complete and clear information. If necessary, additional information should be requested from the representative.
Note: in our experience, customs more often holds the representative responsible for the accuracy of the declaration also from a criminal point of view
- If declarations are to be included in customs declarations (e.g. relating to dual-use, other special arrangements or binding tariff information), these declarations must come from the representative. Again, according to established procedures, inquiries should be made by the representative if necessary and the Customs expect the representative's staff to have knowledge of these issues.
- If necessary, the assignment will have to be refused. These cases must be recorded.
3. Preparation and filing of return
- The return must be filed correctly, completely and in a timely manner. In addition to the aforementioned steps, important factors include sufficient knowledge and experience of employees, including keeping the knowledge and guidance of (new) employees up to date.
- Clear work instructions for declaration processes and internal control during the declaration process are important, e.g., how to handle inaccurate or incomplete information, self-checking or multi-eye principle when filing declarations.
- A customs representative is expected to proactively monitor the status and deadlines of submitted declarations. The representative must be able to demonstrate action to the principal, represented and/or customs even before deadlines have passed.
- The customs representative should ensure proper operation of declaration software.
4. Filing, archiving/administration duty
The customs representative must keep records of his activities as a customs representative. The requirements for the records depend on the nature and size of the business and business activities, which in particular point out incorrect certificates.
5. Internal control of declaration quality/monitoring of the declaration process
The representative must have implemented a system of internal controls2 focused on its activities. These controls should focus not only on the quality of returns (including timely and proper payment of taxes), but also on client screening, acceptance of assignments and adherence to procedures, among other things.
The checks should be recorded internally and the results of the checks should be analyzed periodically. Reporting to customs of problems and differences in deductions is also important in this regard.
Customs also clearly sees an important role for management here by steering compliance and the quality of the declaration process.
If you have a sole proprietorship, you must meet these requirements just like other businesses.
You can have internal audits performed by a third party so that you guarantee compliance with these requirements.
6. Recovery and cancellation
The representative should have procedures by whom and when any corrections to a return are made. Information about this should be reflected both in the record of internal control and in the relevant return file.
Criterion of practical competence or professional qualifications
A customs representative will need to have insight into what (practical/professional) knowledge and competencies are needed and how this is fulfilled in the organization. Customs refers for these competencies to the "EU Customs Competency Framework for the Private Sector" prepared by the European Commission in cooperation with the business community.
In any case, the customs representative must ensure that sufficient customs knowledge is available to guarantee correct and complete declarations. This applies to both the declaration, customer and order acceptance, and the implementation of internal controls. Moreover, keeping the knowledge up to date should be facilitated within the company.
Implications for practice
The above shows that a considerable increase in the requirements to be allowed to act as a customs representative has been introduced. Complying with these requirements is indispensable for customs brokers in particular, but also for companies acting as customs representatives within their group in order to (continue to) carry out their activities.
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