BRIEFING

EU Legislation in Progress

Establishing an EU customs data hub

and an EU customs authority
OVERVIEW
Today's massive increase in trade volumes, combined with the need to conduct border checks for
compliance with the growing number of EU standards and to stay abreast of continuously evolving
trade strategies, has put EU customs authorities under a lot of pressure. Concerns have been raised
that the EU's customs union is burdened by an uneven level of digitalisation across Member States,
suboptimal coordination between national authorities and overall complexity. This situation creates
high administrative compliance costs for traders while providing criminals with opportunities to
commit fraud.
To tackle these issues, the European Commission tabled a customs reform package on 17 May 2023.
Key to the reform is the establishment of an EU customs authority that would oversee a new customs
data hub. The aim is to adopt a more centralised and digitalised approach to customs that should
lower compliance costs for traders, free up resources for national authorities and ensure a more
efficient, strengthened and fraud-proof customs union.
The proposal is subject to the ordinary legislative procedure, requiring the support of both Council
and Parliament. Within Parliament, the file was assigned to the Committee on Internal Market and
Consumer Protection, with Deirdre Clune (EPP, Ireland) as rapporteur. At its March 2024 plenary,
Parliament adopted its position at first reading. Negotiations at the Council are ongoing.
Proposal for a Regulation of the European Parliament and the Council establishing the Union
Customs Code and the European Union Customs Authority, and repealing Regulation (EU) No
952/2013
Committee responsible: Internal Market and Consumer Protection COM(2023) 258
17.5.2023
Rapporteur: Deirdre Clune (EPP, Ireland) 2023/0156(COD)
Shadow rapporteurs: Maria Grapini (S&D, Romania)
Catharina Rinzema (Renew, the Ordinary legislative
Netherlands) procedure (COD)
Anna Cavazzini (Greens/EFA, Germany) (Parliament and Council
Anne-Sophie Pelletier (The Left, France) on equal footing –
Next steps expected: Trilogue negotiations formerly 'co-decision')

EPRS | European Parliamentary Research Service

Author: Pieter Baert
Members' Research Service
PE 753.931 –July 2024 EN
EPRS | European Parliamentary Research Service

Context
Customs policy plays a central role in the history of the European Union (EU). As early as 1957, the
Treaty establishing the European Economic Community (EEC) – the Treaty of Rome – provided for
the introduction of a customs union, that is, the elimination of customs duties and restrictions on
the import and export of goods between the six founding Member States and the introduction of a
common external tariff with regard to trade with third countries. 1
Over time, with an ever-growing EU and a globalised economy, the EU customs union expanded and
continuously adapted to new challenges. Today, the more than 100 000 customs officers working in
the EU handle numerous duties, among them:
 ensuring that EU standards are upheld: Customs officers check standards in the area
of the environment, agriculture, fisheries, cultural heritage, market surveillance, and
product compliance. For example, imported children's toys are checked for their
alignment with EU safety requirements;
 stopping the activities of criminal organisations: In 2016, EU customs officers
intercepted 593 tonnes of drugs, over 1.4 million pieces of ammunition and 6 496
firearms;
 collecting customs duties and other taxes2: 75 % of the customs duties collected by
EU Member States go to the EU budget in the form of an EU own resource. In 2023,
nearly €24 billion in customs duties was transferred to the EU budget, representing
roughly 14 % of the EU's total revenue that year. As shown in the graph below, some
countries raise significantly more income from customs duties than others, with four
Member States alone (Germany, the Netherlands, Italy and France) accounting for
more than half of the customs contributions to the EU budget.
Figure 1 – Customs duties paid into the EU budget as an own resource, 2023, (€ million)

Data source: Definitive adoption (EU, Euratom) 2023/2750 of amending budget No 4 of the
European Union for the financial year 2023.
At the same time, customs authorities have had to respond swiftly and efficiently to major crises,
such as the COVID-19 pandemic (for ensuring the quick delivery of life-saving goods such as masks
and vaccines) or Russia's war against Ukraine (for checking whether sanctions against Russia are
being upheld).

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Existing situation
Complex customs processes
Despite the customs union being one of the EU's oldest milestones, the rules for importing goods
into the EU remain particularly complex. Traders are sometimes required to report to the customs
authorities up to five times for the same transaction:
 before the goods are shipped to or arrive in the EU (pre-load filings, pre-arrival
filings);
 when the vessel or plane arrives (arrival notification);
 when they present the goods to customs (presentation notification for goods);
 if the goods are temporarily stored (temporary storage declaration);
 when the goods are to be placed on the market (customs declaration).
This five-stage process makes it difficult to police and track the flow of goods or to swiftly
intervene when there is suspicion of non-compliance. Moreover, the current rules allow the above
reporting to be done by different persons (the carrier, the importer, the representative, the holder
of the goods, etc.).

Fragmented approach to digitalisation

The past few years have seen a greater focus on digitalisation in the customs union. This trend has
allowed officers to shift away from paper-based formalities, spend less time on administrative hassle
and cut paper costs. Yet, digitalisation of customs procedures has not helped to shape a harmonised
common digital space or to abolish the formalities embedded in the 27 distinct national IT systems.
This fragmented digital environment is a source of frustration for traders who need to find their
way around the different digital interfaces. Moreover, the 27 national IT environments have multiple
IT systems that handle the entry and exit steps of the customs process without necessarily being
interconnected. In its May 2023 impact assessment accompanying the proposal for a regulation on
a customs code and a customs authority, the Commission remarked that in 2022, an economic
operator wishing to complete all customs formalities throughout the EU would have needed to
connect with 189 national IT systems.

Fragmented governance
The massive volume of goods customs authorities have to handle makes it impossible for them to
thoroughly check each and every package/container for risks or compliance with EU standards. To
cope with this situation, they have had to develop national risk strategies helping them to decide
what goods to inspect based on the risk of customs fraud or other illegal practices (e.g. breach of
safety, health or environmental standards) involved. In particular, these strategies seek to identify
profiles of risky operators. However, as also highlighted by the EU Court of Auditors in 2021, these
strategies remain very national-based, and fraudsters may try to get away with illegal practices by
concentrating their activities at a point of entry where the risk of being caught is the lowest ('border
shopping'). This problem is further aggravated by the decentralised approach to digitalisation, which
makes data sharing between national IT systems for detecting abusive practices more complicated.
Member States may also differ in the way they apply financial penalties to non-compliant traders,
which may incentivise border shopping. 3

Rise of e-commerce
The rise of online sales has upended the way consumers shop for goods. E-commerce goods
imported from outside the EU represent a considerable share of overall online purchases in the EU.
In 2022, one-fifth of EU e-shoppers bought or ordered goods and services from a non-EU seller (see

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Figure 2). One study estimates that online e-commerce in goods dispatched from countries outside
the EU was worth around €29 billion in 2020.
Figure 2 – Percentage of individuals in the EU-27 who purchased goods online from a non-
EU seller in 2023*

Data source: Eurostat. Note: *in the three months preceding the survey.
As noted above, it has become extremely difficult for customs authorities to thoroughly check
whether all incoming parcels are risk-free and in line with EU standards. Moreover, on the financial
side, customs authorities need to check whether customs duties and VAT have been applied
correctly. 4 Yet again, the significant amount of packages – often of very little numerical value –
flowing through customs every day creates difficulties in confronting VAT- and customs fraud. One
study concluded that 'potential revenue recovery on catching individual cases of fraud is miniscule,
making it hard to justify the resources needed for adequate controls'.
A recent evolution in VAT legislation has been the introduction of the deemed supplier rule, done
with the aim of lowering compliance costs for businesses, making room for greater competition and
consumer choice on the EU market, and allowing for a more focused allocation of resources within
the Member States' tax administrations. According to this new rule, electronic interfaces (such as
online marketplaces, portals or platforms) facilitating the online sales of goods imported into the EU
can assume the role of a 'deemed supplier' for VAT purposes. In other words, they are treated as the
supplier of the goods (even though they only act as intermediaries) and are therefore responsible
for charging and declaring, on behalf of the seller, the VAT due on the goods supplied. In addition to
the advantages mentioned earlier, the 'deemed supplier' approach lowers the likelihood of fraud, as
it allows VAT collection and remittance to be concentrated in the hands of a smaller number of
(usually large, well-known) platforms, which usually have dedicated and experienced accounting
departments. This allows tax authorities to free up time and other resources and to reallocate them
to other activities.

Complex tariff calculation and fraud

Another source of frustration for both businesses and customs authorities is the complex method
for calculating customs duties. Next to accurately establishing the customs value of a good and its
origin, operators need to find their way around the EU's tariff classification, which contains more
than 1 000 codes. This situation entails complex calculations and collection costs for both businesses
and authorities.

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While VAT is applicable to all imported goods, customs duties are only applicable to goods of a
value higher than €150. While this exemption has brought administrative relief to traders, it has
also become a significant source of fraud. 5 With customs duties only applying to goods with a value
above €150, traders see an opportunity to fraudulently under-value their goods (see box below).

What is under-valuation?
Under-valuation is a fraudulent practice whereby traders declare a value of imported goods to customs
that is lower than the actual value of the goods. As the customs duty is calculated on the basis of the value
of the goods, their under-valuation inevitably lowers or cancels the customs duty altogether. In addition,
this under-valuation might also lead to the charging of a lower VAT amount, as the latter is calculated on
the basis of the value of the goods plus the customs duty. The current €150 threshold for customs duty
exemption creates an incentive for traders to report their goods to the customs authorities as being of a
value below this threshold. This leads to lost customs duty and, in turn, lower VAT revenue, to the detriment
of Member States' tax revenues (and the EU budget).
Other types of fraud involve smuggling, mis-declaration of origin and mis-classification of goods.

Preparation of the proposal

In 2020, the Commission published a communication on Taking the customs union to the next level:
A plan for action, in which it laid down the key principles that should guide the overhaul of the
customs union.
As a following step, in 2022 the Commission carried out an interim evaluation of the customs union,
in which it noted a series of problems, such as the insufficient harmonisation of the rules in the
different Member States. Later that year, the Commission launched a public consultation seeking
the input of stakeholders on the future of the customs union. It received 194 responses, mainly from
large international businesses or business representations. The respondents agreed on the need for
further customs reform, highlighting the importance of aligning customs with new business models
and technologies while reducing and simplifying the administrative burden on them.

The changes the proposal would bring

As part of the overall EU customs reform, on 17 May 2023 the Commission tabled a proposal for the
establishment of an EU customs authority and a customs data hub, accompanied by an impact
assessment. The EPRS published a detailed analysis of the Commission's impact assessment in
September 2023.
The proposal seeks to establish a customs union that is efficient, geopolitical and future-proof. Next
to a number of other provisions, the two key provisions in the proposal involve the establishment of
an EU customs authority and an EU customs data hub.

EU customs data hub

The EU customs data hub should become 'the face and the engine' of the new customs union,
consolidating the fragmented digital space for customs formalities. The customs data hub would
serve as a single centralised IT environment, thereby sparing traders the need to interact with
27 different IT environments.
Next to the benefits for traders, the centralised data hub would also ensure the integrity, traceability
and non-repudiation of the data submitted to or collected by the customs authorities, thereby
strengthening customs control and the fight against customs fraud, smuggling and breaching of
standards.
The rules on the customs data hub are laid out in Title III of the proposal. Table 1 presents an overview
of the hub's key aspects.

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Table 1 – Key aspects of the EU customs data hub

EU customs data hub Comment

The Commission would develop, implement and maintain the EU customs data
hub (Article 29(3)), and would be empowered to adopt delegated acts to ensure
that the data hub can respond to the evolving needs of customs policy
(Article 29(4)). The Commission would be allowed to process the data including
Role of the Commission
personal and commercially sensitive data, stored or otherwise available in the
data hub in order to carry out tasks related to risk management, check whether
the rules are effectively enforced, and ensure the uniform application of customs
legislation (Article 29(4)).

Next to the Commission and national customs authorities, other players would be
allowed to process the data, including personal and commercially sensitive data,
stored or otherwise available in the data hub. Among these players are OLAF,
Access to data
EPPO, Europol, the Member States' tax authorities and market surveillance
authorities, Frontex, and the Member States' authorities related to food and feed
law (Article 29(5-11)).

Data storage Data would be kept for a maximum of 10 years.

Provision of information Customs authorities would have to promote transparency by making the customs
by the customs legislation, general administrative rulings and application forms freely available,
authorities wherever practical without charge, and through the internet ((Article 39(2)).

The customs data hub would be gradually implemented over the next 15 years.
At first, its activity would be restricted to e-commerce (2028). From 2032 onwards,
Timeline
all traders would be able to use it on an optional basis. From 2038 onwards, use of
the data hub would be mandatory (Article 265).

EU customs authority
A new EU customs authority would be set up to develop, operate and manage the customs data
hub. It would focus on coordination between national customs administrations, capacity building,
data management (regarding the customs data hub) and risk coordination.
The rules on the EU customs authority are laid out in Title XII of the proposal. Table 2 provides an
overview of this new body's key aspects.
The authority would therefore become a new EU agency. While the seat of the authority would need
to be determined, the Commission highlights that in view of the cooperative nature of most of the
authority's activities, 'it should be in a place that allows such close cooperation with the Commission,
the authorities of the Union regions most relevant for international trade, and relevant Union and
international bodies (for example, the World Customs Organisation for facilitating practical cross
fertilisation on specific subjects)' (Recital 55).
In terms of the direct costs, the Commission estimates that maintaining the EU data hub would
require an annual investment of €2 billion. 6 However, the centralisation of costs at EU level would
allow Member States to save on IT expenditure at national level. In 15 years, the Commission
estimates that Member States would save more than €20 billion in total IT expenses and an
additional €1 billion in staff time freed up from current tasks. While the authority and the data hub
would also play a key role in the fight against customs fraud, the Commission does not provide an
estimate as to how much additional revenue could be raised by decreasing this type of fraud.

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Table 2 – Key aspects of the EU customs authority

EU customs authority Comment

The authority would be in charge of the development, operation and

Interrelation with the EU
management of the EU customs data hub (Article 209). This could include tasks
customs data hub
such as designing algorithms, user interfaces, system interfaces and others..

The authority would collect data to measure the customs union's overall
Coordination and performance, coordinate research on customs, issue recommendations, prepare
capacity building common training content for customs officers across the EU and monitor its use
by customs authorities (Article 208(c)).

The authority would make use of the data available in the customs data hub for
risk management purposes, from a centralised EU point of view (Article 207(2)). It
Risk management would develop common EU risk criteria and common priority control areas and,
where appropriate, issue recommendations to Member States, thereby enabling
a centralised EU-wide overview of risk controls.

The authority would also establish a crisis management mechanism, which does
not yet exist in the customs union at EU level. The authority would analyse and
understand potential crisis scenarios and impacts on an ongoing basis, and
develop protocols to be applied in the event when such crises do occur. For
example, there could be protocols for making customs officers and customs
Crisis management
control equipment temporarily available from one Member State to another, in
case of a crisis (Article 203-204), or protocols to protect supply chain resilience.
The Commission would, through comitology, adopt the implementing provisions
defining the criteria for considering that a crisis exists and the procedures and
protocols to be applied.

The proposal lays down the rules regarding the administrative and management
structure of the authority (Article 211), its management board (Articles 212-216),
Set-up
executive board and director (Articles 217-221), budget (Articles 222-228) and
staff (Articles 229-231).

The EU customs authority would be established in 2026 and become operational

Timeline
by 2028 (Article 238).

Every 5 years, the Commission would evaluate the performance of the authority
Evaluation
(Article 235).

Simplified calculation of tariff duties and removal of the €150

threshold
To address the complexities business face in calculating and authorities in collecting customs duties,
the Commission proposes, in a separate proposal (2023/0157(NLE)), to introduce a simplified
calculation method for tariff duties. This would be a straightforward, simple five- 'bucket'-based
system (see Table 3 for details), and it would exclusively apply to low-value distance goods. This
new calculation method would be used on a voluntary basis and would be applicable as of
1 March 2028.7
To align the VAT and customs treatment of imported goods, the Commission proposes to remove
the €150 threshold below which goods are exempt from customs duties, thereby making all
imported goods subject to both VAT and customs duties. This should put an end to the practice of
undervaluation and therefore be of benefit to both the Member States' tax revenues and the EU
budget.

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Table 3 – Five-bucket-based system for tariff duties

Bucket Customs duty rate Examples (non-exhaustive)

A 0% Printed books, paper, works of art and antiques

Mineral fuels, mineral oils, electrical machinery and parts thereof, metal
B 5%
cutlery, toys and games

C 8% Pharmaceutical products, silk products and headgear

D 12% Travel bags, worn clothing and leather articles

E 17% Footwear, beverages and tobacco

Data source: Annex to the Commission proposal for an EU customs data hub and an EU customs authority.

'Trust and Check' traders scheme

From 2032 onwards, traders would be able to apply to the 'Trust and Check' traders scheme
(Chapter 4 – Article 25).8 Subject to strict entry requirements (clean criminal record, high safety
standards, etc.), this new partnership between businesses and customs authorities would provide
authorised traders with 'green lanes' for their goods. In exchange for a high level of transparency on
their supply chain (i.e. granting customs authorities access to electronic systems to verify
compliance and track the movement of goods in real time), Trust and Check traders would be able
to release their goods without active customs intervention, where the information is available in
advance and where the goods have not been selected for controls. Trust and Check traders would
be able to pay customs duties periodically rather than per consignment. The reform would 'cut out
a huge layer of administration for the traders' and would be 'a major boost for their ease of doing
business', the Commission argues.
Customs could suspend a trader's Trust and Check status should they be suspected of involvement
in fraudulent activity in relation to their economic or business activity.

Other provisions
The proposal introduces a common EU framework to identify customs infringements, including
potential mitigating or aggravating circumstances, and a common minimum level of sanctions for
such infringements. While Member States would still be allowed to charge additional penalties and
sanctions, the minimum level would always need to be respected (Articles 245-254).
Referring to the 'the success of the VAT e-commerce package', the Commission introduces the role
of the 'deemed importer' (Article 21), analogous to that of the 'deemed supplier' in the area of VAT.
When e-commerce intermediaries (online marketplaces, platforms, etc.) facilitate the sale of online
goods imported into the EU, they would take up the role of 'deemed importer', thereby becoming
automatically responsible for the calculation and collection of customs duties, for which they could
use the '5-bucket' tariff calculation method. With the e-commerce intermediary ensuring customs
(and VAT) are paid at the moment of sale, EU consumers would no longer face surprise requests for
the payment of customs duty when their package arrives at the door. The provisions on the deemed
importer role would apply as of 1 March 2028.
As part of its customs reform package, the Commission has also tabled a proposal to simplify VAT
rules when importing e-commerce goods into the EU (2023/0157(NLE)). An EPRS legislative
briefing provides a detailed analysis of its contents. The Commission considers that while this
proposal is 'not dependent' on the introduction of the simplified 5-bucket tariff treatment and the
elimination of the customs duty threshold, the enactment of both proposals should 'help to mitigate
instances of undervaluation, thereby protecting the revenues of Member States'.

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Advisory committees
Consultation of the European Economic and Social Committee (EESC) is mandatory. The EESC's
opinion (Rapporteur: Anastasis Yiapanis; Diversity Europe – GR III / Cyprus) was voted on during its
September 2023 plenary session. The report underlined the important role for small and medium-
sized enterprises (SMEs) in international trade and hoped that the customs authority would be
sufficiently targeted towards SMEs. Furthermore, the EESC mentioned the rise of AI and advocated
for a strategy to integrate AI into the day-to-day operations of customs officials. On a broader note,
the report also highlighted the need for positive communication concerning careers in customs,
targeting younger generations.

National parliaments
As this is an area of exclusive EU competence, there is no 'yellow card' procedure for national
parliaments to assess the proposal's compliance with the principle of subsidiarity.
However, the Swedish Parliament adopted a reasoned opinion, arguing that the proposal's chapter
on sanctions coordination was in breach of the subsidiarity principle. 'Member states are better
suited to determine how the sanctions system should be designed, with regard to national
conditions', the Swedish Parliament wrote. In its reply, the Commission explained that the proposal
would only introduce a common minimum set of acts or omissions constituting customs
infringements and a common minimum set of non-criminal sanctions, without changing national
procedural law. 'Member States would still be able to provide for additional customs infringements
and national sanctions', the Commission clarified.

Stakeholder views
The European Association for Automotive Suppliers (CLEPA) – representing over 3 000 companies
supplying components and technology in the mobility sector – expressed its support for the
Commission's proposal and its main features, arguing that 'the economic benefits will outweigh
initial investment costs in IT'. CLEPA however urged the Commission to seek coordination with key
third countries, in particular the United Kingdom and the signatories to the Pan-Euro-Mediterranean
Convention, to ensure that non-EU manufacturers are also well aware of and prepared for the
implementation of the Commission's proposal.
Haropa – representing the ports of Le Havre, Rouen and Paris – underlined the urgent need for the
reform, given the increasing volume of tasks customs authorities have to handle. Haropa supported
the decision to establish an EU customs data hub and an EU customs authority, and demanded that
the latter receive solid financial backing to allow it to carry out its tasks effectively. Haropa also
welcomed the enhancement of operators' AEO status, citing the current 'major compliance
obligations' for companies. It considered the timeline envisaged for the implementation to be
'appropriate'.

Legislative process
As part of its overall initiative to strengthen, simplify and digitalise EU customs policy, on
17 May 2023 the Commission put forward a legislative proposal to revise the Union Customs Code
and to set up an EU customs authority and an EU customs data hub. The proposal falls under the
ordinary legislative procedure and therefore requires support from both the Council and the
Parliament, following consultation of the EESC (2023/0156(COD)).
In Parliament, the file was assigned to the Committee on Internal Market and Consumer Protection
(IMCO), with Deirdre Clune (EPP, Ireland) as rapporteur. The IMCO committee endorsed her report
in a vote on 22 February 2024. The report is very supportive of the proposal and welcomes the
establishment of a new customs data hub and authority. It would however advance the full roll-out
of the data hub and its mandatory use by traders to 31 December 2032 in the place of

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31 December 2037. Before this date, the Commission could establish a voluntary pilot phase to test
the functionalities of the data hub. The report would also task the new customs authority with
preparing simplified guidelines and manuals for SMEs and taking action to enhance SMEs'
understanding of the customs legislation and formalities. The report also proposes the
establishment of a platform that is to be overseen by the new customs authority through which
businesses and citizens can report goods that have entered the internal market that are not
compliant with EU standards.
The Parliament adopted the report as its first-reading position at its March 2024 plenary.
In the Council, the Working Party on Customs Union is carrying out a technical analysis of the
proposal. A first exchange of views at technical level was held on 26 June 2023, with a first policy
debate at ministerial level held at the Economic and Financial Affairs Council of 14 July 2023. The
debate prepared the ground for further discussions and gave political guidance to the work at
technical level.
In June 2024, the Council took stock of the file's state of play. The Belgian Presidency managed to
accomplish significant analytical work on the proposal during the first half of 2024. The Hungarian
Presidency will continue the work to complete the first-round technical analysis. During the Council's
discussions, Member States acknowledged the importance of closer cooperation between customs
authorities and agreed that the EU data hub is a potential way forward. However, further discussions
and analyses are needed.

EUROPEAN PARLIAMENT SUPPORTING ANALYSIS

Baert P., Proposal for a simplification of VAT rules for e-commerce (imports), EPRS, European
Parliament, July 2024.
Rakštelytė A. with Marchand E., Revision of Union customs legislation, Initial appraisal of a European
Commission impact assessment, EPRS, European Parliament, September 2023.

OTHER SOURCES
European Commission, Communication from the Commission on Customs reform: Taking the Customs
Union to the next level, May 2023.
European Commission, EU Customs Reform, webpage, May 2023.
European Commission, Proposal for a Council Directive amending Directive 2006/112/EC as regards VAT
rules relating to taxable persons who facilitate distance sales of imported goods and the application of
the special scheme for distance sales of goods imported from third territories or third countries and
special arrangements for declaration and payment of import VAT, May 2023.
European Commission, Proposal for a Council Regulation amending Regulation (EEC) No 2658/87 as
regards the introduction of a simplified tariff treatment for the distance sales of goods and Regulation
(EC) No 1186/2009 as regards the elimination of the customs duty relief threshold, May 2023.
European Commission, Proposal for a Regulation of the European Parliament and the Council establishing
the Union Customs Code and the European Union Customs Authority, and repealing Regulation (EU) No
952/2013, May 2023.
European Parliament, Establishing the Union Customs Code and the European Union Customs Authority,
Legislative Observatory (OEIL).

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ENDNOTES

1
The customs union was established in 1968.
2
Such as VAT (the revenue from which is also partially paid into the EU budget) and excise duties.
3
At present, the Union Customs Code requires Member States to apply 'effective, proportionate and dissuasive
penalties' to non-compliant traders.
4
This task has become more burdensome following the elimination of a (partial) VAT exemption on imported online
goods in 2021. As a result, all imported goods are now subject to VAT.
5
The amount of revenues from customs duties lost due to fraud is difficult to estimate. The Commission is currently
working on a methodology to estimate this 'customs gap'. A 2016 study estimated that almost two-thirds of the e-
commerce parcels are undervalued in terms of the customs duties payable on them, resulting in a loss of €1.3 billion
per year.
6
The Commission's impact assessment speaks of an 'EU Data Space' rather than an 'EU Data Hub'.
7
The applicable duty rates for products may be slightly higher compared to the applicable rate based on the full
commodity code. If importers wish to apply a 'standard' (lower) duty rate, they can do so, but they would have to
prove the originating status of the goods.
8
This scheme upgrades and strengthens the current EU Authorised Economic Operator (AEO).

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Third edition. The 'EU Legislation in Progress' briefings are updated at key stages throughout the legislative
procedure.

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