The European Parliament voted this week to postpone implementation of the customs code until 2016.

The proposed code was due to come in to effect in July 2013 but will require a considerable investment by all Member States in compatible software to support the increased use of electronic reporting, harmonised application of the customs provisions and risk management. Current economic conditions and difficulties in ensuring compliance with the Lisbon Treaty have made the 2013 unrealistic.

The MCC when introduced will offer businesses some key trade facilitations, including:

• Streamlined customs procedures (merging many of the existing relief schemes)
• The ability to clear all EU imports in one Member State irrespective of where they physically arrive
• Self assessment similar to VAT rather than submitting customs declarations

The MCC also contains provisions that could adversely impact businesses, including:

• Widening the charging provisions to levy customs duty on more royalty and licence fees
• The abolition of the "First Sale" concept that enables businesses to use an earlier sale in the supply chain as the basis for customs valuation and reducing the duty payable
• The requirement to provide guarantees for all duty suspended goods (e.g. customs warehouses, Inward Processing Relief (Suspension), Processing under Customs Control etc.) for all businesses unless AEO approved

The EU Parliament seems to be warning the EU Commission to drop its plans on First Sale and wider royalty charging provisions, which would be excellent news to the business community which could end up with much higher duty costs if these proposals became law.

Please contact me if you would like further information on what this vote and the Modernised Customs Code means to you.