The customs authorities of the EU Member States now have a way to say no to duty collection ordered by the EU and OLAF: pay with reservation and then claim the duties back before the European Court of Justice.
Most of the customs duties collected by the customs authorities of the Member States belong to the EU. Only a small part (20%) of the collected import duties remain at the level of the Member State, to compensate for the cost of collection.
Member States that do not make these customs duties available to the EU’s budget upon first demand face infringement actions from the European Commission, to pay the duties, as well as punitive interests (16%).
In a recent audit, the European Commission concluded that Dutch Customs had to act more firmly. The Commission felt that Dutch Customs had not monitored the payment of customs debts after receiving indications of fraud, and had not requested the payment of guarantees from importers when they should have. This, according to the Commission, constituted a breach of the Netherlands’ obligation to make it’s collected customs duties available to the EU’s budget. The result? A not-so-friendly request to The Hague to make their own resources available to the EU budget. Since the Netherlands are no longer able to collect the duties from the importers themselves, this has to come from the Dutch treasury.
Unsurprisingly, Dutch Customs were unhappy about this move and they do not accept that the duties are due. The Netherlands have to pay, of course, but they do so with ‘reservations’. Sounds like a smart move? Absolutely - and yet totally unthinkable - until recently. Only in mid-2020 did the European Court of Justice confirm that questioning the Commission’s findings was a real option. How does paying ‘with reservations’ work? Well, by making available their own resources with reservations, and to then claim the duties back for ‘unjust enrichment’. Legal creativity at its best, and its most practical. This practice was easily mastered by the Dutch, and it is soon to be incorporated into EU law.
Customs practitioners confronted with a recovery of customs duty know the our-hands-are-tied-by-the-Commission witticism all too well. Logic now suggests that customs authorities hiding behind an instruction from Brussels when conducting post-release investigations could soon be a thing of the past.
Collection of customs duties by the Commission on grounds challenged by the Member States has been a constant itch in Brussels, we expect that it is likely to cause more head-scratching in the coming years.