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Taxation and Customs Union

EU Customs strategy

About the EU Customs Union

The Customs Union is a foundation of the European Union and an essential element in the functioning of the single market. The Customs Union means that EU Member States apply a common system of customs duties to imports of goods from outside the EU customs territory, there are no customs duties and no customs controls at the borders between the EU Member States. The single market can only function properly when there is a common application of common rules at its external borders.

To achieve that, the national customs administrations of the EU act as though they were one. While customs legislation is adopted at EU level, it is implemented on a decentralised basis by the Member States. Member States’ customs authorities supervise all goods entering or leaving the EU customs territory, regardless of their mode of entry or exit.

The role for Customs today

Until recently, the role of the customs consisted primarily of collecting customs duties and indirect taxes at import. Numerous developments, including enlargement, the globalisation of trade and supply chains, the development of e-commerce, the threat of terrorist attacks and the internationalisation of organised crime, have altered the environment in which customs operate.

Nowadays customs authorities not only collect customs duties and VAT on imported goods, and excise duties where applicable, but they also check those goods for many non-financial purposes, such as to ensure the safety and security of the goods and to ensure that they meet EU product compliance requirements, food, health and environmental standards and rules, Intellectual Property Rights and much more. They cooperate in the fight against fraud, terrorism and organised crime together with law enforcement authorities, administrations and agencies responsible for border and internal security. In addition, they are responsible for managing and enforcing an increasing number of preferential trade agreements between the EU and other countries.

In line with these increased responsibilities, the legal rules that customs administrations enforce encompass far more than those relating to customs as such. Customs now also apply rules concerning trade policy such as preferential trade, health and environmental controls, the common agricultural and fisheries policies, the protection of our economic interests by non-tariff instruments, product safety and compliance, common security policy and external relations policy measures and more.

EU customs’ non-fiscal/protection role increased during the Covid-19 pandemic when they stepped up to ensure smooth cross-border trade in the challenging conditions, mainly in respect of the vital medical equipment and later vaccines.

Customs aim to balance controls with the facilitation of legitimate trade because international trade is vital to the success of the EU. To achieve the correct balance between these demands, customs procedures and control methods must be modernised and co-operation between the different services must be reinforced. For this reason, the Union Customs Code (Regulation (EC) No 952/2013) entered into force on 1 May 2016 and work on upgrading and developing electronic systems designed to make the Customs Union a modern, interconnected and fully paperless environment should be completed across the EU before end 2025 at the latest. The details of these IT systems can be found in Union Customs Code Work Programme.

To effectively fulfil their various responsibilities, customs maintain a continuous dialogue with stakeholders. In this context, consultation with the business sector has been enhanced within the framework of the Trade Contact Group, in which all major players in the international supply chain are represented. Trade associations are regularly invited to seminars and working groups to give their input to the development of new policy and legislative initiatives.

A new set of actions

It has become apparent in recent years that Member States’ customs authorities are struggling with the challenges of performing their various roles. Despite the entry into force of the Union Customs Code, there is evidence of problems such as undervaluation of goods to avoid customs duties and VAT, smuggling of illicit or unsafe goods, imbalances between Member States in customs controls and of goods being diverted towards the weakest entry and exist points to the EU customs territory. In addition, the world economy faces structural changes, with digitalization and new business models such as e-commerce. Customs authorities also need to be able to react better to changing or emergency circumstances, such as the COVID-19 pandemic.

Mindful of these evolutions, the Commission elaborated an Action Plan aiming at taking the Customs Union to the next level, aiming at making the customs union smarter, more innovative and more efficient. The communication on Taking the Customs Union to the Next Level: a Plan for Action was adopted on 28 September 2020. The Action Plan comprises 17 actions up to 2025 encompasses a number of different fields, beyond customs policies, in areas such as risk management, managing e-commerce, the promotion of compliance and customs authorities acting as one. The plan includes an EU “Joint Analytics Capabilities” initiative to facilitate the collection and the better use of data, revisiting the role and obligations of e-commerce actors, other e-commerce-focused actions, the stepping up of the EU Authorised Economic Operator (AEO) programme, the development of an EU Single Window environment for Customs that will allow legitimate businesses to complete border formalities in one single portal. A planned Reflection group will aim to see how to make the Customs Union smarter, more agile, more technologically advanced and more crisis-proof.

The Action Plan was accompanied by a second Biennial report on Developing the EU Customs Union and its Governance, describing important EU customs developments in nine priority areas in the period 2018 to 2020.

Please find all the information on the dedicated page.

The future of customs

A key action in the Customs Action Plan is that of launching discussions on how to ensure that the Customs Union is better prepared for the future (Reflection Group). As the Action Plan states, it is vital to explore how to make the Customs Union smarter, more agile, more technologically advanced and more crisis-proof. The Council conclusions on the Action Plan of 21 December 2020 (14292/20) welcomed the plan to launch of such a Reflection Group.

In 2018, DG TAXUD together with the EU Joint Research Centre launched a foresight exercise bringing together customs officials from Member States, European Commission Directorates-General and services, trade associations, businesses, international organisations, consumer organisations, academia, representatives of key trading partners. This project worked to create a shared and strategic understanding among key stakeholders of ways to deal with current and future challenges for customs and to generate a vision for how EU customs should look in 2040. The outcome of this exercise was a report aimed at assisting policymakers in identifying, understanding and directing change. You will find the report on the Joint Research Centre webpage.

Useful links

  • Electronic Customs
  • The European Commission's Anti-Fraud Office (OLAF) has a substantial role to play in investigating customs fraud. For more information see OLAF's website.