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Taxation and Customs Union
Newsletter22 February 2023Directorate-General for Taxation and Customs Union

Standing with Ukraine: How customs and tax policy contributes to the EU response

 EU and Ukraine flags waving together

It is nearly one year since the start of Russia’s ruthless aggression in Ukraine, an event which called for a swift, determined and unified EU response. DG TAXUD was heavily involved in this crisis response, identifying and implementing quick actions, and cooperating with colleagues in Ukraine every step of the way. Nearly 12 months and 10 sanction packages later, we sat down with colleagues from across DG TAXUD to understand their contribution to this work – what has been done, how this was achieved, and what this work means to them on a personal level.

“In TAXUD, as soon as Russia invaded Ukraine and the issue of sanctions came up, we immediately put in place a small task force, a team we call the “Sanctions Crisis Team,” which involves colleagues from many different Units,” said Lina Papamichalopoulou, Head of Unit for Customs Legislation.  “Customs plays a central role regarding the implementation of trade-related sanctions. It is at the front line in enforcing sanctions at the external borders of the EU and is in a unique position to control goods entering or leaving the EU,” she added.

With each new sanctions package, DG TAXUD worked to ensure that customs could effectively implement and enforce the EU sanctions. This entailed notably making sure that the national systems of customs were up to date with all sanction measures and comprehensive lists of the products impacted by these sanctions.

DG TAXUD worked closely with the heads of EU customs administrations, to facilitate quick and regular information exchange between Member States on sanctions and related risks and to coordinate proper crisis management. This is managed through the secure Customs Risk Management System (CRMS2) that connects the Commission and all Member States customs offices. Mechanisms to detect possible sanctions circumvention were also set up, building from information automatically collected by DG TAXUD systems, or received from authorities and stakeholders on the ground.

With each new sanctions package, DG TAXUD continued to ensure that Member States customs could effectively implement and enforce the EU sanctions. As the measures had been prepared on an emergency basis, there were some difficulties, for example regarding the terminology used in the legislation, which was not always easily understandable by customs. DG TAXUD provided legal expertise and solutions in all aspects relevant to legislation, in particular by “translating” the sanctions regulations into customs procedures that customs officers all over Europe would be able to implement,” Papamichalopoulou said.

On the taxation side, DG TAXUD wanted to ensure that sanctioned Russians and Belarussians were fully and properly scrutinised from a tax perspective, given the potential for evasion and abuse. A Tax Enforcement Plan included actions by EU tax authorities such as tax audits, tax refund screening and information exchange between authorities. A tax subgroup was set up within the EU’s “Freeze and Seize” Task Force to coordinate the work on this plan and ensure its proper implementation.

Pointing to the advantages such a dedicated sub-group brings to the efforts, Karl Croonenborghs, Deputy Head of Unit for Legal Affairs – Direct Taxation in TAXUD said “We are particularly proud of the fact that 27 Member States’ tax authorities support for the first time a joint and coordinated tax enforcement effort in what are challenging circumstances caused by the war in Ukraine. The sub-group provides a unique and welcome forum where issues and problems around tax enforcement in this context can be discussed, and which allows tax authorities to delve straight into the actual work without having to worry about setting up an architecture first.”

To help Ukraine and its people, TAXUD also contributed to DG MOVE’s work on Solidarity Lanes, to ensure the smooth and safe trade of goods between Ukraine and EU Member States and facilitate humanitarian aid shipments to Ukraine. Through the Solidarity Lanes, more than 15 million tonnes of Ukrainian agricultural goods have been exported to countries most in need.

The Solidarity Lanes ensured that trade with Ukraine, including food and other critical products, such as humanitarian goods, continued flowing through the border in very difficult circumstances,” said Maria Isabel Garcia Catalan, Deputy Head of TAXUD’s International Coordination Unit. “Ukrainian citizens and businesses have not been isolated: the exchanges have been kept with the EU and with the rest of the world, and trade has been recovered and kept safe,” she added.

Colleagues provided regular support and guidance to customs authorities in dealing with this new challenge, including by visiting the Member States bordering Russia or Ukraine. There was a strong spirit of EU solidarity – between the Commission and Member States, and with Ukraine

“We have been assisting bordering Member States, like Poland, Romania, Slovakia and Hungary, as well as Ukraine and Moldova to improve border controls and infrastructure and to help them prepare for the Connecting Europe Facility programme,” Garcia Catalan said. “A small team visited the Border Crossing Points between Ukraine, Romania and Moldova, to check how we could better facilitate the traffic and the transit of grain. All Member States have been asked to contribute donations of customs equipment, either to Ukraine or to neighbouring EU Member States.”

On the humanitarian side, DG TAXUD worked quickly to grant VAT and customs duty relief to goods that Member States imported to help Ukrainians. Discussions were also launched amongst Member States to avoid the double-taxation of Ukrainian refugees and a reflection began on other tax and customs measures that could help facilitate the integration of Ukrainian people into the EU market.

The war also accelerated pre-accession work with Ukraine in the area of customs. This included finalising legal texts, such as the one in which Ukraine commits to take over the Union Customs Code – the EU’s legal framework for all customs rules and procedures in the EU customs territory. Results were quickly achieved.

Ukraine has over 80% of Union Customs Code transposed into its legislation. The remaining parts are planned to be finalised with the adoption of new Ukraine Customs Code, when war situation allows it.

Both the work on the Customs and Taxation chapters will be included from autumn 2023 in the EU Enlargement package, which starts detailed screening of Ukraine’s legislation, in view of opening the enlargement negotiations one day,” said International Relations Officer Kaido Sirel.

Moreover, the EU has opened the Customs and Fiscalis programmes to Ukraine, which means that Ukraine will be able to take part in the activities of both programmes with EU Member States and other participating countries, in a major boost for cooperation between the EU and Ukraine on customs and tax matters. We also supported them Ukraine’s accession to the Common Transit Convention (CTC) and its use of the New Computerised Transit System (NCTS) from October 2022. This enables Ukraine to use the Union Transit System like any EU Member State, while the CTC facilitates trade and speeds up the border crossing of goods. “Ukrainians even named it their ‘visa-free access to the EU Common Market’,” Sirel said.

Throughout it all, DG TAXUD colleagues were in close contact with their Ukrainian counterparts, who were often quite literally working on the frontline. They got to witness first-hand the resilience of the Ukrainian people.

The working environment has been extreme. For example, we had cases where, in the middle of a video conference meeting, the Ukraine delegation needed to run for shelter because of the air raids and Russian rockets launched in the capital city. After one hour, the Ukrainians came back from the shelter and continued the meeting like nothing happened,” Sirel said.

Looking back, the one thing that all TAXUD colleagues interviewed emphasise is the excellent cooperation – among units within the Directorate-General, but also with other DGs, Member States and international partners.

Sanctions coordination is teamwork. Without the close cooperation of experts from different areas of expertise, it would not have been possible to solve the multitude of issues and to find creative, effective and sustainable solutions within short deadlines,” Papamichalopoulou said.

Sirel echoes this: “I am particularly proud of everything that DG TAXUD has contributed to the work for Ukraine. The whole of DG TAXUD worked like big supportive family, enabling us to achieve nearly impossible results in record speed,” Sirel said.

One year of Ukrainian resistance

EU Solidarity with Ukraine

EU measures following the Russian invasion of Ukraine: Information for customs authorities and stakeholders


Publication date
22 February 2023
Directorate-General for Taxation and Customs Union