New customs rules, new business opportunities
The customs world is facing a major revolution. After all, Europe has decided to standardise and digitise the customs legislation of all EU Member States. Nor should the impact of Brexit be underestimated. Both of these developments impact the logistic processes of no fewer than 47,000 Belgian companies. Together with customs strategist Stefaan Amling, we take a look at the obstacles and opportunities offered by the new customs laws.
Impact of Brexit and the European Union Customs Code
Customs regulations have remained static for a long time, and the most radical changes date back as far as 1992. “However, the business world will have a lot to face in the coming years,” declares Stefaan Amling. “In 2016, Europe launched new customs legislation, the Union Customs Code (UCC), to modernise and digitise customs procedures. In concrete terms, this means electronic customs declarations, adapted customs tariffs, and new rules for 35,000 companies operating in Belgium. The technological changes and challenges associated with this legislation have never been greater for companies in the last 25 years. The first changes must already be in place in 2020.” In addition, Brexit’s consequences directly impact more than 12,000 companies in Belgium that currently still interact with the UK without the need for customs formalities.
Yet, most companies are barely paying attention to the reforms. This attitude not only jeopardises their entire logistics and supply chain, but it also means that they are missing an opportunity to consolidate their international market position. Stefaan Amling: “Hardly any business in Belgium knows exactly how the arrival of the Union Customs Code will change the market and the company’s own processes. What is certain is that the forced digitisation obliges the government and our businesses to invest over the next three years in order to meet the deadline of end 2020/2023. Otherwise, from one day to the next, they will no longer be able to import or export goods.”
Smart customs strategy pays off
In 2020, many businesses still regard customs formalities, and the related costs, as necessary evils. Nevertheless, according to Stefaan Amling, a well-thought-out approach can help turn them to your advantage. One example: “A container of bicycles assembled outside the EU will cost the importer 14% in import duties, while only 4.7% is due for a container of bicycle parts. Using the wrong definition can be an expensive choice.” And there are many similar best practices. For example, companies with an AEO certificate enjoy many associated advantages – such as fewer checks, simpler procedures and, in some cases, even exemption from import duties or export measures. The certification provides companies with a significant edge over competitors without these perks. It generally takes around a year to obtain an AEO certificate, but, thanks to their expertise and experience, our customs strategists can cut that time in half.
“The main issue today is that companies’ customs-related activities are all highly fragmented,” Amling continues. “Furthermore, many processes are still performed manually and on paper. As a consequence, businesses are not always aware of the exact amounts they are spending on import and export duties or how high they need to set their product’s market price for a particular country in order to make a profit.”
The potential of a smart customs strategy becomes strikingly clear when businesses see exactly how many euros are involved in their customs operations and then combine that knowledge with the opportunities that the UCC legislation offers. “Practical examples show that companies can offer their products to the consumer for up to 25% less – without any additional expense or loss of profit.” In short, the new European customs legislation – with its compulsory digitisation and new technology – is the perfect opportunity to map out everything in detail and make the right strategic decisions to boost operational profit.
Strategy, change and training
At least 47,000 companies in Belgium will feel the consequences of the UCC and Brexit. And most entrepreneurs haven’t got a clue about how to turn these complex transitions to their advantage. Our experts combine customs knowledge with change management, a unique feature in this world, which has experienced practically no change for the past 25 years.
In addition to strategy and optimisation projects, our customs team also offers training courses. “Companies turn to our Customs Competence Center for open workshops or in-house training customised to their business activities,” explains Amling. “They can also use e-learning to boost their knowledge at their own pace. Of course, companies wondering about goods’ classification codes, excise duties, or other customs-related technical queries can always count on our support as well.”
Over the last decade, BDO’s team of customs strategists has worked intensively with the European Commission to formalise this new legislation. They are perfectly positioned to understand the changes and know the IT systems that the European Commission is using to open up its data. We use this unique knowledge to help companies active in Belgium apply European customs law to their advantage. BDO customs strategist Stefaan Amling: “Consider, for example, ways in which they might align their processes to European standardised regulations, or align their software with the databases of the Member States and the European Commission.”
Amling himself stumbled into the sector by accident. “In 1998, I worked for the European Commission on a freelance basis as co-ordinator of the NCTS project (the New Computerised Transit System). After travels in New Zealand and Australia, I received the opportunity to take part in rolling out a project on the standardisation of customs legislation within the European Directorate-General TAXUD.” Since then, he has established a thorough body of knowledge on European customs regulations.