COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE Customs reform: Taking the Customs Union to the next level
Date: 2023-05-17
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: common tariff policy, customs cooperation, customs inspection, customs union, external border of the EU, goods and services, information system, risk management, simplification of formalities, supply chain

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 17.5.2023  COM(2023) 257 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE Customs reform: Taking the Customs Union to the next level  
 
 
1. INTRODUCTION  

It is time to take the Customs Union to the next level, equipping it with a stronger framework 
that will allow us to better protect our citizens and our Single Market. I will propose a bold 
package for an integrated European approach to reinforce customs risk management and 
support effective controls by the Member States. Ursula von der Leyen, President of the 
European Commission, July 20191. 

The Customs Union is a true success story of European integration and prosperity: the 
European  Union  benefits  strongly  from  being  connected  with  the  rest  of  the  world  through 
international  trade,  while  goods  can  move  freely  within  the  EU  Single  Market,  the  world's 
largest  integrated  single  market  area2.  In  2021,  the  value  of  EU  trade  with  other  countries 
amounted to EUR 4.3 trillion, accounting for 14% of world trade, while up to 56 million jobs 
in the EU are dependent on intra-EU trade3.  

Customs are the guardian of the EU’s external border for goods and for the security of 
our supply chains. Customs supervises all goods entering or leaving the Customs Union, 24 
hours a day and 365 days a year, processing 691.5 million import declarations, 17.5 million 
transit  movements,  and  486.3  million  export  declarations  in  20214.  Customs  identify  risks, 
based  on  trade  and  security  intelligence  and  carry  out  controls  to  ensure  that  EU  rules  are 
enforced. In 2021, customs collected more than EUR 50 billion per year in taxes and around 
EUR 25 billion in customs duties. 75% of the duties collected goes to financing the EU budget, 
representing 8% of the revenue of the EU’s budget. At a time when financing needs for public 
investment have increased, it is of strategic importance to equip customs in the EU with the 
tools to protect the EU’s and Member States’ financial interests. At the same time, customs 
tariffs and other trade measures protect the EU against unfair trade practices. Increasingly, the 
role  of  customs  in  protecting  the  EU  goes  beyond  tariffs,  by  enforcing,  together  with  other 
authorities,  standards  e.g.,  on  health,  environment,  security,  and  safety,  especially  through 
prohibitions and restrictions5, for example trafficking in illegal drugs and firearms. 

The early 2020s have been marked by tectonic shifts in the geo-political landscape leading 
to disruptions in global supply chains, re-emphasising the need for the EU to identify and 
reduce its strategic dependencies. This should be done through a mix of measures, as laid out 
in the EU Green Deal Industrial Plan6. For EU businesses to prosper in this new era and to keep 
and  develop  production  capacities  within  the  Single  Market,  notably  in  critical  industries,  a 
level playing field with non-EU producers is key. International competition can only work to 
the mutual benefit of trading partners when rules are applied and enforced. Addressing unfair 
competition  and  production  methods  that  undermine  the  EU’s  health,  safety  and  security 
standards or exploit the environment or forced labour, benefits the EU and its trading partners. 

A  well-functioning  Customs  Union  is  thus  fundamental  to  the  EU’s  competitiveness, 
sustainability and resilience. A reformed and strengthened Customs Union will preserve the 
integrity of the Single Market, helping to maintain EU competitiveness in the twin green and 

Political Guidelines for the Next European Commission 2019-2024, page 16. 
Measured in purchasing power parity, IMF World Economic Outlook. 
International trade in goods - Statistics Explained (europa.eu). 
EU Customs Union – unique in the world (europa.eu).  
European  Commission,  Directorate-General  for  Taxation  and  Customs  Union,  Integrated  EU  prohibitions  and 

1 
2 
3  
4  
5 
restrictions list: indicative calendar and list as of 1.1.2022 legal notice, Publications Office of the European Union, 2022. 
6 
Communication  from  the  Commission  to  the  European Parliament,  the  Council  and  the  European  Economic  and 
Social Committee and the Committee of the Regions A Green Deal Industrial Plan for the Net-Zero Age, COM (2023) 62 final. 

1 

 
                                                           
digital transitions. This means that effective monitoring and control of supply chains for goods 
at the EU’s external border is, more than ever, of strategic importance for the EU.  

2. CUSTOMS IN TRANSITION AND UNDER PRESSURE 

European Customs do not yet currently function ‘as one’. This leaves the Customs Union at 
the mercy of its weakest link. Incremental changes introduced over the years were necessary 
[…]. Nonetheless, in a fast-changing world, these are insufficient to address the scale of the 
challenges faced by Customs. The Customs Union is not ‘fit for purpose’ Wise Persons 
Group on the future of customs7  

Throughout recent crises, and despite the limitations of the current framework, customs 
have successfully and swiftly delivered. Customs have played an essential role in the EU’s 
coordinated  and  forceful  response  to  the  unprovoked  Russian  invasion  of  Ukraine:  from 
enforcing  export  bans  -  including  on  dual  use  and  military  goods  -  and  import  controls,  to 
supporting humanitarian aid via duty reliefs and green lanes. This came only a year after the 
decisive role of customs during the COVID-19 pandemic in monitoring the transit of life-saving 
vaccines and medical equipment, while adapting to disrupted and shifting global supply chains. 
At  the  same  time,  the  end  of  the  transition  period  following  the  withdrawal  of  the  United 
Kingdom from the EU effectively changed the boundaries of the Customs Union in 2021; a 
tremendous challenge which customs have successfully managed. 

However,  these  crises  also  highlighted  the  indisputable  need  for  a  structural 
modernisation to make EU Customs a strategic capability of the European Union. Under 
the current Union Customs Code Regulation (UCC)8 and its resulting governance framework, 
customs legislation and common tariffs are an exclusive EU competence, while Member States 
are responsible for implementation, most importantly by means of performing risk management 
and controls on the ground. According to the European Court of Auditors (ECA), this setup 
leads  to  substantial  and  largely  undesirable  discrepancies  in  the  application  of  customs 
legislation across Member States, weakening the Customs Union, hampering the EU’s financial 
interest and allowing non-compliant operators [to] target EU points of entry with lower levels 
of controls9. These same weaknesses and gaps are also exploited by non-compliant trade and 
by organised criminal operations, undermining the security of the EU and the integrity of the 
Single  Market.  Independent  studies  consistently  show  the  high  non-compliance  rates  of 
imported  products  in  different  manufacturing  sectors,  such  as  chemicals10  and  toys11.  Non-
compliant products entering the EU hamper the competitiveness of compliant businesses and 
pose serious risks to the health and lives of EU consumers, with product-related injuries and 
premature death causing unmeasurable pain for those affected. A recent report found that 95% 
of products sold via online marketplaces are non-compliant with chemicals laws in different 
ways12. In this regard, societal costs are estimated at EUR 76.6 billion per year13. 

Putting more Union in the European Customs: Ten proposals to make the EU Customs Union fit for a Geopolitical 

Regulation (EU) No 952/2013 of the European Parliament and of the Council laying down the Union Customs Code 

7  
Europe, Report by the Wise Persons Group on the Reform of the EU Customs Union, Brussels March 2022. 
8 
(OJ L 269, 10.10.2013, p. 1–101). 
9 
ECA Special Report 04/2021: Customs controls: insufficient harmonisation hampers EU financial interests. 
10 
Based on the latest REACH and CLP enforcement report, up to 28% of imports are not compliant with REACH and 
the Classification, Labelling and Packaging (CLP) Regulation. According to a recent CEFIC (European Chemical Industry 
Council)  report,  in  2020  80%  of  non-compliant  articles  containing  banned  or  restricted  chemicals  comes  from  outside  the 
EU/EEA. 
11 
alerts, with a significant proportion of unsafe toys originating from non-EU countries (85% from China alone).  
12  
13 
Council on general product safety’ (SWD (2021) 168 final). 

EEB report on Online Platforms: Role and Responsibility in Ecodesign policy. 
Impact assessment accompanying the document ‘Proposal for a Regulation of the European Parliament and of the 

In 2016-2021, dangerous toys found on the EU market represented more than a quarter of total RAPEX / Safety Gate 

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Customs are increasingly burdened with an ever-growing range of tasks. In the last years 
the EU has agreed a significant number of very  ambitious legislation setting environmental, 
safety, health,  social and digital  standards that shape the way businesses operate within and 
beyond  the  Single  Market.  Recent  examples  include  the  updated  General  Product  Safety 
Regulation 14, the Regulation to minimise EU-driven deforestation15, the Regulation to prohibit 
products made with forced labour16, the EU Carbon Border Adjustment Mechanism17 and the 
European  Accessibility  Act18.  To  date,  goods  need  to  comply  with  over  370  pieces  of  EU 
legislation  that  customs  have  a  duty  to  enforce.  The  steady  increase  of  tasks  related  to  the 
enforcement  of  EU  legislation  on  prohibitions  and  restrictions,  has  resulted  in  significant 
pressure on customs. Moreover, without a central supply chain supervision, the EU does not 
have  full  visibility  and  control  over  which  goods  enter  and  leave  the  Single  Market.  This 
weakens not only the credibility of the EU’s sectoral policies, but also limits the EU’s power 
as a geopolitical actor.  

This challenge is intensified by a drastic increase in trade volumes, largely driven by the 
extraordinary  growth  of  e-commerce  which  generates  an  exponential  number  of  small 
packages of low-value goods. The 2017 VAT e-commerce reform, which aimed to respond to 
the sharp growth of e-commerce, introduced several simplifications for the collection of tax on 
e-commerce  transactions  and  removed  the  VAT  exemption  on  imported  goods19.  While  the 
reform did not remove the EUR 150 customs duty exemption, it introduced the obligation to 
lodge an electronic customs declaration, leading to 1 billion additional customs declarations in 
2022, coming on top of the standard customs declaration, which have already almost doubled 
from 376.8 million items in 2019 to 691.5 million items in 2021. Moreover, maintaining the 
customs duty exemption for goods up-to EUR 150 has left the door open for the systematic 
abuse of that threshold through undervaluing and splitting of consignments. About 65% of the 
e-commerce  consignments  are  undervalued20  with  a  view  to  avoiding  customs  duties,  while 
studies suggest that 66% of products purchased online do not meet EU safety requirements21. 
Finally, the difference between the VAT and customs treatment of e-commerce goods renders 
the system complex for the parties involved. Today, customs do not have today the means to 
properly enforce the rules of international  trade on cross-border e-commerce. A tailor-made 
customs regime for e-commerce is needed. 

The  2013  Customs  Reform  establishing  the  UCC,  in  force  since  May  2016,  moved  EU 
Customs to a paperless, integrated and fully electronic environment. The IT deployment of 
the reform is ongoing and will be completed by the end of 2025. It focuses on digitising existing 
processes  without  changing  underlying  principles.  However,  as  already  indicated  in  the 

Proposal for a Regulation of the European Parliament and of the Council on prohibiting products made with forced 

14  
Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  on  general  product  safety,  amending 
Regulation (EU) No 1025/2012 of the European Parliament and of the Council, and repealing Council Directive 87/357/EEC 
and Directive 2001/95/EC of the European Parliament and of the Council (COM(2021)346). 
15 
Proposal for a Regulation of the European Parliament and of the Council on the making available on the Union market 
as well as export from the Union of certain commodities and products associated with deforestation and forest degradation and 
repealing Regulation (EU) No 995/2010 (COM (2021) 706). 
16 
labour on the Union Market (COM(2022)453). 
17 
mechanism, COM/2021/564 final. 
18  
requirements for products and services (OJ L 151, 7.6.2019, p. 70). 
19 
Council  Directive  (EU)  2017/2455  of  5  December  2017  amending  Directive  2006/112/EC  and  Directive 
2009/132/EC as regards certain value added tax obligations for supplies of services and distance sales of goods (OJ L 348, 
29.12.2017, p. 7). 
20 
21 

Copenhagen Economics (2016), E-commerce imports into Europe: VAT and Customs treatment. 
https://www.beuc.eu/publications/beuc-x-2021-004_is_it_safe_to_shop_on_online_marketplaces.pdf  

Directive  (EU)  2019/882  of  the  European  parliament  and  of  the  Council  of  17  April  2019  on  the  accessibility 

Proposal for a Regulation of the European Parliament and of the Council establishing a carbon border adjustment 

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Communication ‘Taking the Customs Union to the Next Level:  A Plan for Action’22, which 
was  broadly  supported  by  the  Council  in  its  Conclusions  of  December  2020,  the  ongoing 
completion of the UCC roll-out is needed but insufficient for addressing emerging challenges. 
Equally,  the  European  Parliament  stressed  the  importance  of  fully  digitising  Customs  IT 
systems by 2025 but called for further reform to improve the UCC and adapt it, in particular to 
address  ‘the  challenges  and  risks  arising  from  e-commerce’23.  The  current  approach  of 
connecting national  IT systems at  EU level  is  reaching its limit.  Not only  is  it expensive to 
develop and maintain 27+1 IT systems, and for trade to connect to different national systems, 
but the speed of adaptation to change is slow and customs data remains fragmented.  

3. THE NEXT LEVEL – CORE PRINCIPLES AND KEY FEATURES OF THE REFORM 

To bring  a step change to the Customs Union that  will stand the test of time in  the coming 
decades, the Commission has now tabled the most ambitious and comprehensive reform of the 
Customs Union since its birth in 1968, founded on three core principles: 

1.  An efficient Customs Union with simplified and modernised customs procedures, so 
that legitimate businesses can benefit from trading opportunities with certainty that their 
competitors also play by the wide range of rules enforced under the customs umbrella, 
no matter where the goods enter the EU. 

2.  A geopolitical Customs Union, capable of better defending the financial interest of the 
EU  and  its  Member  States  as  well  as  EU’s  security,  safety,  health,  economic  or 
environmental  interests  and  values,  to  coordinate  trade  restrictions  and  shape 
international customs cooperation, by pooling competence and expertise at central level 
in the EU Customs Authority.  

3.  An  agile  and  future-proof  Customs  Union,  adapting  flexibly  to  changes  in  supply 
chains,  be  it  the  twin  green  and  digital  transitions  in  the  ongoing  decade,  or  future 
developments  in  supply  chain  management.  This  will  be  supported  by  the  new  EU 
Customs  Data  Hub  which  is  designed  to  evolve  with  new  requirements  in  customs 
operations over time, unlike traditional IT systems that are built for specific processes 
and purposes only. 

Box 1: The Customs reform in a nutshell 

This  reform  seeks  to  establish  a  more  cost-efficient  and  effective  cooperation  framework 
governing the Customs Union, based on a new partnership among EU customs authorities 
and between customs and business, with two overarching objectives:  

(i)  Reduce  compliance  costs  for  administrations  and  businesses  through  simplified  and 

modernised procedures (chapter 4)  

(ii) Enable EU Customs to better protect the financial and non-financial interest of the EU 
and its Member States as well as the Single Market, based on common, EU-wide risk 
management and more harmonised controls (chapter 5) 

These two objectives are inherently linked: The more control capabilities are strengthened; the 
more procedures can be simplified. The more procedures are simplified, the more resources can 
be freed up to tackle illicit trade. To deliver on this ambition, the reform proposes to set up two 
key enablers: the EU Customs Authority and the EU Customs Data Hub.  

Communication  from  the  Commission  to  the  European Parliament,  the  Council  and  the  European  Economic  and 

22 
Social Committee, Taking the Customs Union to the Next Level: A Plan for Action (COM (2020) 581 final). 
23 
achievements and looking towards future developments (2022/3015(RSP). 

European  Parliament  resolution  of  18  January  2023  on  the  30th  anniversary  of  the  single  market:  celebrating 

4 

 
                                                           
The key function of the EU Customs Authority (see also Box 5) will be to pool expertise and 
competences  that  are  currently  scattered  across  the  EU,  to  steer,  coordinate,  and  support 
national customs authorities in the EU. This will enable strengthened supply chain supervision, 
with customs authorities at EU and national level ‘acting as one’ when it comes to controlling 
the EU’s external border for goods. 

The  new  EU  Customs  Data  Hub  (see  also  Box  3)  will  be  the  face  and  the  engine  of  the 
Customs Union and a prerequisite for strengthening supervision and simplifying procedures. It 
will over time integrate and replace the existing Customs IT infrastructure and at the same time 
enhance interoperability with related policy fields (see also chapter 6). Thereby, the EU and its 
Member  States  will  save  billions  in  IT  development  and  maintenance  costs  annually 
compared to the status quo24. 

Traders will see an annual reduction of compliance costs of around EUR 2.7 billion per 
year due to the simplified procedures. Moreover, the reform will secure several billions of 
additional  public  revenue  in  the  EU,  by  reducing  tax  and  customs  fraud  and  tackling 
undervaluation.  The  tailor-made  e-commerce  regime  will  also  bring  additional  revenue, 
estimated at EUR 1 billion per year. 

4. SIMPLER CUSTOMS PROCEDURES – A NEW PARTNERSHIP BETWEEN CUSTOMS AND BUSINESS 

The  reform  covers  three  layers  of  simplifications:  A  first  set  of  measures  will  reduce 
formalities for all traders, yet without reducing customs’ control capabilities. A second set of 
simplifications will be applicable only to a selected group of ‘Trust and Check traders’, building 
on and improving the existing concept of Authorised Economic Operators (AEO)25. Lastly, the 
reform  will  put  in  place  a  tailor-made  customs  regime  for  e-commerce,  to  reduce  the 
compliance  costs  linked  to  processing  e-commerce  and  establish  full  transparency  for 
consumers. Transparency is the overall guiding principle of this reform: the more transparent 
traders are with customs about their supply chains, the less interference is needed on the ground. 
This represents a fundamental shift in the relationship between customs and business that will 
reduce administrative  formalities and unnecessary  red tape  while boosting  risk management 
capabilities.  

Box 2: Major simplifications for businesses and authorities 

Key simplifications of this reform include:  

  Single EU interface. Customs data will only need to be submitted to the EU Customs 
Data Hub, as opposed to multiple interfaces from the 111 separate systems in place 
across  the  EU  today.  Because  information  is  gleaned  from  stable  supply  chain  data, 
supporting  documents  only  need  to  be  submitted  once  for  multiple  consignments.  The 
obligation  to  submit  standardised  declarations  will  be  removed  and  replaced  by  the 
obligation for the relevant actors to make available the relevant information on time. In such 
a way, compliant goods could flow without any customs intervention26.  

  Customs  One-Stop-Shop.  Trust  and  Check  Traders  will  have  one  single  customs 
administration as a partner while operating across the EU.  Instead of having to deal 
with  up  to  27  national  customs  administrations  with  different  practices,  traders  will 
exchange with one customs administration in the place of their establishment, facilitated by 

The benefits and cost savings are even more pronounced compared to a counter-factual scenario of an un-coordinated 

24 
national roll-out of data hubs, further fragmenting the Customs Union. 
25 
AEO  status  is  a  certified  standard  authorisation  issued  by  customs  administrations.  It  certifies  that  an  economic 
operator  has  met  certain  standards  in  relation  to,  e.g.,  safety  and  security,  compliance  with  customs  rules,  and  financial 
solvency.  
26  

This excludes goods which are subject to restrictions. 

5 

 
                                                           
the EU Customs Data Hub. This approach may be extended to all traders after a thorough 
review in 2035.  

  Simpler  and  more  transparent  e-commerce  import  processes.  Platforms  will  be 
considered the importers of the goods they sell and must report those sales to customs. This 
will  ensure  full  transparency  for  EU  citizens,  who  no  longer  risk  facing  unexpected 
compliance fees from the postal or express operators.  

  A simplified 4-bucket method to calculate duties for low-value goods. The reform will 
introduce  a  new  system  for  low-value  consignments  that  substantially  simplifies  the 
classification and valuation of low-value goods, without creating loopholes for fraud. This 
will enable the removal of the customs duty exemption for goods  worth up to EUR 150, 
which is currently a source of customs and VAT fraud. 

Customs processes reflect the complex reality of international trade, involving a multitude of 
actors  such  as  suppliers,  traders,  transporters  and  service  providers.  Today,  information  is 
collected  in  multiple  declarations  for  each  consignment  of  goods  no  matter  its  size,  and  at 
different stages: before entry or exit, at arrival, for temporary storage and for placing the good 
under a customs procedure. Declarants need to be familiar with up to 27 different national IT 
environments. They may also need to provide supporting documents related to the origin or 
manufacture of goods depending on their nature, such as when their production may be at risk 
of breaching EU prohibition and restriction legislation (e.g., the geo-localisation of the forest 
to fight against deforestation or information on manufacturers convicted for forced labour). The 
formalities and various processes have an administrative overhead and come at a cost to trade.  

At the same time, customs can only enforce the rules when they know in advance which goods 
are  departing  or  arriving  and  can  decide  whether  and  where  interventions  and  checks  are 
necessary. In an ideal world, procedures for compliant trade flows would therefore be simple, 
accessible and fully automated. Customs would then be able to focus their resources to better 
target  risks  and  carry  out  controls  in  the  least  disruptive  way.  For  this  to  happen,  customs’ 
attention  must  shift  from  a  focus  on  the  process  compliance  of  individual  consignments, 
towards a focus on the problems and risks of overall supply chains, based on the information 
available  to  them.  This  customs  reform  will  therefore  strengthen  customs’  capability  to 
supervise supply chains and intervene, wherever necessary (see also chapter 5). Interoperability 
with other relevant  databases, enabling links such as those between the  EU Customs Single 
Window Certificates Exchange and the Digital Product Passport27 registry, will be instrumental 
in  facilitating  customs  and  enforcement  checks  by  providing  standardised  information  in 
electronic form. 

Box 3: The EU Customs Data Hub - embracing the industrial data revolution 

The EU Customs Data Hub  will be the face and the engine of the Customs Union.  It  will 
collect,  process,  connect  and  store  all  relevant  data,  thereby  redefining  the  way  in  which 
information is provided, used for customs supervision and shared with partner authorities. It 
will  also  run  EU-level  risk  analysis.  The  EU  Customs  Data  Hub  is  a  key  enabler  and  pre-
requisite for: 

  The simplified procedures and reduced compliance costs for businesses and authorities 
alike. Information can be provided to customs by connecting directly to the EU Customs 
Data  Hub,  instead  of  multiple  national  systems.  It  allows  for  multiple-filing  and  stable 
information can be provided once and reused for subsequent imports or exports. 

  A common, EU-wide risk analysis underpinning control recommendations, based on 
centralised data, more  efficiently  and effectively  protecting  the EU’s  external  border for 

27  
sustainable products and repealing Directive 2009/125/EC (COM(2022) 142 final). 

As  introduced  in  the  proposal  for  a  Regulation  establishing  a  framework  for  setting  ecodesign  requirements  for 

6 

 
                                                           
goods (chapter 5). The information provided to the EU Customs Data Hub will be used for 
EU and national risk analysis. Beyond the EU Customs Authority, national authorities as 
well as the Commission, OLAF, European Public Prosecutor’s office (EPPO), and under 
certain  conditions  Europol  and  Frontex  will  have  access  to  the  EU  Customs  Data  Hub, 
substantially strengthening their analytical capabilities. This enables an EU-wide overview 
of risks and means that risks can be tackled across the EU, regardless of where goods enter, 
thereby supporting EU and national risk management.  

4.1 Simplifications for all traders 

In the current system, customs formalities are usually taken care of by a declarant, who is not 
necessarily the importer or the exporter. In the new system, each single consignment will be 
linked to one single operator, who will be liable for compliance with duty payments and 
product rules. Importers and exporters will be responsible for paying the applicable duties and 
taxes and ensuring compliance with the various procedural and legislative requirements.  

In this innovative new partnership, businesses will be able to provide the information they 
usually need to provide to customs on their imports and exports directly via one IT interface – 
the EU Customs Data Hub. Different actors involved in moving the goods, such as transporters 
or warehouse operators, will also enter their relevant data elements via the new tool. Emphasis 
will be placed on the collection of first-hand data from trade and commercial systems,  web 
platforms and other sources with a complementary reduction in reliance on third-party data and 
in customs processes in general. Stable information on supply chains that is not expected to 
change in the short term can be provided once and reused for subsequent imports or exports. 
Over time, this will develop into a full overview of businesses’ supply chain and activities. 

This partnership will not create any new loopholes that criminal activities could exploit: 
customs will have all the real-time information they need on which goods are coming and when 
(see also chapter 5). Customs risk analysis will be strengthened by collecting better data on the 
supply chain and introducing EU-level risk analysis to fight cross-border fraud and that, under 
certain  conditions,  may  feed  into  the  threat  assessment  analyses  developed  by  other  Union 
agencies, including Europol and Frontex, within their respective competencies. Customs will 
have a bird’s-eye view of ongoing trade and supply chains. Together with partner authorities 
they could intervene on any given consignment according to its risk analysis before loading, at 
entry, during transport or at destination. 

4.2 Simplifications for ‘Trust and Check traders’ 

A  small  group  of  selected  ‘Trust  and  Check  traders’  will  benefit  from  even  greater 
simplifications that would reduce to a minimum paperwork and formalities28. Transparent 
trade flows will be able to move via ‘green lanes’ without formal customs interaction and free 
of administrative burden, while customs will request a control only if necessary. The concept 
of  ‘Trust  and  Check  traders’  builds  on  the  current  AEO  status  while  upgrading  and 
strengthening it. Like AEOs, ‘Trust and Check traders’ will have to comply with a number of 
criteria aimed at ensuring that they are trustworthy operators such as a clean legal record, a high 
level of control of their operations and supply chain, and financial solvency. In addition, they 
will  need  to  operate  an  electronic  system,  which  makes  available  real-time  data  on  the 
movement of their consignments and their compliance with all relevant requirements through 
the EU Customs Data Hub.  

As EU Customs will have a full supply chain overview for these ‘Trust and Check traders’, 
they could be authorised by customs to self-monitor the compliance of their goods under certain 

28 

By contrast, the obligation to provide certain minimum pre-loading and pre-arrival information must remain. 

7 

 
                                                           
conditions, release the goods on behalf of the customs authorities and pay duties periodically, 
without submitting transaction-based customs declarations per consignment. Customs will be 
able to perform risk analysis and check information on a continuous basis and request a control 
whenever  they  deem  it  necessary.  The  quality,  coherence,  and  accuracy  of  the  received 
information  will  allow  monitoring  the  operator’s  trustworthiness.  If  needed,  customs  could 
revoke or suspend the trust and check authorisation if the ‘Trust and Check traders’ do not meet 
anymore the criteria to be authorised or in case of misconduct. 

4.3 A tailor-made customs regime for e-commerce  

Building  on  the  successful  VAT  modernisation29,  this  reform  sets  up  a  tailor-made 
customs regime for e-commerce30. Back in 2017, EU Member States agreed to remove the 
VAT exemption for imported goods valued up to EUR 22 as from 2021, with a view to adapting 
VAT rules to the realities of distance sales of goods triggered by the extraordinary growth of e-
commerce. Before this reform, e-commerce was a big blind spot. Low-value goods were not 
declared to customs, resulting in a complete lack of supply chain supervision. Since July 2021, 
all  imported  goods  are  subject  to  VAT  and  covered  by  a  digital  customs  declaration.  This 
includes goods valued up to EUR 150 for which no customs duties are currently due.  

New procedures will be put in place to further simplify the current regime and align it 
with VAT rules for e-commerce. As customs do not have the means to properly enforce the 
rules  of  international  trade  on  cross-border  e-commerce,  digital  platforms  will  be  made 
‘deemed  importers’  (instead  of  consumers)  and  considered  responsible  for  all  customs 
formalities and payments. They will charge the customs duties at the moment of sale and pay 
them to the respective Member States as they already do for VAT31.  

Moreover, a simplified method for calculating the applicable import duties for low-value 
goods sold through distance sales to consumers will be introduced in the reviewed Common 
Customs Tariff. Together with the use of the EU Customs Data Hub, this simplified method is 
expected to offset a potential increase in administrative costs of the e-commerce regime. It will 
be based on 4-tier bucketing system with respective ad valorem duty rates32 of 5% (e.g., for 
toys, houseware articles), 8% (e.g. for silk products, glassware), 12% (e.g. for cutlery, electrical 
machinery) and 17% (e.g. for footwear). This will simplify rules, similarly to what is already 
practised by international partners such as Canada33, while closing a loophole, which currently 
leads to foregone revenue of at least EUR 1 billion for EU budgets.  

As customs will receive relevant information from the platform on all sales, the new rules will 
also  allow customs  to  better  enforce compliance with product requirements.  If  customs 
encounter a problem related to a parcel, they could further investigate whether it concerns an 
isolated case or a systemic problem. In addition, customs could contribute to enforcing the new 
rules on responsibility embedded in the Digital Services Act34. 

Footnote 9. See also VAT EU legislation (europa.eu). 
The new rules will take into due account multilateral negotiations in the WTO or digital partnerships concluded with 

29 
30  
Japan, Korea and Singapore. 
31  
Platforms  will  also  be  responsible  for  ensuring  that  distance  sellers  are  registered  with  producer  responsibility 
organisations those goods that are subject to extended producer responsibility, in order to ensure a level playing field with other 
sellers. 
32  
number of units’. 
33 
See https://www.wto.org/english/tratop_e/msmes_e/canada_sept21_e.pdf. 
34 
Regulation (EU) 2022/2065 of the European Parliament and of the Council of 19 October 2022 on a Single Market 
For  Digital  Services  and  amending  Directive  2000/31/EC  (Digital  Services  Act)  (Text  with  EEA  relevance)  (OJ  L  277, 
27.10.2022, p. 1–102). 

‘Duty levied as a percentage of value of the services or goods being imported, rather than on their weight or the 

8 

 
                                                           
Finally, the new rules will clarify responsibilities in the import process, thereby increasing 
transparency  in  e-commerce.  This  will  shield  EU  citizens  from  unpleasant  surprises,  like 
unexpected costs and burdensome customs formalities. Consumers will have transparency on 
the  full  cost  of  their  online  purchase  and  pay  for  it  in  one  go,  as  they  already  do  for  VAT. 
Moreover, they will have more confidence that the products they buy will not harm them or the 
environment, giving business an incentive to produce sustainably.  

5.  SUPPLY  CHAIN  SUPERVISION  AS  A  GEO-STRATEGIC  CAPABILITY  –  A  NEW  APPROACH  TO 

MANAGING RISK AT THE EU’S BORDER FOR GOODS.  

Box 4: Key capabilities of the new EU risk management framework 

The reform will introduce a new governance framework for EU risk management, involving 
Member States, the Commission, the new EU Customs Authority (see also Box 5) as well as 
market  surveillance  and  other  relevant  authorities.  Importantly,  the  new  partnership  with 
businesses underpins this new governance framework.  

The reform will establish four capabilities that are crucial to deliver risk management to protect 
the EU’s common border for goods: 

1.  A  central  risk  analysis  capability  at  the  core  of  the  new  EU  Customs  Authority, 

exploiting the new wealth of data in the EU Customs Data Hub; 

2.  A mechanism to ensure a more harmonised implementation of risk management and 

controls across the EU’s common border for goods; 

3.  A cooperation framework of various authorities managing the Single Market  and the 

Customs Union. 

4.  A process for forming a common view on risk prioritisation 

To balance needs and resources, customs controls are largely based on automated and targeted 
risk management. Currently, Member States employ national systems with national data to do 
this, without EU-wide supply chain supervision. At the moment, neither Member States nor the 
Commission  have  a  complete  EU-wide  overview  of  the  consignments,  operators  or  supply 
chains for risk management and control purposes. 

The ECA has identified structural challenges and shortcomings in the management of financial 
risks  that hamper the EU’s financial interests.  Risk  management in the EU  lacks important 
features, such as: an EU-wide analysis, based on data from all EU imports; appropriate data-
mining techniques; and appropriate methods to address financial risks for imports resulting 
from e-commerce and Uniform application of customs controls by Member States is necessary 
to  prevent  fraudulent  importers  from  targeting  border  entry  points  with  a  lower  level  of 
controls. 

Customs are even less equipped to manage non-financial risks: the current risk management 
framework does not adequately capture the increasing number and complexity of EU laws that 
require customs to check product compliance of imports. Synergies with related policies remain 
untapped. There is no common approach to prioritising non-financial risks. Instead, risks are 
currently  prioritised  in  an  unstructured  and  haphazard  way,  leading  to  27  different  national 
approaches  to  controlling  the  EU’s  border  for  goods  and  opening  the  door  for  rerouting, 
circumvention and fraud.  

Put simply, the EU Customs Union lacks an effective EU risk management framework to 
protect the EU border for goods. Five guiding principles form the conceptual basis for a holistic 
EU risk management framework, striving for common standards while acknowledging specific 
national/regional/sectoral characteristics: 

9 

 
1.  Customised 

and 
national/regional/sectoral specificities and managing non-financial and financial risks;  
2.  Dynamic  risk  management,  adapting  to  a  constantly  changing  risk  landscape  and 

risk  management, 

principles 

balancing 

central 

detection tools; 

3.  Inclusive risk management, building on cooperation with other authorities and ‘Trust 

and Check traders’; 

4.  Data-driven  risk  management,  exploiting  efficiently  and  comprehensively  all 

available data; 

5.  Effective  risk  management,  ensuring  a  more  harmonised  application  of  customs 

controls across the single external border.  

There are no customs borders between Member States and the controls by one customs officer 
serve all Member States. A decision on the control intensity related to certain risks - for instance 
the  enforcement  of  sanctions  against  Russia  -  has  an  impact  on  the  entire  EU.  EU  risk 
management  needs  therefore  to  be  based  on  a  common  EU-27  prioritisation  of  risks.  For 
financial risks, the Commission already establishes certain priority control areas and common 
risk criteria, to be implemented by Member States. With the increasing number of non-financial 
risks to be managed by customs, this reform introduces a similar process for those non-financial 
risks. This risk prioritisation will guide the EU Customs Authority (see also Box 5) in executing 
operational  risk  management  at  EU  level  and  Member  States’  customs  authorities  for  their 
control decisions. As this is also a political matter, it could in the future be subject of exchanges 
on weighing of risk and prioritisation at a political level in the Council.  

Given the different types of non-financial risks (safety, security, environmental, etc.), the most 
efficient enforcement strategy depends on the nature of the sectoral legislation. Across all non-
financial  risks,  closer  strategic  and  operational  cooperation  between  customs  and  non-
customs authorities (e.g., market surveillance authorities, law enforcement authorities. border 
management  authorities  and tax authorities) is  much needed. Such  coordination should start 
with  more inclusive and holistic policy making,  by taking account  of the roles and possible 
synergies of the respective authorities upstream. This should pave the way for a more strategic 
approach to enforcing product standards in the Single Market. Such a strategic approach needs 
to be complemented operationally with data sharing and joint risk analysis35. The EU Customs 
Data Hub, building on the EU Single Window Environment for Customs (EU CSW) and the 
new  Import  Control  System  (ICS  2),  will  enable  the  joint  use  of  data,  going  beyond  the 
automated  cross-checking  of  authorisations  or  exchange  of  documents,  with  the  goal  of 
developing  common  risk  management  strategies.  The  introduction  of  the  Digital  Product 
Passport will complement this by enabling digital identification of products, on an individual, 
batch  or  model  basis,  and  ensuring  access  to  data  regarding  its  provenance,  presence  of 
hazardous substances or critical raw materials and other information relating to its composition 
and  sustainability.  Furthermore,  information  from  other  competent  authorities  on  restricted 
chemical  substances,  or  on non-compliant supply chains detected in  any  Member State, can 
directly feed into the common risk analysis, improving the intelligence for the control decisions 
of all Member States36. 

35  
To facilitate this cross-domain collaboration the EU Customs Data Hub will be built in close alignment  with the 
European  Interoperability  Framework  (COM(2017)  134  final)  and  the  related  cooperation  framework  as  proposed  by  the 
Commission with the Interoperable Europe Act (COM (2022) 720 final). 
36  
For example, direct access to the database of the European Chemicals Agency (ECHA) would allow for controlling 
the existence of a valid registration number for each substance manufactured or imported by one legal entity for a quantity of 
1 tonne or more. Without such registration, placing on the market is not allowed. Similarly, access to the ECHA database would 
allow  customs  services  to  check  authorisation  decisions  when  the  Commission  has  granted  an  exemption  for  substances 
prohibited under the REACH legislation. Currently, customs authorities often face problems in checking this information as 
authorisation decisions are addressed to the user and not to the importer of the substance. 

10 

 
                                                           
Box 5: Tasks of the EU Customs Authority  

First, the EU Customs Authority will pool customs expertise at central level to carry out 
EU risk management, exploiting for risk analysis purposes the wealth of constantly updated 
data in the EU Customs Data Hub. Based on this analysis, the EU Customs Authority will issue 
control recommendations to national customs authorities, which those will have to apply or 
justify  not  applying.  Common  risk  management,  translating  into  a  more  harmonised 
application of customs controls, will help create a true common external border for goods. This 
will be key in tackling ‘border shopping’, a prevalent practice undermining the integrity of the 
Single  Market  whereby  traders  target  the  weakest  link  of the  EU’s  external  border  to  allow 
illicit products to enter the Single Market. EU and national risk management will inform 
and reinforce each other. National customs authorities will continue performing national risk 
analysis and management tailored to the risks profile of a given Member State, based on starkly 
improved intelligence provided by the EU Customs Data Hub and the collaborative networks it 
will support.  

Second, the EU Customs Authority will coordinate operational crisis management. Under 
the applicable EU legislation, the EU Customs Authority will develop protocols and procedures 
for different crisis scenarios and ensure their application. The EU Customs Authority will also 
be the central customs interlocutor for non-customs authorities (e.g., market surveillance, 
law enforcement authorities, including EUROPOL) tasked with preserving the integrity of the 
Single Market 37. While the EU Customs Data Hub will provide the IT and underpinning data, 
ensuring  integration  of  innovate  data  sources  such  as  the  Digital  Product  Passport,  the  EU 
Customs Authority will ensure operational cooperation and coordination with relevant entities 
including EU Agencies such as Europol and Frontex. There are strong synergies between these 
two tasks, as the new EU risk management capability in the EU Customs Authority will also 
enable much more rapid, effective, and comprehensive targeting of crisis-related risks and a 
stronger multi-agency cooperation than is currently possible. 

Third,  the  Commission  may  task  the  EU  Customs  Authority  with  developing  and 
maintaining  the  EU  Customs  Data  Hub  and  overseeing  the  migration  and  integration  of 
existing customs IT systems over time. Moreover, if deemed appropriate, the Commission may 
delegate the execution of future Customs programs financed via the EU budget.   

6. TIMELINE OF THE REFORM  

The  reform  will  be  rolled  out  in  steps  over  the  coming  10  to  15  years.  This  will  ensure 
consolidation of the 2016 reform before the benefits of the new model gradually materialise 
without disrupting customs operations. While some key provisions of the new UCC Regulation 
will apply shortly after adoption, there will be a transition period  during which some of the 
current practices would continue.  

The EU Customs Data Hub will be developed and rolled out over time, building on some and 
integrating other existing customs IT systems and the Digital Product Passport, including those 
to be implemented under the ongoing UCC IT reform. The EU Customs Data Hub will be first 
put in place in a core form to help in dealing with the most pressing issue, e-commerce. The 
tailor-made  customs  regime  for  e-commerce  will  apply  from  2028  onwards,  when  the  EU 
Customs Data Hub will go into a first, limited operational phase. In a second step, customs IT 
systems that are already centralised38 will start to be migrated to the EU Customs Data Hub, 
after which the migration of the remaining, national IT systems could take place. Traders may 

37  
It  will  also  strengthen  cooperation  with  authorities  investigating  criminal  offenses  and/or  supporting  criminal 
investigations as well as with Frontex mandated to detect, prevent and combat cross-border crime at the EU external borders. 
38 

These include: CRMS2, ICS 2, EU CSW-CERTEX, CCI. 

11 

 
                                                           
start using the EU Customs Data Hub as of 1 January 2032 and will be obliged to do so from 1 
January 2038 onwards.  

The EU Customs Authority shall assume its tasks on 1 January 2028 and will be immediately 
operational as regards its responsibilities in risk and crisis management. It will gradually expand 
its scope in sync with the roll-out of the EU Customs Data Hub, while it may in the future be 
tasked with responsibilities going beyond to what is stipulated in this reform proposal.  Until 
2028, Commission Services will continue their risk management activities that are consistent 
with and help pave the way for the implementation of the present reform. The roll-out of key 
infrastructure,  such  as  ICS2  and  the  Customs  Risk  Management  System  (CRMS2),  and 
strengthened  data  analytics  capabilities  within  the  Commission,  will  not  only  help  better 
manage the EU Customs Union in the short term, but will also make sure that the EU Customs 
Authority is equipped to perform its tasks right from the start.  

7. GOING BEYOND THE REFORM – MODERNISING CUSTOMS GLOBALLY 

The  2021  Commission  Communication  ‘Trade  Policy  Review  -  An  Open,  Sustainable  and 
Assertive Trade Policy’39 made the twin green and digital transitions a key pillar of EU trade 
policy.  By  the  same  token,  customs  modernisation  must  not  stop  at  the  borders  of  the  EU 
Customs Union. The challenges posed by the climate emergency and e-commerce are global 
by default and require a thorough review of customs cooperation globally.  

Multilateralism and rules-based trade remains a core component of the EU’s global trade 
strategy. This is why reforming the World Trade Organization remains a key priority for the 
EU. Moreover, in 2021, the EU developed an ambitious vision to modernise the World Customs 
Organization  (WCO)40.  Embracing  the  industrial  data  revolution  and  promoting  sustainable 
value  chains,  this  has  fed  into  the  WCO  Strategic  Plan  for  2022-2025,  thereby  shaping  the 
global  discussions  on  customs  reform.  Going  forward,  more  needs  to  be  done:  the  global 
customs community needs to engage in a structural reflection on reforming the WCO to make 
customs a strategic capability in the twin transition worldwide, taking inspiration from the EU 
customs reform.  

To make world  customs fit for the digital age, in 2022 the EU and its international partners 
endorsed a new ‘WCO Data Strategy’, targeting the creation of a ‘global data ecosystem’. 

39  
Communication from the Commission to the European Parliament, the Council, the European Economic and Social 
Committee,  and  the  Committee  of  the  Regions,  Trade  Policy  Review  -  An  Open,  Sustainable  and  Assertive  Trade  Policy, 
COM/2021/66 final. 
40 
such as commodity classification, valuation, rules of origin, supply chain security, and trade facilitation. 

The World Customs Organization (WCO) is an intergovernmental organisation working on customs-related matters 

12 

 
 
                                                           
This requires structured and comprehensive exchange of customs information at global level, 
while paying particular attention to the protection of commercial confidentiality and personal 
data. The EU Customs Data Hub will be a role-model in the global roll-out of the WCO Data 
Strategy.  Inspiring  international  partners  to  set  up  similar,  interoperable  data  management 
systems will substantially strengthen customs’ abilities to efficiently monitor and control global 
supply chains.  

In addition,  the EU  should  take a leading role in developing a  global green customs policy. 
There  are  several  areas  in  which  global  customs  can  support  environmental  objectives. 
Besides  greening  customs  administrations  themselves41,  modernising  the  classification  of 
goods in line with the objectives of the twin transitions should be part of the ongoing strategic 
review  of  the  harmonised  system  convention42 43.  Options  for  greening  the  harmonised 
systems (HS) classification range from issuing lists of environmental goods, to changing the 
structure  of  the  HS,  or  even  alterations  to  the  classification  itself,  on  the  basis  of  new 
environmental criteria. Such a revision could also help reinforce resilience and address potential 
supply challenges in sectors that are essential for the green energy transition. A standardised 
classification  of  environmental  products  would  provide  an  important  basis  for  countries  to 
carefully  calibrate  tariffs  and  regulatory  measures  on  these  products  and  would  prove  an 
effective  tool  to  strengthen  the  sustainability  of  EU  trade  policy  in  the  WTO,  in  free  trade 
agreements, and in new forms of engagement, including in net-zero partnerships. 

Beyond  multilateral  cooperation,  the  EU  also  cooperates  with  non-EU  countries  based  on 
bilateral trade agreements. The EU’s large network of such agreements have been facilitating 
trade and also contain commitments on customs cooperation which work to our mutual benefit 
by facilitating legitimate trade and identifying fraud, smuggling or criminal activities together.  

However, many of these agreements are outdated when it comes to providing customs with the 
tools and information to monitor and control international supply chains. Today, information is 
exchanged  with  partner  countries  upon  request.  The  EU  Customs  reform  will  facilitate,  in 
particular via the EU Customs Data Hub, a more systemic exchange of customs information 
and even of risk signals.  The future approach to  international  customs cooperation will also 
need to reflect the changing geopolitical landscape and the need to secure critical supply chains 
and control the circumvention of crucial EU policies, such as sanctions.  

8. CONCLUSION 

More than half a century after its foundation, the Customs Union remains a key pillar of EU 
integration.  It  is  the  foundation  of  the  Single  Market  and  its  regulatory  framework  geared 
towards the twin green and digital transitions. The recent dramatic shifts in geo-politics and the 
world economy have changed global trade and exacerbate the need to modernise the Customs 
Union and its regulatory and governance framework.  

This reform is the most ambitious and comprehensive attempt to make the Customs Union fit 
for  the  decades  to  come.  To  empower  EU  customs  to  best  serve  the  EU,  its  citizens  and 
businesses. To create a true Union of EU customs, acting as one.  

EU  industry  needs  a  level  playing  field,  and  citizens  and  consumers  want  safe  products, 
environmental and social standards. The Commission therefore calls on Member States and the 
European  Parliament  to  swiftly  agree  on  the  proposals  presented  today  so  that  citizens, 

41 
42 
43 
by most countries worldwide as the basis for their customs classification. 

For example, by developing the EU’s EMAS-like standards also globally, under the umbrella of the WCO. 
Report of the WCO Exploratory Study on a Possible Strategic Review of the HS is expected in 2024. 
The Harmonised System is the multipurpose international product nomenclature developed by the WCO. It is used 

13 

 
                                                           
businesses, and administrations  can fully reap the benefits  of operating in  a Customs Union 
with an efficiently managed common border for goods.  

14