Customs law is largely based on European and internationally established rules. The fact that the customs authorities may designate more customs debtors for one customs debt is an example of a direct consequence of European customs legislation. In a recent judgment of the Dutch Supreme Court, it is again emphasized that the circle of persons liable for a customs debt is large.
Can the tax advisor be in the danger zone and be held liable for the customs debt when importing goods into the EU?
In most cases, a customs debt is incurred after a so-called declaration for free circulation of the goods has been made. In the old European customs legislation this was regulated in article 201 of the Community Customs Code and in the Union Customs Code (hereinafter: UCC) applicable from 1 May 2016 in article 77 UCC.
When released for free circulation, several customs debtors can be identified, depending on the situation. The old and the new legislation are almost identical on this point. In practice, the 'most important' debtor was and is the declarant, which means the person who makes a declaration in his own name or the person in whose name the declaration is made. The latter case is the most common form of 'direct representation' in the Netherlands. A customs dispatcher will then sort out the declaration for import for his client and will then make the return in the name and for the account of the client. Thus, the client is 'the declarant' and therefore the customs debtor.
In addition – in case of indirect representation – the person on whose behalf the declaration is made can also be regarded as a debtor. In the case of indirect representation, the declarant makes the declaration in his own name but this will happen on behalf of another person, in which case two persons can be regarded as customs debtors.
Finally, the persons who provided information for the declaration can also be regarded as debtors.
These persons can only be held accountable if they knew or should reasonably have known that the data was wrong. The burden of proof lies with the customs authorities. For a long time, it was assumed that for the designation of the customs debtor in the above mentioned sense, it was required that this person himself had to provide the information required for the customs declaration. An example of this is a situation in which a person provides the declaration and gives the declarant a certificate of origin that later turns out to be invalid, and that the fact that the person in question was aware of this, can be proven.
However, as cited above from the judgment of the Supreme Court, it is apparent that the circle of persons that can be appointed as a customs debtor is much broader.
In the case before the Supreme Court, a natural person X was handed over more than 6 million euros in requests for payments (Dutch: UTBs) in connection with additional customs duties on chicken meat. The tax inspector stated that although X had not supplied the information required for the customs declaration, he had been involved in conceiving and artificially setting up a structure of trade flows. As a result of this structure, the price of the poultry meat was artificially increased in successive transactions, so that no additional customs duties were due on import into the EU.
After the Haarlem District Court and subsequently the Amsterdam Court of Appeal maintained the additional assessments ("request for payment", UTBs), the Supreme Court ruled on 30 September 2016, ECLI: NL: HR: 2016: 2195, and referred for preliminary questions to the European Court of Justice (ECJ) about the interpretation of debtorship. In particular, the Supreme Court wanted to know whether the natural person X could also be qualified as the liable person. This was because he had not provided the information required for the customs declaration as strictly as is required by customs legislation and had 'only' been involved in setting up the trade structure. The ECJ then answered the question on 19 October 2017 and broadly explained the concept of a customs debtor.
According to the judgment of the ECJ, the designation of the debtor does not require that the person concerned did directly or indirectly supply the customs authorities with the wrong information. By contrast, anyone who has been involved in the fraudulent structure can be held liable as a customs debtor.
As a result of this broad interpretation by the ECJ, it is no surprise that the Supreme Court confirmed in its final judgment that X could be regarded as a debtor. This interpretation of the concept of customs debtor will certainly have consequences for the criminal customs practice. We expect that in the near future case law will explore the boundaries of this broad interpretation of the concept of the customs debtor.
For the time being, it is certainly not excluded that also tax advisers are in the danger zone. After all, they are often involved in the practice of advising and devising a structure to save their clients on customs duties.
Consequences could be huge. Considerable amounts of money can be involved when customs duties are imposed, as for instance in the mentioned Supreme Court case. The impact of a possible liability claim for customs duties can therefore also be enormous. It would be good if also the tax adviser will bear that in mind.