Customs Talks: Customs risk for fulfillment service providers and indirect customs representatives—access to the accounts of the represented party required

According to Art. 18 UCC, anyone can be represented by a customs representative. Direct and indirect representation is possible. In the case of indirect representation, the declaration is made in the representative's own name but on behalf of the represented party. The representative and the represented party are jointly and severally liable for the import duties, Art. 77 (3), 84 UCC. As a rule, a person not established in the Union cannot function as a declarant, Art. 170 (2) UCC. They must be indirectly represented.

Fulfillment service provider acted as an indirect representative, used third-country purchase transactions as a basis for calculating import duties

In the case in question, the fulfillment service provider also offered customs services for its mostly Chinese clients, who were selling the imported goods via marketplaces in the EU. In other words, as an indirect representative, he released the imported goods for free circulation. The purchase transactions between the Chinese clients of the fulfillment service provider and their Asian suppliers were used as the basis of assessment for the import. The only evidence available to the fulfillment service provider was a copy of the respective invoices received by the Chinese clients.

Hamburg Fiscal Court: Transaction value method inadmissible on this base load

The Fiscal Court ruled that the valuation was inadmissible, i.e., the transaction value method based on the transaction between the Asian supplier and the Chinese client was not applicable. This is because a purely third-country purchase transaction to determine the customs value in accordance with Art. 70 (1) UCC can only be used, if the declarant (in this case the fulfillment service provider) is in possession of all the necessary documents that enable the customs authority to check the entire process in terms of customs valuation. This also includes the accounting records of the third-country buyer (i.e. the Chinese client) and subsequent marketplace seller, whom the declarant indirectly represented.

All documents required for the customs value check of the overall transaction must be available

The declarant must, in principle, be able to provide sufficient evidence to support the data in his declaration, Art. 163 UCC. It must also be possible for Customs to verify the information in the accounting records, Art. 48 UCC. This is not possible based on the invoice alone. Thus, it cannot be ensured that all cost components have been correctly taken into account according to Art. 71 UCC. Likewise, it cannot be proven on the basis of the invoice whether the purchase price actually paid or to be paid is correctly stated. To do this, a reconciliation with the accounts of the “declarant” or invoice recipient and owner of the goods is required. If the indirect representative does not allow the customs audit service to access the accounts of the buyer of the goods whose purchase price has been declared as the customs value, the audit cannot be completed.

As a result, the purchase price is not eligible for recognition. The customs value must therefore be determined using other appropriate methods. In the case in question, this led to the post-clearance recovery of import duties, which was assessed against the fulfillment service provider.

Conclusion: Indirect customs representation is de facto ruled out

In practice, service providers will no longer be able to function as indirect declarants. This is because customers will usually not grant service providers access to their accounts. However, access to the invoice recipient's accounts has been deemed a prerequisite by the Fiscal Court. In individual cases, for example in company groups or with well-known and long-standing customers, this may work. In such cases, service providers should ensure by contract that they have access rights to the electronic accounts and to all necessary documents. Additionally, it should be agreed, how this is done technically, so that the accounting can be reached from Germany, e.g. via a VPN-connection.