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Case 114/2022 of the Belgian Constitutional Court –Power of customs regarding confiscation of goods
On 22 September 2022, the Constitutional Court of Belgium ruled in case no. 114/2022 that it is not discriminatory for the customs authorities to have more discretionary power than a penal judge regarding the confiscation of goods.
The Constitutional Court ruled that customs authorities can propose a settlement if there are mitigating circumstances, whereby they have the discretionary power to either uphold the full confiscation, order a partial confiscation, or waive the confiscation completely. A penal judge on the other hand, does not have discretionary power to only confiscate part of the goods or waive the confiscation all together and must demand the full confiscation of the goods (and countervalue of the goods if the goods can no longer be presented) even in case there are mitigating circumstances surrounding the case. The Court has confirmed that this difference in discretionary power does not constitute a form of discrimination.
Energy crisis: Temporary decrease of excise tariffs for professional use of natural gas and electricity
A royal decree was published on 11 October 2022, amending the provision of the program law of 27 December 2004, containing the excise tariffs. The amendment provides for a decrease of the excise tariffs on the professional use of natural gas and electricity. The total excise tax rate on natural gas is brought to the European minimum for consumption up to 50,000 Mwh. For this purpose, the contribution on energy is reduced to €0.54/Mwh, and the special excise duty is set at zero for the first two consumption scales. For electricity, the special excise duty rate for consumption up to 1,000 Mwh is also decreased to the European minimum. The aim of the reduction of the excise tariffs is to provide support and assistance to companies struggling with the current geo-political instability and high energy prices. The decrease is temporary and will take effect from 1 November 2022 until 31 December 2022.
Energy crisis: Special excise duty on unleaded petrol increased again in October and November
Although the special excise duty rate increased twice in October, the Belgian government decided to increase the special excise duty on unleaded petrol again with € 9.900 per 1,000 liter. The increase of the special excise duty took effect on 7 October and is part of the so-called cliquet system, which provides for an increase of special excise duties in case of a decrease in the maximum price for diesel or unleaded petrol.
Additionally, the Belgian government took the decision to increase the special excise duties on unleaded petrol twice during the month of November. The special excise duty on unleaded petrol was first increased by €31.4000 per 1,000 liters on 10 November. The second increase of €12.4282 per 1,000 liters was published one week later, on 17 November.
“Hamamatsu” Ruling of the German Federal Fiscal Court
The German Federal Fiscal Court (Bundesfinanzhof) has finally published its ruling in the “Hamamatsu” case on customs valuation. As a reminder: the proceedings began in 2015 when Hamamatsu Photonics Deutschland filed its lawsuit with the Munich Tax Court (Finanzgericht München), and has passed through various German and European court instances.
The case concerns the relationship between customs value and transfer prices in the case of related companies from a customs perspective and the request for refund based on downward transfer price adjustments by means of consolidated credit notes.
The Federal Fiscal Court confirmed that a refund of customs duties was not permitted on the basis of an adjustment of transfer prices. It stated that the transaction value method cannot be applied with regard to “a price that is partly composed of an amount initially invoiced and partly of a lump-sum adjustment after the end of the billing period, without it being possible to determine whether at the end of the billing period this adjustment will be upwards or downwards” (i.e. if transfer prices are used which are not finally determined at the time of importation). The Court also mentioned that the same applies not only for the transaction value method but also to the fall-back method.
The ruling, raises further ambiguities regarding the application of valuation methods under customs law. The German customs authorities have not yet issued any guidance as to how this ruling will be applied in practice. As a result of the ruling also upward transfer pricing adjustments, should not be possible. It remains very exciting to see how customs authorities and the EU Commission, will deal with the Hamamatsu ruling in the future. Companies should therefore keep a close eye on further developments.
Commission notice concerning the transitional PEM rules of origin for diagonal cumulation
On 21 October, the EU published a notice concerning the application of the transitional rules of origin providing for diagonal cumulation between the pan-Euro-Mediterranean (“PEM”) countries. The notice sets out the dates of application of the transitional rules of origin providing for diagonal cumulation in the pan-Euro-Med zone and lists the parties that have opted to extend the application of Article 7(3) either, towards all or to a limited number of their partners applying the transitional rules.
Combined Nomenclature 2023 published
On 31 October, the European Commission published a new version of the Combined Nomenclature (CN) which will enter into force on 1 January 2023. Among the new tariff codes introduced are: rare-earth metals Cerium and lanthanum (2805), unwrought aluminum (7601), machine tools for working metal, machines for additive manufacturing by sand, concrete or other mineral products deposit (8485), static converters (8504).
The EU agreed on 8th sanctions package targeting Russia
On 6 October 2022, the EU adopted a new sanctions package targeting Russia for its role in the conflict in Ukraine. Most notably, the new sanctions package extended the existing ban on technical assistance, brokering services, and financial assistance to maritime transport to third countries of crude oil and petroleum products from Russia to a full ban on executing that type of transport. It introduces, however, a price cap under which these shipments can be legally executed.
Next to some further expected changes, such as an update of the blacklist and a timeline extension of the import ban on steel products, the EU included the Zaporizhzhia and Kherson regions in its list of regions from which imports are banned. Finally, the new package updated and expanded two lists of goods to which restrictions apply: items which may contribute to Russia’s military and technological enhancement or the development of its defense and security sector, and items that generate significant revenues for Russia.
The Council adopts EU single window for customs
With the goal of facilitating international trade and reducing fraud, the EU has taken further steps in its plan to introduce a single EU-wide window for customs. This single window is a digital solution for the exchange of information between different government agencies, and between government agencies and economic operators.
With this EU single window for customs, government agencies involved in the clearing of goods at the border would be able to share electronic data more quickly and effectively. As a result, traders will only need to provide their data once, via a single platform. One of the goals of this initiative is to streamline the border clearance process across the EU.