In a recent verdict of 8 March 2022, the Court of Justice of the European Union has sentenced the United Kingdom to 2,7 billion euros in backpay after not levying enough import duties. Malicious importers of Chinese clothing could import goods against a too low value for years through the United Kingdom. As a result, the EU has missed out on many import duties. Martijn Schippers, Assistant Professor of Customs Law at Erasmus School of Law, explains the recent verdict and the implications for the Netherlands to BNR Nieuwsradio.
The European Union has a customs union. As a former member of the EU, the United Kingdom was a part of this Union until recently. In this customs union, the national customs authorities function as controllers, and these authorities are responsible for the levying of customs laws of the EU. An investigation by the European Commission showed that too few import duties were levied in the United Kingdom to import Chinese clothing.
“Malicious importers are untraceable”
If a national customs authority levies not enough import duties, the EU will account this on the concerning member state. In theory, this state could account this further upon the importer. In reality, this is not always possible, explains Schippers: “it is complicated. The first bill always goes to the customs authorities because they are charged with the monitoring tasks. They could try to account this on the importers, but many cases are expired, and malicious importers are untraceable. In the end, this will cost the British taxpayer.”
The Netherlands is faced with a similar additional tax assessment of 150 million euros. Schippers: “When the investigation in Chinese clothing import in the United Kingdom started, the malicious importers rerouted their trade flows to other EU member states like the Netherlands, Germany and Hungary. In these countries have been initiated as well. The investigation in the Netherlands shows that 150 million euros of duties were levied too little.”
Research project
Walter de Wit, Professor of International and European Customs law at Erasmus School of Law, and Schippers take part in an international research project into the undervaluation of imported goods within trade law and indirect taxes. The research project is an independent legal research project, which the European Commission partially finances. The project is executed in collaboration with Erasmus School of Law, the Westfälische Wilhelms-Universität Münster, the Universidad de Valencia en the Joint Research Centre (ISPRA). Schippers, who did PhD research on the valuation of imported goods, is appointed as a national reporter for the Netherlands. In this context, he conducts qualitative research by interviewing several Dutch customs officers.
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Click here for the entire fragment of the programme Ochtendspits of BNR Nieuwsradio (in Dutch).
Erasmus School of Law hosts an English seminar about this topic on the 31st of March 2022. The researchers linked to this project will speak about the topic with the Dutch customs authorities and OLAF (the European Anti-Fraud Office). For more information and registration for the seminar, click here.