EU: New measures to fight VAT fraud on online sales

New rules came into force on 1 January to help Member States better tackle VAT fraud in the area of online sales. With e-commerce, online shops selling into the EU could be established anywhere in the world. So, it’s difficult to identify the origin of online businesses selling goods or services in another Member State. Tax administrations don’t have the information they need to assess whether the correct amount of VAT has been paid or not. With the new Central Electronic System of Payment Information (CESOP), identifying these online sellers is easier thanks to the sharing and exchange of payment data. The system facilitates the work of the Member States to better detect potential VAT fraud and prevent loss of VAT revenues. And since the data needed for this analysis is already collected and held by payment service providers when they facilitate online sales, there was really no better starting point.
Source: European Commission

EU: New phase of EU Excise Movement and Control System (EMCS) allows for interoperability with export systems

The EU Excise Movement and Control System (EMCS) is the trans-European system for the movement of excise goods (tobacco, alcohol and energy products) across the EU. The system is in place since 2011 and currently used by more than 200,000 registered operators. The system has been improved and expanded throughout different deployment phases since its inception.

Phase 4.0 of the EMCS, which came into force on 13 February 2023, made the commercial movements of excise products fully paperless across the EU, helping Member State authorities to fight excise duty fraud by digitalising movements where the duty was previously paid in a Member State. The standardised, electronic system also simplified life for traders, especially energy suppliers and producers of alcohol, and helped them to speed up trade in the relevant sectors.

EU reaffirms trade support for Ukraine and Moldova

The Commission proposed to renew the suspension of import duties and quotas on Ukrainian exports to the EU for another year, while reinforcing protection for sensitive EU agricultural products. These Autonomous Trade Measures (ATMs) have been in place since June 2022 and are a key pillar of the EU's unwavering support for Ukraine and its economy. The measures help alleviate the difficult situation faced by Ukrainian producers and exporters as a consequence of Russia's unprovoked and unjustified war of aggression. While the main objective of the ATMs is to support Ukraine, the measures are also mindful of EU farmers' and other stakeholders' sensitivities. To this end, and considering a significant increase in imports of some agricultural products from Ukraine to the EU in 2022 and 2023, the renewed ATMs contain a reinforced safeguard mechanism. This makes sure that quick remedial action can be taken in case of significant disruptions to the EU market, or to the markets of one or more Member States.

The Commission proposes to renew by another year the suspension of all remaining duties on Moldovan imports in force since July 2022. The proposals will now be considered by the European Parliament and the Council of the European Union. The goal is to ensure a seamless transition from the current regime of ATMs to the new one, by the time the current regimes expires on 5 June 2024 for Ukraine and 24 July 2024 for Moldova.

European Union: Update- Technical issues related to the CBAM Transitional Registry and Import Control System 2 (ICS2)

As of 30 January the ICS2 system and the CBAM Transitional Registry were considered ‘back to normal’. Currently, there are no known issues preventing reporting declarants from completing or submitting CBAM reports.  The Commission is aware of technical issues which have led to some businesses being unable to submit data and reports related to the EU Carbon Border Adjustment Mechanism (CBAM) and the Import Control System 2 (ICS2).

This is due to an incident involving a technical component affecting several EU customs systems, including ICS2, and the functioning of the CBAM Registry. To offer a pro-active approach to help businesses who have experienced problems, the Commission has put in place solutions for reporting declarants. To facilitate reporting declarants who may have experienced difficulties in reporting and have not yet submitted their quarterly CBAM report, a new functionality will be made available as of 1 February on the Transitional Registry, allowing them to “request delayed submission”, giving an additional 30 days to submit their CBAM report.

In accordance with the guidance provided to National Competent Authorities (NCAs), no penalties will be imposed on reporting declarants who have experienced difficulties in submitting their first CBAM report. Delayed submission of a CBAM report due to system errors would, by definition, be deemed justified as long as the submission occurs promptly once the technical errors are overcome. In any event, penalties will not be imposed by NCAs before a correction procedure has been opened, allowing reporting declarants to provide justifications and correct any potential inaccuracies in their CBAM report.

Reporting declarants who do not encounter any major technical issue are still encouraged to submit their CBAM report by the end of the reporting period. In line with Implementing Regulation 2023/1773 governing the transitional period, they may subsequently modify and correct their first three CBAM reports until 31 July 2024.

EU to strengthen rule book against terrorist financing

The EU Parliament and Council reached a provisional agreement on the sixth Anti-Money Laundering (AML) directive and the EU “single rulebook” regulation. The agreed provisions, part of the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) package, will have to be applied by banks and other obliged entities to protect the EU internal market from money laundering and terrorist financing.

EU publishes guidance for member states on data collection for dual-use items export control report

On 17 January 2024, the Commission published these new Guidelines in view of the preparation of its annual report on dual-use export controls. The goal is to increase transparency through more information sharing on Member States’ licensing decisions in the area of export controls.

The Guidelines were agreed with Member State’ experts, and set out in detail the process for the collection of licensing data by the European Commission and the competent authorities of the Member States. They will allow the EU Annual Export Control Report to include detailed licensing information, such as authorisations for dual-use exports as well as denied transactions. Enhanced public reporting and greater transparency on EU export controls are key elements of the implementation of the 2021 Regulation on dual-use export controls.

EU designates individuals & entities on Syria sanctions list

The EU has added 6 individuals and 5 entities to its Syria sanctions list:

  • 3 leading businesspersons operating in various sectors including logistics, tourism, trading, and pharmaceuticals, reportedly supporting and benefiting from the regime, Mahmoud al-Dj, Bilal al-Naal, and Fahd Darwish;
  • 2 individuals connected to the Assad family, Mohannad al-Dabbagh and Firas al-Akhras;
  • Yasser Ibrahim, an economic advisor to Bashar al-Assad;
  • 3 entities allegedly connected to the transfer of Syrian mercenaries, arms trade, narcotics trafficking, and money laundering, Al-Dj Group, Cham Wings, and Freebird Travel Agency;
  • Iloma Investment Private JSC, which owns almost half of Damascus airport; and
  • Al-Aqila Company, which allegedly entered into a joint venture with the Iranian Alborz Insurance Company to strengthen Iran’s position in the Syrian economy.

G7+ compliance and enforcement alert on Russia oil price cap & EU reporting requirements

The G7+ price cap coalition has issued a compliance and enforcement alert on the Russia oil price cap (OPC), including:

  • an overview of key OPC evasion methods and recommendations for identifying such methods and mitigating their risks and negative impacts;
  • information on how to report OPC suspected breaches across the Price Cap Coalition; and
  • the evasion methods covered are: falsified documentation and attestations; opaque shipping and ancillary costs; third country supply chain intermediaries and complex and irregular corporate structures; flagging; the “shadow” fleet; voyage irregularities.

As established in the 12th package of EU sanctions, from 20 February 2024, it is mandatory for certain EU operators transporting Russian oil to provide itemised cost information for ancillary costs (such as licence fees, taxes, and insurance) and attestations ‘per-voyage’ upon request. 

The EU has updated/added 15 FAQs to provide guidance on this update, including:

  • how the recordkeeping and attestation process works (FAQ 35);
  • details on which actors are required to produce new attestations and itemised ancillary costs (FAQ 35);
  • what ‘per-voyage’ attestation means (FAQ 35b); and
  • what costs are included in the itemised ancillary costs requirement (FAQ 35c).

EU designates entities for undermining stability in Sudan

The EU has added 6 entities to its Sudan sanctions list for supporting activities undermining the stability and political transition of Sudan:

  • 2 companies involved in the manufacture of weapons and vehicles for the SAF, Defense Industries System and SMT Engineering;
  • SAF-controlled Zadna International Company for Investment Limited; and
  • 3 companies involved in procuring military equipment for the RSF, Al Junaid Multi Activities Co Ltd, Tradive General Trading andGSK Advance Company Ltd.

EU publishes white paper on coordination of export controls

The EU Commission has published a white paper analysing the current variation in export controls across EU member states and making proposals to help foster uniform and effective controls across the EU and to open a discussion with member states, the European Parliament, and stakeholders.

The white paper proposes:

  • introducing new items on the EU control list to close the gaps in controls that may be created by blockage of decision-making process within multilateral regimes;
  • creating a high-level forum to discuss export controls developments and foster a common EU position;
  • improving the coordination of Member States’ National Control Lists ahead of their adoption (through a voluntary approach); and
  • bringing forward the evaluation of the current Dual-Use Regulation to the beginning of 2025.

European Commission publishes new Guidelines for annual report on dual-use export controls

The European Commission has issued important new Guidelines on data gathering and processing on export controls. This follows yesterday’s Commission White Paper on export controls, which highlights the need to fully implement the EU’s dual-use regulation. On 17 January 2024, the Commission published these new Guidelines in view of the preparation of its annual report on dual-use export controls. The goal is to increase transparency through more information sharing on Member States’ licensing decisions in the area of export controls. The Guidelines were agreed with Member State experts, and set out in detail the process for the collection of licensing data by the European Commission and the competent authorities of the Member States. They will allow the EU Annual Export Control Report to include detailed licensing information, such as authorisations for dual-use exports, as well as denied transactions.

Enhanced public reporting and greater transparency on EU export controls are key elements of the implementation of the 2021 Regulation on dual-use export controls.

Such Guidelines will provide exporters, civil society organisations and the public at large with a more complete set of information on the control of dual-use exports, and a comprehensive picture of the implementation of export controls in the EU. This new approach will be taken up in the next annual report later this year.

They will also facilitate dialogues and exchanges with partners in third countries and promote good reporting practices internationally. This will help supporting an informed debate regarding the development of EU export control policy.

European Commission proposes new initiatives to strengthen economic security

The Commission adopted five initiatives to strengthen the EU's economic security at a time of growing geopolitical tensions and profound technological shifts. The package aims to enhance the EU's economic security while upholding the openness of trade, investment, and research for the EU's economy, in line with the June 2023 European Economic Security Strategy. 

Proposals are part of a broader three-pillar approach to EU economic security by promoting the EU's competitiveness, protecting against risks and partnering with the broadest possible range of countries to advance shared economic security interests.

The initiatives adopted today aim at:

  • further strengthening the protection of EU security and public order by proposing improved screening of foreign investment into the EU;
  • stimulating discussions and action for more European coordination in the area of export controls, in full respect of existing multilateral regimes and Member States' prerogatives;
  • consulting Member States and stakeholders to identify potential risks stemming from outbound investments in a narrow set of technologies;
  • promoting further discussions on how to better support research and development involving technologies with dual-use potential;
  • proposing that the Council recommends measures aimed at enhancing research security at national and sector level.

Future EU actions will continue to be informed by the on-going risk assessments and by strategic coordination with Member States to reach a shared understanding of the risks that Europe faces and of the appropriate actions.

EU renews Russia sanctions & makes human rights designations

The EU has renewed its Russia sectoral sanctions for a further 6 months (until 31 July 2024) and listed 4 individuals and 1 entity under its global human rights sanctions regime:

  • Valentina Levashova, Ludmila Smolkina, and Oleg Alypov, who are respectively 2 judges and a prosecutor involved in the arrest and detention of opposition Russian politician, Vladimir Kara-Murza;
  • the Safe Internet League and its Chairwoman, Ekaterina Mizulina, allegedly responsible for censorship against internet content creators

Latvia to centralise sanctions-related work in single authority

From 1 April 2024, the Financial Intelligence Unit (FIU) will become the main competent authority for sanctions in Latvia.  The FIU is currently responsible for combatting sanctions evasion and from 1 April 2024 it will also be responsible for enforcement, providing guidance, and liaising with the private sector and foreign institutions.

Switzerland implements the EU’s 12th package of sanctions

The Federal Council adopted further sanctions against Russia at its meeting on 31 January. This is in response to Russia's ongoing military aggression against Ukraine. In doing so, the Federal Council joins the European Union (EU), which adopted its 12th package of sanctions in December 2023. The new measures will enter into force on 1 February. Switzerland previously added 147 individuals and entities to its sanctions listings on 21 December.

UK confirms indefinite CE marking recognition for machinery products

The UK Department for Business and Trade (DBT) hosted a webinar to explain in greater details the recent changes to the UK’s post-Brexit approach to product marking. The online event follows a series of policy measures announced in January to improving product regulation in Great Britain (GB). The session, which CECE was invited to attend, was aimed at informing stakeholders of the different options for placing manufactured products on the UK market. Four key areas covered:

  • Latest policy update
    The extension of the CE marking indefinite recognition to 21 product regulations in total (included in the recent DBT’s announcement) will allow manufacturers to apply either the UKCA or CE marking to place a range of products on the GB market. Different methods to apply UKCA marking will be also in place. During the webinar, the DBT representatives confirmed the Government’s intention to deliver ad-hoc legislation this Spring to provide legal certainty. It was also pointed out the two-part approach taken to the Restriction of Hazardous Substances (RoHS Regulations), where the EU regulations and CE making can be used except for the case of EU exemptions that have not been equally provided under the UK regulation. In such a case, the UKCA mark will be required.
  • Fast-Track UKCA process
    During the event, it was clarified the functioning of this optional process meant to provide greater flexibility for meeting the UKCA requirements. Planned to be introduced with the same legislation in Spring, manufacturers can resort to this system on a voluntary basis. Following the Fast-Track mechanism, the UKCA making will allow manufacturers to demonstrate products’ compliance with the UK or recognised EU essential requirements as well as conformity assessment procedures. The webinar also touched upon products falling within multiple regulations, where a mix of both UK and EU conformity assessment procedures can be used. Finally, the Fast-Track UKCA is also applicable in case of divergence between a mandated UK regulation and an equivalent EU regulation (not recognised in UK).
  • Product labelling flexibilities
    The government also intends to legislate for further measures to provide permanent labelling flexibility. In practice, businesses will continue to have the flexibility to place the UKCA marking on (a) the product itself, (b) the adhesive label, or (c) the accompanying document. During the webinar, the DBT outlined the intention of the Government to introduce legislation on digital labelling to apply the UKCA marking, manufacturer and importer details. However, importer labelling responsibilities remain unchanged.
  • Placing manufactured products on the UK Market
    For the 21 product regulations included in the DBT's January announcement, the webinar clarified that both the UKCA and CE marking will continue to be recognised for the placing of products on the GB market. If a third-party assessment is needed, the conformity assessed by a UK Approved body may use the UKCA marking, whereas products assessed by an EU Notified Body may use the CE marking. As regards the Northern Ireland, the CE marking continues to be used for self-assessed products and for those products assessed by an EU Notified Body. On the contrary, the CE + UKNI marking can be used whether mandatory third-party conformity assessment is required, and the assessment is undertaken by a UK Notified Body.

UK sanctions extremist settlers in the West Bank

The UK announces new sanctions against extremist Israeli settlers who have violently attacked Palestinians in the West Bank. 

  • new sanctions will target extremist Israeli settlers who have violently attacked Palestinians in the occupied West Bank
  • sanctions will impose financial and travel restrictions, in a bid to tackle continued settler violence which threatens West Bank stability
  • Foreign Secretary commits to “hold to account those who undermine prospects for peace”

The Foreign Secretary has announced sanctions on 4 extremist Israeli settlers who have committed human rights abuses against Palestinian communities in the West Bank.  

There have been unprecedented levels of violence by extremist settlers in the West Bank over the past year. Some residents of illegal Israeli settlements and outposts have used harassment, intimidation and violence to put pressure on Palestinian communities to leave their land. 

Two of the individuals designated today – Moshe Sharvit and Yinon Levy – have in recent months used physical aggression, threatened families at gunpoint, and destroyed property as part of a targeted and calculated effort to displace Palestinian communities. One illegal outpost, set up by Zvi Bar Yosef, has been described by local Palestinian residents as a “source of systematic intimidation and violence.”

UK changes to permitted destinations on 13 open general licences

The Export Control Joint Unit (ECJU) has updated 13 open general licences (OGLs) to remove countries Burkina Faso, Haiti, Mali, and Niger as permissible destinations.

UK release updated general guidance on sanctions

OFSI have release an updated guidance outlining obligations under financial sanctions as well as OFSI’s approach to licensing and compliance issues. It takes into account the most recent relevant case law and measures Link

UK Russia sanctions guidance updated

The UK has updated its Russia sanctions guidance to include licensing grounds relating to Schedule 3DA revenue generating goods, outlining when a licence may be granted for the provision of technical assistance, brokering services, financial services, or funds relating to goods falling under Schedule 3DA.

A licence may be granted:

  • for goods falling under Part 2 of Schedule 3DA if it relates to the execution of obligations arising from contracts concluded before 23 June 2022, or before 29 October 2022 for codes 2208 and 2303;
  • for goods falling under Part 3 of Schedule 3DA if it relates to the execution of obligations arising from contracts concluded before 21 April 2023; and
  • for vessels, aircraft, or aero gas turbine engines controlled under Schedule 3DA moving from Russia to a third country or the UK if certain conditions laid out in the guidance are met.

United States: New deadline for filing Entry Type 86

In a notice published in the Federal Register on January 16, Customs and Border Protection (CBP) announced that it is amending the ACE Entry Type 86 Test to require filing of these entries prior to or upon arrival of the cargo. The Entry Type 86 is a test allowing the electronic filing of entries for low-value shipments meeting the requirements for admission under the administrative exemption in 19 U.S.C. 1321(a)(2)(C). The traditional entry time frame of permitting filing of an entry up to 15 days after arrival of the cargo was used initially for the Entry Type 86 test. However, CBP has determined that that time frame “has proven to be inconsistent with the expedited process envisioned for the ACE Entry Type 86 Test”, and this has led to enforcement challenges and various violations such as entry by parties without the right to make entry, incorrect manifesting of cargo, misclassification, and delivery of goods prior to release from CBP custody. The requirement to file Type 86 entries prior to or upon arrival of the cargo will go into effect on February 15, 2024.