Trust and Check trader

One of the key changes of the EU Customs Reform is the introduction of the Trust and Check trader (T&C).

T&C authorisation vs. AEO certification: what are the main differences?

The T&C authorisation and the AEO certification are both mechanisms designed to facilitate trade and enhance security in the supply chain. However, they are distinct in their requirements and the benefits they confer upon traders. 

As a reminder, the AEO certification can be obtained when specific criteria can be fulfilled including a history of compliance with customs regulations, appropriate professional qualifications, financial solvency and a high level of control over their operations and goods flow. This is achieved through effective management systems for commercial and, where necessary, transport records, enabling appropriate customs controls. 

Benefits certification

Once granted, this certification can provide the following benefits for the economic operators (among others): 

• Globally recognised mark of quality that signals a company’s role as a secure and reliable participant of international trade. It is based on the World Customs Organization’s SAFE Framework of Standards to secure and facilitate global trade. 

• Reduced customs inspections, priority treatment if selected for inspection a reduction of guarantees.

According to the currently available draft documents underlying the EU customs reform project, the T&C Authorisation will envisage the following (among others): 

• The T&C status requires the economic operator to having an electronic system providing or making available to the customs authorities as close to real time as technically possible data on the movement of the goods.

• The T&C status grants the economic operator several facilitations, such as providing data and documents after the release of the goods, performing certain controls and releasing the goods themselves, determining and deferring the customs debt periodically and avoiding transit formalities for goods entering or exiting the customs territory.  

Transition from AEO to T&C:

While current AEOs have a foundational level of compliance and systems that may give them a transitional advantage, it is not automatic that an AEO will become a T&C trader. 

AEOs will need to meet the additional requirements specific to the T&C approach, particularly having an electronic system providing or making available to the customs authorities as close to real time as technically possible data on the movement of the goods. The transition to T&C status may require investment in technology and processes to meet the new standards of data provision and interaction with customs authorities. 

In a nutshell, the T&C authorisation represents an evolution of this concept, introducing more stringent requirements and offering greater facilitation benefits. AEOs will not automatically become T&C traders; they must actively meet the additional criteria to qualify for this advanced status. The complexity of implementing the T&C requirements is beyond a simple upgrade and involves a significant commitment to enhancing systems and processes for real-time data sharing and analysis. Companies as such will need to evaluate closely whether the benefits of this new T&C authorisation are worth the additional requirements. Especially since it is now clear that the AEO certification will not disappear.

AEO certification will stay

Diverting from the original EU Commission proposal for the EU customs reform the AEO certification will stay. So both the AEO certification and the T&C authorization will be available to companies following the EU customs reform. Which is goods news for smaller and medium size business for which the requirements of T&C might not be feasible. As well as companies that will not be able to obtain the T&C status and as such might lose some of their current benefits, for example customs brokers acting a direct representative.

The requirements for AEO companies however, according to the latest draft version of the proposal following the trilogues, indicate they will be extended. This relates mostly to the fact that processes/procedures including internal controls will need to be in place in relation to “other legislation applied by the customs authorities, including product safety”. This is something which is currently often not the case.

Furthermore, a whistleblowing function is introduced, that employees will need to be instructed to contact the customs authorities in case of any “compliance difficulties, suspicious movements or unauthorised handling of goods”. This will require clear internal guidance on in which exact cases the authorities should be contacted. Since especially the term compliance difficulties is vague. 

How can PwC help

PwC can support businesses in assessing the impact of the EU customs reform and determining whether maintaining AEO status or pursuing T&C authorisation is the most suitable approach for their organisation. We can perform a readiness assessment to identify gaps between current customs compliance frameworks and the proposed T&C and enhanced AEO requirements, including the new expectations regarding product safety compliance.

In addition, PwC can assist with the design and implementation of the processes, procedures and technology needed to comply with the new requirements. This includes evaluating whether existing customs and ERP systems are capable of providing the near real-time data exchange required for T&C status, developing compliance monitoring frameworks, and establishing documented controls covering customs and non-customs legislation enforced by customs authorities. 

Furthermore, we can support companies in developing internal policies and whistleblowing procedures, including clear guidance on the escalation and reporting of compliance issues, suspicious movements of goods and other incidents. By combining customs, trade, tax, technology and regulatory expertise, PwC can help organisations navigate the reform efficiently, minimise implementation risks and maximise the benefits of the available customs simplifications and authorisations.