EXPP2230 - National Export System (NES) and authorisation procedures: Authorised Economic Operators (AEO)

The Law

AEO is governed by European Community law. From 1 May 2016, basic law is set out in Regulation (EU) No 952/2013 laying down the Union Customs Code (UCC); and its Implementing (EU) 2015/2447 abd Delegated (EU) 2015 2446 Regulations. Prior to this AEO was governed by Council Regulation (EEC) NO 2913/92 (the customs code) as amended by Regulation (EC) No 648 2005 of the European Parliament and of the Council and Commission Regulation (EEC) No 2454/93 (the implementing Provisions) as amended by Commission Regulation (EEC) No 1875/2006.

The amendment to the Community Customs Code (CCC) in Council Regulation 648/2005 allowed Customs authorities to grant status of Authorised Economic Operators (AEO). This was the EC’s response to the need to secure international supply chains and the introduction of Customs Trade Partnership Against Terrorism (C-TPAT) in the USA and the development of the Safe framework of standards in the World Customs Organisation.

Authorised Economic Operators became effective from 1 January 2008.

The aim is to provide business with an internationally recognised quality make which will indicate that their role in the international supply chain is secure and their customs controls and procedures are efficient and compliant. An operator with AEO security and safety status implies that apart from being reliable in the traditional financial and customs terms, they are also compliant in respect of security and safety standards and can therefore be considered as a ‘secure’ trader and thus a reliable trading partner.

Depending on the type of AEO certificate applied for and granted these can include either easier access to certain customs simplifications or certain facilitations from customs security and safety controls or both.

There are two types of certificate:

  1. security and safety - issued to any business that fulfils the criteria of customs compliance, appropriate record keeping standards, financial solvency and maintains appropriate security and safety standards
  2. customs simplifications - issued to any business that fulfils the criteria of customs compliance, appropriate record keeping standards and financial solvency

A business can apply for both types of AEO status.

Who can apply for AEO status?

Anyone involved in the international supply chain that carries out customs related activities in the EC can apply for AEO status irrespective of the size of their business. This includes logistics operators, carriers, freight forwarders and customs agents.

The following can apply:

  • manufacturers - ensures a safe and secure manufacturing process for their products and supply of those products to their clients
  • exporters - the person on whose behalf the export declaration is made and who is the owner of the goods or has similar right of disposal over them at the time the declaration is accepted. For persons established outside the Community, the exporter shall be considered to be the contracting party established in the Community
  • freight forwarders - organising the transport of goods on behalf of an exporter, importer or third party
  • warehousekeepers - a person authorised to operate a customs warehouse
  • customs agents - a customs representative acting on behalf of a person who is involved in customs related business activities (direct representative) or in his own name (indirect representative)
  • carriers - person who actually transports the goods or is in charge of or responsible for the operative of the means of transport
  • importers - an operator on whose behalf an import declaration is made and who at the time the declaration was accepted is the owner/consignee of non community goods or if not the owner is responsible for the control of the goods.

Others who may qualify include port operators, stevedores, loaders, and secure freight parking operatives.

Businesses that are not involved in customs related activities will not be entitled to apply. This means the following categories will not normally be eligible to apply for AEO status:

  • banks
  • insurance companies
  • consultants
  • software houses

and any other similar trade categories who are not generally involved in the international supply chain unless they are, or acting in the name of, an importer or exporter.

Bureaus and buying and selling agents will not normally qualify for AEO status unless they also act as customs agents for their clients.

Can the application cover more than one legal entity?

No, the application for AEO status only covers the legal entity of the applicant. There is no provision for a group of companies to hold a single AEO authorisation.

Can the application cover a specific location or a division of the legal entity?

No. There is no provision to grant AEO status to a specific site, division or branch of the legal entity. The application must cover all the activities and locations of the legal entity in the international trade supply chain and the criteria will be applied across all those activities and locations.

Can the application cover activities in other Member States of the EU?

If the legal entity operates in other EU Member States as well as the UK the application must cover all the business activities involved in the international supply chain across the EU if the activities involve more than one Member State. The application should be sent to:

AEO Central Site
Bowman House
100/102 Talbot Street
NOTTINGHAM
NG1 5NF

Telephone: 03000 564 556

Email: AEOapplications@hmrc.gsi.gov.uk

However, if your business has set up separate legal entities in the other EU Member States, those legal entities will need to apply separately if they wish to obtain AEO status to the customs activities in those Member States.

For example: a Parent Company is established in Germany. It has two subsidiaries, one registered in Belgium (S1) and one in Austria (S2). The parent company does not carry out any business related to customs rules but both the subsidiaries are involved in customs activities covered by customs legislation. The parent company wishes to apply for AEO status for all the customs activities carried out by its subsidiaries S1 and S2 where both perform customs related activities and documentation in their respective Member States.

In this example both subsidiaries must submit the application to their respective Member States in their own name.

Does the legal entity have to be established in the EU?

In order to apply for AEO status the legal entity must be established in the EU.

Established in the Union is defined as in the case of a:

  • ‘natural person’ any person who has his or her habitual residence in the customs territory of the Union
  • ‘legal person’ or an association of persons, any person having its registered office, central headquarters or a permanent business establishment in the customs territory of the Union.

There may be instances where the claim to establishment may be queried. If so they will be asked to provide evidence which may include:

  • a certificate of registration issued by the Registrar of Companies
  • details of where staff are employed and are engaged in making supplies of goods and/or services
  • details of contracts, orders and/or invoices held or issued by the business, or
  • proof that the business has its own accounts.

Further guidance and contact details can be found on the AEO website.

What happens to my other customs authorisation if my AEO certificate is suspended or revoked?

If your AEO certificate is withdrawn you will not automatically lose any authorisation(s) (for example, customs warehousing or simplified procedures) that you hold at the time. Although the Customs office supervising any authorisation(s) you may hold will be informed of the withdrawal and look at the reason(s) why and if non-compliance impacts on your ability to continue to hold the authorisation(s).