ICS2 release 2 is disrupting customs procedures in the EU!
On March 1 2023, the EU introduced the second release of its Import Control System 2 (ICS2), coming two years after the first release. With the high volume of goods imported into its single market, accounting for around 15 % of the world’s trade in goods, the EU decided to upgrade security protocols with the ICS2, split into three phases.
ICS2 requires carriers transporting packages into or through the EU to provide a complete set of data on the goods prior to arrival. This new customs security model impacts not only carriers but all businesses shipping to the EU. Vague item descriptions on customs forms are not accepted anymore, and HS codes are required on all customs forms. This means that businesses lacking the technology to assign HS codes correctly and quickly face a whole new set of challenges. Keep reading to get a clear understanding of ICS2, your obligations from March 2023, and how Eurora can help you get ready.
Why should I care about ICS2 release 2?
No matter if you are a carrier, retailer, postal operator, or logistics provider, you are impacted by ICS2 if you ship to the EU. Although air carriers, postal operators, and express couriers are legally responsible for complying with the second release of ICS2, retailers must get familiar with the new requirements. As of March 1, 2023, HS codes are required on customs forms for all EU-bound goods. If retailers do not provide HS codes with their shipments, the carrier or logistics provider will have to assign them. This is an additional challenge for the carrier who won’t know the products and may unintentionally use incorrect HS codes.
With this in mind, retailers should assign the correct descriptions and HS codes on their packages themselves, so they can avoid delivery delays and errors. This is especially critical if the retailer pre-collects duty and tax from his customers. If customs receive the wrong HS code from the carrier, the retailer’s customer can be wrongly asked to pay additional taxes. In addition, retailers must make sure they can provide accurate item descriptions. Vague item descriptions on customs forms such as “gifts,” “clothing,” and “electronics,” are no longer be considered acceptable descriptions.
What is ICS2?
ICS2 is a new and updated customs electronic import system. It will manage the advanced safety and security risk analysis for all goods entering the EU, and it is gradually replacing the Import Control system (ICS). The main goal of ICS2 is to allow customs authorities to better identify high-risk consignments and intervene at the most appropriate point in the supply chain. But also to strengthen the protection of internal market against security and safety threats.
The rollout of ICS2 has 3 phases:
Each release affects different economic operators and models of transport. These economic operators will begin declaring their goods to ICS2 depending on the type of services they provide. The first release focused on pre-loading data for air express carriers and postal operators and the second release focuses on transport of all goods by air (complete dataset). The third release coming in 2024 is aimed at operators carrying goods on maritime and inland waterways and roads and railways.
What do I need to do from March 1, 2023?
From March 1, 2023, all air carriers, freight forwarders, express courier services, and postal operators transporting goods to or through the EU by air must digitally submit a minimum set of data to EU customs before loading goods onto the aircraft. In addition, they must submit a complete set of data before the goods arrive in the EU.
More parties are involved to gather the necessary data. To have goods clearing customs without a hitch after March 1, 2023, here is what the supply chain should look like:
- The retailer prepares his EU shipment and includes detailed product descriptions and HS codes
- The forwarder receives the shipment along with its filed shipment details and forms
- The freight forwarder either submits shipment data to ICS2 or passes it to the air carrier with the package.
- The air carrier confirms he has all the information needed for the shipment or that the data is already submitted to ICS2.
However, if the carrier does not have enough information to submit to ICS2, problems will arise. The carrier will have to either reach out to the retailer and ask what the package contains or open it. Then the carrier will have to assign descriptions and HS codes himself. In case the data is not provided to the customs authorities, the goods will not be processed for customs clearance. This can lead to delays in the supply chain and sanctions for non-compliance with the regulations.
ICS2 release 2 is challenging even for EU member States. The following EU Member States were not able to connect to ICS2 Release 2 by 1 March 2023 and were allowed a derogation to connect by 30 June 2023: Austria, Belgium, Denmark, Estonia, France, Greece, Croatia, Luxemburg, Netherlands, Poland, Romania, and Sweden. Although ICS2 requirements are postponed in those countries, you shouldn’t wait longer to get ready.
How can Eurora help me with the new ICS2 requirements?
The new ICS2 requirements highlight new challenges that the global supply chain has been facing lately. There is a pressing need for correct and high-quality data, but many businesses are lagging behind. If you do not have the necessary technology in-house, partnering with Eurora will ensure your shipments have the right data and won’t get delayed under ICS2.
As we saw, ICS2 requires all goods to have the correct HS code. Look-up tools have poor data quality, guidebooks become outdated quickly, and government support has a long waiting time. Eurora’s science backed AI engine makes sure that all the goods and parcels you ship are assigned the correct HS code automatically and quickly, reducing delays and operational costs.
Yet, having the right product descriptions and HS codes won’t be enough to make sure your shipment will reach your customer with no hurdle. Precise duty & tax calculation requires a holistic solution that leaves no room for error. Eurora’s Duty & Tax Calculation service automatically calculates the exact VAT rate and duties based on the destination country. We support any currency and more than 160 countries.
Not only the data you provide but also the data you can get from your customer and its destination country is critical. With Eurora’s Restrictions Screening service, you can check if your items are subject to any import/export restrictions, and make sure your customer is not on any denied parties` list. Our database covers most countries in the world.