The Indirect Representative is Born
The idea of the Indirect Representative was thought up by bureaucrats in 2018 and is part of the new rules coming into force 2021. The Indirect Representative is a new position within the EU, created to monitor transactions, making them equally liable as the manufacturer for goods imported into the EU. The Indirect Representative carries a heavy burden of responsibility for the imported goods. How did this position come about?
EU Parliament Agreed The Trade Deal
I didn’t hear a resounding HOORAH!!! across the UK after 660 out of 697 EU parliamentarians gave their belated blessing to the Brexit trade deal at the end of April 2021. Part of their enthusiasm might be that the Brexit trade deal includes provisions for the use of Indirect Representatives. Let’s be honest who gives a monkey’s what that bunch of overpaid useless bureaucrats think anyway. As a parliament, they have no teeth, make no laws, and only do the bidding of their EU peers, which is one of the main reasons the UK left in the first place. Decisions and laws are not made by the EU Parliament but by other nonelected bodies. But I digress, how did the Indirect Representative come about?
Was it a coincidence that on 1 January 2021 a whole series of new rules concerning how third party countries sell to the EU came into play. On the 1 July 2021 there are no less than 70 new regulations coming into effect, affecting third party countries who want to trade with the EU.
In 2018, while Prime Minister Theresa May is negotiating the European Withdrawal agreement in good faith, the EU was already plotting, drawing up plans to punish the UK. New rules which will make other countries thinking of leaving the club reconsider as it makes trade on a level playing field virtually impossible. A year later in June 2019 the regulations on market surveillance and compliance of products for third party countries came into force. Rules that were apparently ignored by UK businesses as it would not affect them until after Brexit.
The regulation (EU) 2019/1020 lists the new EU trading rules from July 2021:
Reason The EU Want Companies to have one
One of the main points for “better surveillance” of companies outside the EU, is the requirement for an Indirect Representative who is resident within the EU and can act on behalf of companies taking responsibility for customs duties and import-VAT adding extra costs to all transactions. The “Indirect Representative” is born.
It was bad enough that UK businesses could not apply for a new EORI number until after 1 January 2021. (An EORI number is required whenever you, as a trader, want to import goods from a non-EU country into the EU.) Businesses wanting to warehouse goods within the EU must appoint an Indirect Representative to clear customs.
Definition of Indirect Representation
The indirect representative acts in their own name but on account of a third party.
It’s not an easy job being an indirect representative due to incalculable risks and possible additional fees, duties and fines which can be imposed on them for up to three years after clearance of customs. If they fall foul of a customs inspection, they will be required to show the importers books.
The Indirect Representative must therefore maintain a full audit trail of customs declarations going back three years. The Indirect representative is jointly and severally liable for all customs liabilities arising from the customs related transactions for which they have been appointed. If the indirect representative acts without being officially appointed by use of a Power of Attorney, they are held personally liable as sole customs debtor.
It’s for this reason Indirect Representatives charge 3% of the declared value of the shipment. Not an unreasonable charge when you consider in cases of discrepancies, Customs are most likely to pursue the indirect representative as opposed to the third country exporter because there is no other EU based party to take action against.
The EU have also limited the number of transactions per year that an Indirect Representative may perform on behalf of their client. After which the exporter is obliged to open a company within the EU.