The digitisation of documents has long since become part of everyday business life. Many companies have already switched entirely to electronic record-keeping, others are on their way to doing so, or are currently grappling with the archiving of documents. Certain special features must be observed when archiving customs documents, and we would like to address these here, since we frequently deal with questions on this topic in our advisory practice.
1. “Orderly retention”: archiving under Section 147 of the German Fiscal Code (AO)
Import and export duties, as governed by EU law (Article 5(20) and (21) UCC), constitute taxes within the meaning of the German Fiscal Code (Abgabenordnung, AO). The retention of documents relating to the assessment of these duties is therefore governed by the retention rule in Section 147 AO.
Section 147(1) AO provides that the following documents must be retained “in good order”:
1. accounts and records, inventories, annual financial statements, situation reports, the opening balance sheet as well as the operating instructions and other organisational documents needed for their comprehension,
2. the trade or business letters received,
3. reproductions of trade or business letters sent,
4a. documents pursuant to Article 15(1) and Article 163 of the Union Customs Code;
5. other documents to the extent that these are of relevance for taxation.
Point 4a covers documents relating to the fulfilment of customs formalities (Article 15(1) UCC) as well as documents relating to the declaration of goods for a customs procedure (Article 163 UCC). It is thus clear that the retention rules apply not only to import documents relevant for duty purposes, but also to export-related documents, since export too constitutes a customs procedure (Article 5(16) UCC). Where the export declaration is filed electronically under the computerised export procedure (ATLAS Export), it is even necessary to prove the export by means of the “Exit Certificate” (Ausgangsvermerk) PDF document transmitted by the export customs office to the declarant/exporter, which must accordingly be archived digitally (Section 6.6(1)(a) of the VAT Application Decree).
But what exactly is meant by “orderly retention”?
Somewhat cryptically, Section 147(2) AO provides, in essence, that the documents listed in paragraph 1 may be retained as a reproduction on an image medium or on other data media, provided that this complies with the principles of proper bookkeeping and it is ensured that:
- the reproduction or the data correspond, in visual terms, to the commercial or business letters received and the accounting vouchers, and, in content, to the other documents, once they are made legible;
- they remain available at all times throughout the retention period; they can be made legible without delay and can be processed by machine.
Expressly excluded from digital archiving, in addition to annual financial statements and the opening balance sheet, are certain customs documents falling under paragraph 1, point 4a, namely official documents or informal proofs of preferential origin that require a handwritten signature.
It should therefore be noted that official documents, such as formal proofs of preferential origin (certificates of origin, EUR.1, EUR-MED, and A.TR movement certificates), must still be archived in their original form. Likewise, even where proofs of preferential origin have been issued on the basis of the simplified evidentiary procedure under preferential agreements and used for import clearance, they must be retained in their original form where a handwritten signature is required. This is mandatorily the case where statements on origin are issued for consignments up to a value of €6,000 and the issuer is not an approved exporter within the meaning of the relevant preferential agreement.
Other customs documents may be archived digitally, provided the conditions described above are met, that is, in particular, that the principles of proper bookkeeping are observed and that legibility can be ensured at all times.
2. Retention period
All customs documents falling under point 4a must be retained for 10 years. It is important to communicate this period within the company and to set it out in procedural instructions, since free trade agreements frequently provide for shorter retention periods. The 10-year retention period applies not only to proofs of preferential origin used to claim customs benefits on import (suppliers’ statements on origin and movement certificates issued by the customs authority in the country of export), but also to the corresponding documents where the company itself exports originating goods: copies of statements on origin issued by the exporter, together with the relevant documents evidencing origin, must likewise be retained for 10 years.
3. Proofs of preferential origin and supplier’s declarations
A recurring question is which form and period of retention applies to supplier’s declarations. These are typically exchanged between companies as PDF documents, often in form format in the case of long-term supplier’s declarations, and as a statement on the invoice in the case of single supplier’s declarations. But what applies where these are unsigned owing to their digital format?
Article 63(3) of the UCC Implementing Regulation sets out the formal requirements for supplier’s declarations:
“3. The supplier’s declaration shall bear a handwritten signature of the supplier. However, where both the supplier’s declaration and the invoice are drawn up by electronic means, these can be electronically authenticated or the supplier can give the exporter or trader a written undertaking accepting complete responsibility for every supplier’s declaration which identifies him as if it had been signed with his handwritten signature.”
In principle, therefore, the law requires a handwritten signature, but allows for it to be dispensed with in the cases described, that is, in the case of electronic authentication or a written undertaking. Since the electronic creation of invoices and supplier’s declarations has by now become standard practice, companies generally hold electronically transmitted supplier’s declarations, which are archived electronically. Customs accepts copies of supplier’s declarations, and supplier’s declarations without a signature, provided the natural person taking responsibility for the declaration is named in it (paragraph 5 of the Administrative Instruction on Supplier’s Declarations, Z 42 14). Regardless of the format in which the supplier’s declaration is issued, it should be noted that, under Section 147(3) AO, it must be retained for ten years. Suppliers, too, should always retain a copy of the declarations they issue for this period.
4. Conclusion
The subject of retention obligations under Section 147 AO is often readily delegated to the finance or tax department. However, since particular archiving formats and retention periods apply specifically to certain customs documents, staff in customs departments should be involved in ensuring proper archiving and should carry out spot checks accordingly. Purely out of self-interest, they should have a stake in ensuring that a suitable internal control procedure is put in place within the company, since it is, ultimately, the customs department staff who must produce the requested documents to the customs auditor.
