General Customs Rules and Procedures

1. General Customs Rules and Procedures

2. Relevant Acquis • Customs Code – Council Regulation (EEC) 2913/92 • Regulation laying down provisions for the implementation of Council • Modernized Customs Code (MCC): • EP and Council Regulation No 450/2008 • Regulation (EEC) No 2913/92 establishing the Community Customs Code – Commission Regulation (EEC) 2454/93

3. Legal Environment • Customs Act nr. 88/2005 • Regulation No 630/2008, on preferential customs treatment of various type • Regulation on the custody and customs clearance of goods No 1100/2006 • Administrative Procedures Act No 37/1993

4. Customs Territory Country, islands and skerries as boundary in accordance with well as twelve nautical mile Icelandic customs territory also includes the airspace above the aforementioned land 154 5 112 Officers Hafnarfjörður 12 miles 2 44 2 1 2 2 1 101 Other Personnel 213 Employees

5. Customs Representation • The general rule is that importers are responsible for declaring goods and for the payment of import charges • Importers may grant to customs brokers authority to act on their behalf before the customs authorities

6. Customs Brokers • Directorate of Customs grants operating licenses for Customs brokers • Strict conditions are for granting licenses: • Certification of financial competence and a criminal record certificate • Description of the activities containing information on the proposed working arrangements and where and how the proposed activities will be conducted, including information on accounting, safeguarding of data, internal control and names of the employees

7. Customs Debt • Whoever imports goods for resale, for delivery without remuneration or for own use, or who becomes responsible for the payment of duties is liable for duty • All goods imported are subject to duty according to the Customs Tariff in Annex to the Customs Act

8. Incurrence Debt • Import charges fall due when a permit has been given for their release for domestic use • Import charges shall fall due not later than six months from the date of arrival of the transport vessel to the country • Import charges on goods which have been placed in a bonded warehouse, free zone, duty free supplies or a duty free shop fall due when a permit has been given for their release for domestic use

9. Recovery/Payment of Import Duty • Importer of goods is liable for the payment of import charges • Customs broker can also act before the customs authorities on behalf of an importer with regard to the customs treatment of goods • Together with the importer the broker shall be fully responsible for the payment of import charges • Liability of the customs broker is cancelled if import charges have been debited to the importer’s account

10. Deferred Payment • Parties recorded in the VAT register shall enjoy deferment of payment on import charges provided they are not in arrears with payments to the State Treasury • Each period of settlement shall be two months: • January and February, March and April, May and June, July and August, September and October and November and December

11. Deferment of Payment Period of Settlement and Due Dates January February March April 1 15 1 15 1 15 1 15 28 Due Date Importers in General Due Date of Payment is the second workday after the 15th of each month Alcohol Excise Duties VAT Vehicles Due Date If paper declaration is used VAT payment must follow immediately and excise duty on registration

12. Deferred Payment – cont. • The due date of payment for express consignments shall be seven days after customs clearance of a consignment • When goods are delivered from the custody of a transporter or from a storage area for uncleared goods without proper permit from the Directorate the import charges shall fall due

13. Customs Auditing • The Directorate is in charge of customs auditing • Customs auditing covers any kind of inspection as to the correctness of information submitted in declarations to the Directorate according to law and any kind of inspection as to the correctness of payment of import charges after their levy • Customs auditing covers, inter alia, comparison of information submitted to by electronic means with accounting records, including relevant supporting documentation • The police is obliged to render necessary assistance

14. Reassessment of Import Duties • Importer who holds a permit for EDI customs clearance must keep in his custody all computer data concerning customs clearance for six years from the date of customs clearance • Directorate is authorized to reassess import charges payable by an importer on consignments which the importer has electronically cleared through customs during the last six years • If an importer submits incorrect information on paper documents, reassessment of import charges is only possible within 60 days of the customs clearance

15. Appeal Procedure • In case of a dispute concerning decisions made by the Directorate, a written complaint supported by arguments and necessary documentation can be filed • The time limit for complaints is 60 days from the date of customs clearance • A ruling on a complaint shall be made as soon as possible and no later than within 30 days from the procurement of data

16. Appeals to the State Customs Board • The ruling of the Directorate can be appealed to the State Customs Board within 60 days from the date when a ruling or decision was mailed • An appeal to the State Customs Board does not delay the judicial effect of the ruling • A ruling by the State Customs Board is a conclusive decision at the administrative level • Appeals to general courts ruled on by the Board do not delay or alter the conclusions of the Board until judgement has been passed

17. Gap Analysis • Appeals Process seems to be similar in Iceland and the European Union • Deferred Payment: • Iceland – Main rule, deferred payment 2 months • EU: 1 month or maximal up to approx 6 weeks • Time limit for storing goods in a warehouse without paying duties is six months in Iceland

18. Entry of Goods • All imported and exported goods shall be recorded in a manifest • Excluded are goods stored in a vessel and the luggage of passengers and crew • Uncleared goods which are not recorded in the manifest must not be removed from a vessel unless they are at the same time produced before the customs and a permit received for their removal from the vessel • Goods shall be manifested electronically to the customs port which is their destination

19. Importation of Goods Importer (Broker) Arriving Vessel Manifest submitted Arrival Clearance Customs Clearance Delivery Permit Customs Declaration Arrival Date Deferred Payment or Cash Payment Customs Clearance Delivery Permit Transporter, broker, postal storage or bonded warehouse Temporary storage Customs

20. Export of Goods • All provisions in the Customs Act 88/2005 regarding importation also apply to exportation and transit as far as applicable except otherwise provided for in the act • Professional exporters shall submit export documents electronically to the Directorate • Icelandic fishing ships shall report their catch, transported for sale on foreign markets, in the first port where the ship docks in Iceland on its return from abroad

21. Parameters in the IT System • In order to monitor and control the import of goods, because of import restrictions and prohibitions as well as import duty evasion, certain tariff heading numbers are filtered in the IT system • Due to this control all shipments, that are correctly classified, are detained and are subject to inspection • Other parameters are also controlled in the IT system, e.g. personal identification numbers of companies or individuals (existing for all legal entities in Iceland, natural persons as well as legal persons), country of origin etc.

22. Cooperation with other Agencies • A close and effective co-operation exists between the customs authorities and many other governmental agencies • Customs, Police and other government agencies exchange information and intelligence concerning investigations and observations • This co-operation of Police and Customs is underlined with provisions both in the Customs and the Police Act

23. Cooperation with other Agencies cont. • Several co-operation agreements have been made between the Directorate of Customs and other agencies concerning customs control at the borders • Several Co-operation Projects are already in progress • Goods that are subject to prohibition or restrictions do require a license number on the import declaration before being cleared through the customs system

24. Consignment Reference Number – Vessel • All shipments on a manifest get a Consignment number that is used during the Customs Clearance: • E BRU 10 11 1 DE HAM W001 • E Name of shipping company • BRU First three letters of the name of a vessel • 10 Date of vessel’s arrival • 11 Month of arrival • 0 Year of arrival • DE Country of export (LOCODE standard) • HAM Harbour of Export • W001 Bill of lading number

25. Consignment Reference Number – Aircraft • All shipments on a manifest get a Consignment number that is used during the Customs Clearance: • F 502 12 10 0 DK CPH 1234 • F Identifier of an Airline • 502 Flight Number • 12 Date of aircraft’s arrival • 10 Month of arrival • 0 Year of arrival • DK Country of export ( LOCODE standard) • CPH Airport of Export • 1234 Consecutive Numbers

26. Import Declaration

27. Gap Analysis • Goods arriving in Iceland have to be manifested and consequently submitted electronically to Customs (Excluded are goods stored in a vessel and luggage of passengers and crew members) • Iceland has not implemented the SAD document • Consignment Reference Numbers only exist in Iceland • Iceland has not implemented Pre Declarations

28. Gap Analysis • Simplified Declarations are not applied in Iceland • However, provisional customs clearance is possible, when one or several supporting documents are missing (against a monetary deposit) • Verification (examination of declaration, request for documents, examination of goods, samples) seems similar

29. Coffee Break

30. General Customs Rules and Procedures

31. Temporary Storage • Storage of uncleared goods is authorized in the following facilities: • Clearance warehouses of transporters and licensed customs brokers • Bonded warehouses • Warehouses for duty free supplies • Duty free shops and warehouses for their duty free stock • Free zones (not in use at the moment) • Transit warehouses

32. Temporary Storage – cont. • It is prohibited to store uncleared goods in places other than the facilities mentioned before • It is authorized, when justified by special circumstances, to permit the storage of uncleared goods in other facilities than those mentioned before • The Director of Customs may subject the permit to such conditions as he deems necessary

33. Duty Free Shops • Directorate of Customs can grant to legal persons an operating license for the operation of duty free shops in airports and seaports • A license also covers the operation of duty free stockrooms for uncleared goods, customs cleared goods and domestic products

34. Sale from a Duty Free Shop • Duty free shops are only authorized to sell goods to departing passengers and crew of vessels engaged in international journeys • A sale shall only be permitted against presentation of a boarding card • Directorate can authorize the licensee to sell goods from a duty free shop to arriving passengers and crew of vessels engaged in international journeys • Such shops shall be specially demarcated and only accessible to passengers and crew upon arrival to this country

35. Free Zones • Directorate can grant to legal persons a license for the operation of free zone where uncleared goods and domestic products may be processed beyond the processing permitted in a bonded warehouse • A license shall be granted solely to those engaged in providing to others the services consistent with the operation of a free zone • Licensees themselves are not permitted to engage in industrial production, commerce, commission sale, wholesale or retail sale in the free zone • Only specifically registered companies are permitted to operate a free zone

36. Transit Warehouses • Directorate of Customs can grant to legal persons a license for the operation of transit warehouses • A license shall be granted solely to those engaged in providing to others the services consistent with the operation of a transit warehouse • The licensees themselves are not permitted to store goods or engage in the processing of goods, commerce, commission sale, wholesale or retail sale in the transit warehouse • Uncleared goods may be placed in a transit warehouse from a vessel or a clearance warehouse

37. Transit Warehouses • Goods subject to import licenses may be placed in a transit warehouse although the license is not on hand • Domestic goods may be placed in a transit warehouse when they are intended for use in processing permitted in the warehouse in order to preserve their condition or prevent their damage • Transportation of goods from a transit warehouse to other facilities for undeclared goods is impermissible • Releasing of goods from a transit warehouse for use in the country is not permitted

38. Responsibility/Liability of the Custodian • Transporters, licensees of storage areas and agents of foreign parties who transport goods to this country shall be liable for the payment of import charges on goods which they have delivered or taken into use • The property of those liable for the payment of charges may be attached covering import charges, penal interest and costs, without prior court ruling or accord

39. Movement of Undeclared Goods • Before goods are removed from a vessel or clearance warehouse to a bonded warehouse, a warehouse for duty free supplies, a duty free shop, transit warehouse or free zone the licensee shall notify the Director of Customs about the intended movement of goods • The same shall apply when goods are delivered from the custody of a transporter to the clearance warehouse of a customs broker or another transporter

40. Movement of Undeclared Goods • Director of Customs must declare whether such delivery is permitted or whether the goods shall be detained for further inspection immediately and no later than 24 hours after verifiably receiving notification • The aforementioned provision does not apply to goods transported to a warehouse for duty free supplies from a vessel’s stores

41. Transport of Uncleared Goods Between Storage Areas • Uncleared goods may be transported between storage areas without a special permission from the Director of Customs • The custodian must notify the Director of Customs about the transport of the goods before the transport takes place • Transport of goods from a warehouse for duty free supplies or a duty free shop to other storage areas for uncleared goods is prohibited unless specially permitted by the Director of Customs

42. Transfer of the Responsibility – Security • Transport of goods between storage areas for uncleared goods results in the transfer of responsibility from one custodian to another when a licensee receiving goods certifies their receipt • Operator of a customs warehouse, a warehouse for duty free supplies, a transit warehouse or free zone shall post security to the State Treasury corresponding to 3% of the customs value of goods that may be expected to be stored in the storage area in question

43. Gap Analysis • All warehouse types seem to be similar as in the EU; however the EU legislation is more complex and comprehensive than in Iceland

44. Customs Status of Goods/Transit Transit is well defined in the Customs law No 88/2005, § 1 – Point 28: The transportation of goods within the country under customs control from an arriving vessel on board an exporting vessel, provided the destination of the goods was originally a country other than Iceland

45. Customs Status/Transit – Cont. Further definitions are to be found in in regulation No. 1100/2006 on the custody and customs clearance of goods: § 48 For the purpose of this Chapter “transit” means the transportation of goods within the country from an arriving vessel on board an exporting vessel under customs control, provided the original destination of the goods is a country other than Iceland § 48 A carrier shall notify the director of customs of the transport and custody of goods before the transit takes place

46. Customs Status/Transit – Cont. Regulation No. 1100/2006 § 50 Transfer of the responsibility of a custodian The transit of a consignment is at the responsibility of the carrier who transported the consignment to the country. The carrier is permitted to deliver the consignment to another carrier for exportation against certification of its receipt. Responsibility for the export of the consignment is then transferred to that carrier. § 51 The custody of transit documents Carriers and customs brokers shall keep in their accounts transit notifications and other documents relating to the transit, inter alia cargo manifests. .

47. Customs Status/Transit – Cont. To the right: Icelandic document for Transit SAD document not in use for transit out of the country

48. Customs Status/Transit – Cont. • When the same shipping company is responsible for the transport through the country, transit declarations are made electronically • HS tariff number 9815-0000 is used for EDI system • Customs Authorities have the possibility to monitor all manifests that are electronically transmitted • Thereby focusing their attention on surveillance and intelligence led targeted intervention of higher risk shipments

49. Example of Transit Goods • Most of the goods moved in transit through Iceland are from the USA and Canada destined for Europe and vice versa • Spare parts and provision for foreign vessels • ATA (transit) possible, but is very seldom used • (Greenland and Faroe Islands) • Importer is obliged to pay customs duty if the goods are not exported and cleared out of the country

50. Customs Status of Goods/Transit • 6500 transit shipments cleared in 2010 through Customs in Iceland • Foreign fishing vessels that offload fish in Iceland, and the final destination is outside the country, the cargo is cleared through the transit system out of the county • Iceland a member of the SAD Transit Convention • Linked through the NCTS system in Norway, only for goods arriving from EU destined for Iceland