European Union Customs Union

The European Union Customs Union (EUCU) is a customs union which consists of all the member states of the European Union (EU), Monaco, and the British Overseas Territory (BOT) of Akrotiri and Dhekelia. Some detached territories of EU states do not participate in the customs union, usually as a result of their geographic separation. In addition to the EUCU, the EU is in customs unions with Andorra, the BOT of Gibraltar, San Marino and Turkey (with the exceptions of certain goods), through separate bilateral agreements.Customs unions, Taxation and Customs Union , European Commission. Retrieved 20 August 2016.

There are no tariffs or non-tariff barriers to trade between the members of the customs union and—unlike a free trade area—members of the customs union impose a common external tariff on all goods entering the union.

The European Commission negotiates for and on behalf of the Union as a whole international trade deals under the EU's Common Commercial Policy, rather than each member state negotiating individually. The Commission also represents the Union in the World Trade Organization and any trade disputes mediated through it.

Common external tariffs

The EU Customs Union sets the tariff rates for imports to the EU from other countries. These rates are detailed and depend on the specific type of product imported, and can also vary by the time of year.Taric and Quota Data & Information – European Commission Communication and Information Resource Centre for Administrations, Businesses and Citizens. The full WTO Most Favoured Nation tariff rates apply only to those countries that do not have a Free Trade Agreement with the EU, or are not on a WTO recognised exemption scheme such as Everything but Arms (an EU support arrangement for least developed countries).

Union and common transit Union transit, formerly called "Community transit", is a system generally applicable to the movement of non-Union goods for which customs duties and other charges due on import have not been paid, and of Union goods, which, between their point of departure and point of destination in the EU, have to pass through the territory of a third country.

The 'common' transit procedure is used for the movement of goods between the EU Member States, the EFTA countries (Iceland, Norway, Liechtenstein and Switzerland), Turkey (since 1 December 2012), North Macedonia (since 1 July 2015) and Serbia (since 1 February 2016). The operation of the common transit procedure with the UK is ensured as the UK has deposited its instrument of accession on 30 January 2019 with the Secretariat of the Council of the EU.European Union, Union and Common Transit , accessed 24 December 2020 Text was copied from this source, which is available under a Creative Commons Attribution 4.0 International License . The procedure is based on the Convention of 20 May 1987 on a common transit procedure. The rules are effectively identical to those of the Union transit.

Edward Kellett-Bowman MEP, as rapporteur for a European Parliament Committee of Inquiry, presented a report to the Parliament in February 1997European Parliament, Report on the Community Transit System , 20 February 1997, accessed 31 January 2017 which identified the removal of border controls and a lack of co-operation by member states as being responsible for a rise in organised crime and smuggling.Neil Buckley, "Cross-border crime loses EU billions: Inquiry blames Brussels and customs for failing to clamp down on smuggling", Financial Times, 21 February 1997, p. 2. Kellett-Bowman's report led to the European Union setting up a customs investigation body and computerising transit-monitoring systems.Neil Buckley, "EU plans single body against smuggling", Financial Times, 13 March 1997, p. 2.

Modernised Customs Code The Modernised Customs Code (MCC) was adopted under Regulation (EC) No 450/2008 of the European Parliament and of the Council of 23 April 2008 laying down the Community Customs Code (Modernised Customs Code).OJ L 145, published 4 June 2008 The MCC was primarily adopted to enable IT customs and trade solutions to be adopted.Deloitte Netherlands, "In 2016 the European Union will have a new Customs Code. But what’s new?", published 17 December 2014, accessed 11 December 2023.

Union Customs Code The Union Customs Code (UCC), intended to further modernise customs procedures, entered into force on 1 May 2016. This superseded the MCC. The European Commission has stated that the aims of the UCC are simplicity, service and speed. Implementation took place over a period of time and most aspects of implementation were complete by 31 December 2020, although some formalities managed by electronic systems may not be fully implemented until 31 December 2025.European Commission, "The Union Customs Code (UCC) – Introduction". , accessed 29 March 2023.

One major goal of the UCC is to progress towards the complete use of electronic systems for interactions between businesses and customs authorities, and between customs authorities, bringing all paper-based customs processes to an end.European Commission, "Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 952/2013 to prolong the transitional use of means other than the electronic data-processing techniques provided for in the Union Customs Code", COM(2018) 85 final, published 2 March 2018, accessed 29 March 2023. .

Customs reform In 2023, the European Commission proposed the most comprehensive customs reform since the Customs Union's establishment in 1968. Under the customs reform, the EU decided in 2025 to eliminate the €150 customs-free threshold and added a €3 customs duty for such small parcels. Furthermore, the EU plans to establish an agency for customs, the European Union Customs Authority.

Non-EU participants Monaco and the British Overseas Territory of Akrotiri and Dhekelia are integral parts of the EU's customs territory.Protocol relating to the Sovereign Base Areas of the United Kingdom of Great Britain and Northern Ireland in Cyprus , Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community, EUR-Lex, 12 November 2019.

State / territory Agreement Entry into force Monaco Franco-Monegasque Customs Convention 1968 (United Kingdom) Treaty of Accession 2003Protocol No. 3 on the Sovereign Base Areas of the United Kingdom of Great Britain and Northern Ireland in Cyprus , Act concerning the conditions of accession of the Czech Republic, the Republic of Estonia, the Republic of Cyprus, the Republic of Latvia, the Republic of Lithuania, the Republic of Hungary, the Republic of Malta, the Republic of Poland, the Republic of Slovenia and the Slovak Republic and the adjustments to the Treaties on which the European Union is founded, EUR-Lex, 23 September 2003.Brexit withdrawal agreement 1 May 2004

Historical non-EU participants Jungholz, an Austrian pene-exclave surrounded on four sides by German territory and only accessible via Germany, was de facto part of the EUCU from 1 July 1968 until Austria joined the EU on 1 January 1995.

Kleinwalsertal, an Austrian functional exclave only accessible via German roads, was de facto part of the EUCU from 1 July 1968 until Austria joined the EU on 1 January 1995.

EU territories with opt-outs

While all EU member states are part of the customs union, not all of their respective territories participate. Territories of member states which have remained outside of the EU (overseas territories of the European Union) generally do not participate in the customs union.Territorial status of EU countries and certain territories European Commission, retrieved 18 December 2018

However, some territories within the EU do not participate in the customs union for tax and/or geographical reasons: Büsingen am Hochrhein (German exclave within Switzerland, part of the Swiss Customs Area)Article 6 of Council Directive 2006/112/EC , 28 November 2006 Heligoland (small German archipelago in the North Sea with VAT free status) Livigno (remote Alpine town in Italy with VAT free status) Ceuta and Melilla (Spanish territories in Africa with VAT free status).

Historical opt-outs The following territories were excluded until the end of 2019: Campione d'Italia (an exclave of Italy surrounded by Swiss territory) the Italian waters of Lake Lugano

Bilateral customs unions Andorra, San Marino, Turkey and the British Overseas Territory of Gibraltar are each in a customs union with the EU.

State / territory Agreement Entry into force Notes Agreement in the form of an Exchange of Letters between the European Economic Community and the Principality of Andorra 1 January 1991 Excludes agricultural produce (United Kingdom) Agreement in respect of Gibraltar between the European Union and the European Atomic Energy Community, of the one part, and the United Kingdom of Great Britain and Northern Ireland, of the other part TBD Provisional application from 15 July 2026 Agreement on Cooperation and Customs Union between the European Economic Community and the Republic of San Marino 1 April 2002 Turkey Decision No 1/95 of the EC-Turkey Association Council of 22 December 1995 on implementing the final phase of the Customs Union 31 December 1995 Excludes agricultural produce

Special arrangements concerning territories of the United Kingdom The United Kingdom of Great Britain and Northern Ireland left the European Union on 31 January 2020 and transition arrangements ended on 31 December 2020. Special arrangements have been made for those parts of the United Kingdom and its territories that share a land border with an EU member state.

Northern Ireland

The UK (including Northern Ireland) is no longer a member of the European Union Customs Union. However, there are special arrangements in place for Northern Ireland: its trade with Great Britain and its trade with the European Union are each now regulated by the Brexit withdrawal agreement (specifically the Northern Ireland Protocol and the Windsor Framework), the EU–UK Trade and Cooperation Agreement, the European Union (Future Relationship) Act 2020, the United Kingdom Internal Market Act 2020. These include special provisions for trade in goods between Northern Ireland and the EU which for many purposes are similar to those that apply within the Customs Union, although Northern Ireland remains part of United Kingdom Customs territory.

Gibraltar

Gibraltar left the EU concurrently with the United Kingdom. When part of the EU, it was one of the EU territories with opt-outs and had not been part of the Customs Union. On 31 December 2020, the EU, Spain, the UK, and Gibraltar agreed negotiate a treaty which would include provisions for trade on goods between the EU and Gibraltar. The agreement was signed in Brussels on 14 July 2026, which allowed it to be provisionally applied from 15 July 2026.

The agreement establishes a bilateral customs union between the EU and Gibraltar allowing free movement of goods produced in the EU or Gibraltar. Goods imported to Gibraltar from third countries or exported from Gibraltar to third countries will cleared by Spanish customs authorities at customs offices in Algeciras, La Línea de la Concepción or Sagunto, or at a designated customs office in Portugal.

Akrotiri and Dhekelia As already noted above, the British Overseas Territory of Akrotiri and Dhekelia on the island of Cyprus are integral parts of the EU's customs territory (and remained so after Brexit).

European Union Customs Union

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