H & M Hennes & Mauritz AB

General Information H&M Group’s Recommendations on the reform of the EU Customs Code November 2023 H&M Group welcomes the opportunity to provide feedback on the European Commission's proposal for a revised Union Customs Code (UCC). This proposal strengthens the legal framework for customs and makes it suitable to address recent challenges.The European Commission's comprehensive customs reform proposal aims to make the EU's customs system more efficient, effective, sustainable, and compliant with EU product regulations and new sustainability reg ulations under the EU G reen D eal .Specific measures include centralizing customs data management, streamlining customs procedures, and investing in new IT systems to better identify and target high -risk shipments, reduce administrative burden, automate tasks, and improve efficien cy and effectiveness.

…target high -risk shipments, reduce administrative burden, automate tasks, and improve efficien cy and effectiveness. H&M Group welcomes the proposal’s aim to streamline and modernize customs procedures, while increasing digitization of customs processes which will strengthen the customs authorities’ ability to protect the internal market. However, t hese measures should ensure no unnecessary administrative burden is placed on traders. We believe the EU's customs union plays an important role in protecting the internal market from unfair competition from outside the EU and preventing trade in illegal products. It is also an essential enabler of legal trade with third countries, which creates prosperity for the EU.H&M Group strongly advocates for the swift implementation of this essential reform.

…which creates prosperity for the EU.H&M Group strongly advocates for the swift implementation of this essential reform. We urge the Commission to shorten the timeframe proposed, provided businesses are given an 18 -month lead time to prepare. Therefore, H&M Group: • Urges the Commission to shorten the proposed timeframe of the essential customs reform, while ensuring that businesses have 18 months to prepare. • Supports the Commission’s proposal to remove the 150 Euro de minimis threshold for customs duties, which will increase harmonization while ensuring a fair and safe trading environment. • Welcomes the creation of the deemed importer regime, which will shift both financial and non-financial responsibilities from consumers to economic operators.

…regime, which will shift both financial and non-financial responsibilities from consumers to economic operators. • Stresses that shortening the storage period for third-country goods in temporary warehouses may lead to increased administrative and logistical burdens. • Welcomes the introduction of the Customs Data Hub to increase digitization but notes that the new system should have a realistic implementation timeline. • Emphasizes that only the necessary data should be provided to the EU Customs Data Hub, and that access to the data should be restricted. • Supports the EU Customs Authority and stresses that this should not be an added layer. • Appreciates the implementation of the Trust and Check trader program while noting it should bring tangible benefits to companies. • Is concerned about the proposed rules on customs penalties, which appear to be unproportionate. Ref.

…to companies. • Is concerned about the proposed rules on customs penalties, which appear to be unproportionate. Ref. Ares(2023)7537714 - 07/11/2023 General Information H&M Group is particularly interested in the following key features: 1. The duty -free status for low -value consignments from third countries will be removed (abolishment of the 150 Euro De minis threshold for customs duties) and the creation of the concept of deemed importer.Parcels valued up to EUR 150 that are sent directly from a third country to a consignee in the EU are currently exempt from customs duties. The customs duty exemption for low - value goods was enacted in 1983 and increased in 1991 and 2008. Until 1 July 2021, there was also a VAT exemption on imported goods of negligible value (below EUR 22).

…1991 and 2008. Until 1 July 2021, there was also a VAT exemption on imported goods of negligible value (below EUR 22). Both exemptions were justified by the disproportionate administrative burden of handling customs declarations for charging low customs duties and VAT on low -value goods. The European Commission proposes to remove the duty -free status for low - value consignments from third countries. A key reason for this is that 65 percent of these consignments are undervalued and should not have been covered and cleared as low - value consignments. This mis -valuation gives foreign goods that should be subject to duty an unfair competitive advantage over competing goods within the EU.H&M Group comment: H&M Group supports the European Commission's ambition to introduce a more modern framework for customs that reduces fraud and increases transpa rency for traders and consumers.

…a more modern framework for customs that reduces fraud and increases transpa rency for traders and consumers. Among the several policy proposals, the UCC revision suggests creating the deemed importer regime and removing the customs duty exemption for goods valued up to EUR 150 . The deemed importer regime in the EU propos al of customs reform is a major change that will affect both the collection of customs duties and VAT, and compliance with EU product regulations. Under the new regime, online intermediaries will be responsible for customs formalities and payments, as well as ensuring that the products they sell comply with EU product safety and environmental requirements. This is a much -needed shift in responsibility from the individual consumer .

…safety and environmental requirements. This is a much -needed shift in responsibility from the individual consumer . H&M Group welcome s and support sthe European Commissions' ambition to level the playing field between e -commerce within the EU and from third countries. Our group h a s a lways supported free trade, advocating for the removal of barriers, and minimizing tariffs to foster a more open, dynamic, and competitive single market. Nevertheless , it is also important to ensure a fair and safe trading environment for all parties involved. Therefore, H&M Group's position is aimed at addressing some longstanding problems within the current EU customs system connected to consumer protection and f air competition for companies.

…the current EU customs system connected to consumer protection and f air competition for companies. The EUR 150 de minimis threshold ,that currently exempts goods from customs duties , was initially intended to facilitate commerce, especially for small consignments, but has been exploited by some parties as a loophole to byp ass regulations. This has unfortunately led to the influx of unsafe and non -compliant products into the EU market. Evidence gathered during the work of the Wise Persons Group shows that dangerous, non -compliant products still enter the EU market every day 1 . 1 Report by the Wise Persons Group on the Reform of the EU Customs Union – Brussels March 2022 General Information Additionally, we believe this can undermine the EU: s ‘ circular economy’ agenda and the upcoming enforcement of EU regulations under the EU green deal agenda.

…the EU: s ‘ circular economy’ agenda and the upcoming enforcement of EU regulations under the EU green deal agenda. The current EU customs threshold of 150 euros undermines the circular economy by allowing non -compliant products to enter the market. These products often contain harmful chemicals or are made with unsustainable materials. As a result, they cannot be easily repaired, reused, or recycled. Another reason to remove the current duty -free status for low -value consignments is to ensure competitive neutrali ty towards EU goods and reduce the incentives to deliberately undervalue the customs value on imports to avoid paying duty. Companies selling products on the EU market should regardless of country of origin comply with the same regulations and rules. We support aligning VAT and customs rules, rather than considering them in isolation.

…the same regulations and rules. We support aligning VAT and customs rules, rather than considering them in isolation. This would increase synergies, simplifications, and reduce compliance costs. For example, the implementation dates for VAT and customs changes should be aligned, and the VAT de minimis has already been abolished, while the customs de minimis is still in plac e . Unde r the proposed EU Customs Reform, the deemed importer would be responsible for both financial and non -financial risks associated with imported goods. This could deter businesses from importing unsafe or non -compliant goods and encourage them to take more responsibility for ensuring that their goods comply with EU regulations. This would simplify the process for both businesses and consumers, and it would also help to reduce the risk of fraud.

This would simplify the process for both businesses and consumers, and it would also help to reduce the risk of fraud. For th e s e reason s, H&M Group welcomes the proposed changes in the EU Customs Union reform, particularly the abolition of the EUR 150 de minimis threshold and creation of the deemed importer regime . We believe that this change will effectively close the loopholes, thereby ensuring a level playing field for all actors in the EU. Furthermo re, H&M Group anticipates that this modification will increase consumer protection by ensuring all goods entering the EU are compliant with safety, environmental, and social standards.

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