You have received a customs notification and want to obtain a deferment of payment or a suspension of payment? This is possible by suspending enforcement at customs.
Situations and constellations are conceivable in which you receive a customs notification from the German customs administration and doubt the legality of the notification. At the same time, however, you also face a payment request from the customs administration or another serious decision. It is also conceivable that you may not be satisfied with the outcome of your application for binding tariff information (BTI) because, in your opinion, customs have incorrectly classified your goods in the customs tariff.
In such a situation, you then correctly file an objection to the customs decision, either independently or, in more complex cases, with the assistance of a customs lawyer if possible. However, the opposition procedure has a disadvantage. The customs authority decides autonomously whether to grant the objection. If this is not the case, then the next step would be a court action, so that the proceedings can be very protracted.
The objection against a customs notification takes a long time – you still have to pay
One of the special features of the customs procedure is that, despite the appeals lodged, there is no suspension of the obligation to pay. The amount of duty is not automatically deferred. This means that, despite your action, you must first continue to comply with the decision you have challenged and, for example, you must first comply with a payment request from the customs authorities.
For example, if you argue with the customs administration about what you consider to be an excessively high amount of duty, you would first have to pay the higher amount determined by the customs administration despite the objection you have lodged. The difference paid too much would then be refunded to you later, i.e. after successful conclusion of the opposition proceedings or after taking legal action.
However, it is also quite conceivable that constellations in which such differences are so high that they have such a lasting effect on the solvency of a company and thus bring a company close to insolvency that could jeopardize its existence.
In such a situation, however, you are not completely unprotected. It is possible to apply to the competent customs authority for suspension of the execution of the customs decision. Such an application is thus a central element of effective legal protection.
We would therefore like to give you a brief description of the conditions under which you can submit such an application and the exact impact of such an application on your case.
The suspension of customs execution – what is it actually?
In a situation such as the one described above, you have the possibility to apply to the competent customs authority for a suspension of the execution of the customs decision. In principle, public authorities can also suspend the execution of their decisions on their own initiative, but this case is practically irrelevant in the practice of public authorities.
As a rule, the situation is that you, as the recipient of the customs notification, must independently file an application for suspension of enforcement. The customs authority then has the option of suspending the execution of its decision in whole or in part or rejecting your application in its entirety.
If you have made such an application, nothing happens before the customs authority decides whether your application is positive or negative. If the decision of the competent customs office is positive – i.e. if your application is granted – then this means for you that you do not have to comply with the regulations laid down in your decision at first, without any disadvantages resulting from non-compliance. To put it simply, the suspension of the execution of a decision thus temporarily freezes the situation prior to the receipt of the customs notification. The suspension of enforcement is therefore a security instrument within the framework of interim relief.
If the enforcement of an official decision is suspended, then this decision cannot be enforced during this suspension period and, in addition, no default surcharges may be levied.
Execution will only be suspended under strict conditions
Since the order to suspend the execution of an administrative decision is a powerful instrument, such requests are only granted by the customs authorities under strict conditions.
The customs authorities shall, upon request, suspend the execution of their decision if
- there are reasonable doubts as to the legality of the contested decision, or
- if the execution could cause irreparable damage to the party concerned
First of all, it is always necessary that you yourself actively submit a corresponding application for suspension of enforcement to the competent customs authority.
Reasonable doubts as to legality
There is now a possibility of filing an application for suspension of enforcement if there are serious doubts as to the legality of the customs decision addressed to you and challenged by you.
This raises the question of the conditions under which justified doubts about the legality of a customs decision should exist.
Justified doubts as to the legality of the decision of a customs authority exist, for example, when the legal situation is unclear. This is the case, among others, if a legal question has not yet been clarified by the supreme court and there are reservations in the literature against the legal opinion of the customs authority or the tax courts.
However, well-founded doubts may arise not only as to a point of law but also in fact. There are reasonable doubts as to the facts where there is uncertainty as to the facts relevant to the particular case and where the legal consequence alleged by the appellant appears to be possible in the circumstances. The assessment as to whether doubts exist in fact is made on the basis of the documents available and the evidence available. In this respect, the customs authorities are obliged to investigate the facts on the basis of their principle of official investigation. If you fail to comply with that obligation without the appellant having breached its duty to cooperate, there must be reason to believe that there are reasonable doubts as to the facts.
Similarly, there is doubt in fact where the facts on which the contested decision is based are not closed but are presented only incompletely or unclearly by the customs authorities.
Threat of irreparable harm
It is also conceivable that the execution of a customs decision could potentially cause irreparable harm to the person concerned. In the Union Customs Code there is no definition of when irreparable damage should occur, so that this provision must be based on the case law of the European Court of Justice (ECJ).
A financial loss should only be severe and irreparable if it cannot be fully compensated even in the event of overriding in the main proceedings. In the view of the ECJ, however, serious and irreparable damage should not be ruled out simply because the complainant can obtain financial compensation for the damage he has suffered within the framework of an action for damages.
Worth knowing from the case-law: The ECJ saw irreparable damage in this sense as the necessity of selling residential property, dissolving a company, endangering the existence of a company, irreversible loss of market share and the continuation of unemployment, for example
In the opinion of the Finanzgericht Düsseldorf, however, there should be no irreparable damage if the import turnover tax (EUSt) is to be subsequently determined against a customs debtor entitled to deduct input tax (FG Düsseldorf, v. 27.06.1997 4 V 3292/96 A). The same shall also apply where the amount of duty the suspension of which is in dispute is insignificant in relation to the alleged total loss of the undertaking.
What happens after the application has been submitted?
Requests for suspension of execution are a form of hedging instrument which freezes the current situation. You have a certain urgency about this. Therefore, the customs authorities give preference to applications for suspension of enforcement so that you can expect the decision on enforcement before the decision on your appeal. The customs authorities should decide on a request for suspension of enforcement “without delay“.
Customs have two options to respond to your request. On the one hand she has the possibility to comply with your application and on the other hand it is just as conceivable that your application will be rejected.
If the customs authority complies with your request and the contested decision has the effect of levying import or export duties, the customs authority may, at its discretion, make the suspension of enforcement subject to the lodging of a security. However, this guarantee need not be required if such a requirement could lead to serious economic or social difficulties because of the debtor’s situation. If a security is required, the suspension shall in any case not become effective until the security has been lodged.
However, even in the event of a positive decision to suspend enforcement, you as the applicant will only receive a provisional regulation, which will then become irrelevant at the latest upon the entry into force of the existing regulation or of the legal provisions.
If your application for suspension of enforcement is rejected, the only option you have is to lodge an appeal against this decision of the customs administration or to apply again for suspension of enforcement to the competent tax court.
It is worth knowing that the granting of the suspension of enforcement is no longer at the discretion of the customs authority. If, when examining the application for suspension of enforcement, the Commission concludes that there are reasonable grounds for doubting the legality of the contested decision or that the applicant is at risk of serious harm, the application shall be granted. Only in exceptional cases will a more detailed examination take place. Thus, when determining irreparable damage, a balance must still be struck between the damage and the interest in enforcement.
Opportunities and risks – you should weigh them up
An application for suspension of enforcement is certainly often the instrument of the right choice but does not necessarily always have to be the most sensible response to a customs authority’s decision. Before submitting an application, you should therefore carefully analyse your initial situation.
Applications for suspension of execution are always the right means of choice if the decision of the customs administration itself would put you in a financial imbalance.
If, however, your application for suspension of enforcement is granted but your appeal or action is ultimately unsuccessful, you should bear in mind that you will then have to pay interest on the amount owed to the customs authorities.
In addition, you should note that it can be quite demanding to justify requests for suspension of enforcement. You should therefore seek the advice of a customs lawyer with experience in this area.