The concept of authorised economic operator (AEO) was instituted in the wake of the attacks of 11 September 2001. Its purpose is to make trade more secure.
Under the auspices of the World Customs Organisation, customs authorities have formulated a global strategy to protect international trade, a vital source of economic wealth for states. The purpose of the strategy is to:
- develop an environment for regulating trade that is beneficial to reliable economic operators; and
- enhance the safety of the international supply chain.
In the European Union (EU), the Union Customs Code (UCC) has incorporated this strategy by implementing the approval of authorised economic operators.
In addition to affording certain legal benefits in terms of customs-related matters and security, AEO authorisationl encourages businesses to adapt their structure to customs procedures. The authorisation process provides an opportunity for businesses to evaluate and assess their procedures, which results in:
- better internal control;
- better communication between departments;
- optimised logistics and customs procedures.
AEO authorisation also promotes better relations between customs authorities and businesses, based on mutual trust. At the international level, recognition of this authorisation offers a competitive advantage as it facilitates trade with another AEO-certified businesses or those certified by an equivalent authorisation.
Some examples of equivalent authorisations are:
- in the United States: the "Customs Trade Partnership Against Terrorism – C-TPAT";
- in China: the "Interim Measures of Customs Administration for Enterprise Credit Management – IMECM".
In Luxembourg, the point of contact for AEO-related matters is the Customs and Excise Agency (Administration des douanes et accises – ADA).
Who is concerned
All business involved in the international supply chain – regardless of size – that engage in customs activities may apply for AEO authorisation:
- goods manufacturers;
- customs representatives;
- transport operators;
- airport terminal operators;
- warehousing services providers;
Applicants should refer to the Authorised Economic Operators Guidelines, which are available in PDF form (in English only) on the website of the European Commission.
Types of authorisations
There are 2 types of AEO authorisations:
- "AEOC" (Authorised Economic Operator – Customs simplifications): economic operator authorised for customs simplifications;
- "AEOS" (Authorised Economic Operator – Security and safety): economic operator authorised for safety and security.
Depending on the type of business, applicants may choose:
- one of the 2 authorisations; or
- a combined authorisation, known as "AEOF" or "AEO C/S".
The business must satisfy all of the following criteria:
- satisfactory history of compliance with customs requirements and tax provisions;
- no serious criminal offences in connection with the customs-related activity engaged in;
- an effective system for managing trade and transport records, permitting the appropriate customs inspections to be carried out;
- proof of financial creditworthiness;
- practical standards of professional skills or qualifications related directly to the activities engaged in (AOEC or AEOF);
- existence of appropriate safety and security standards (AEOS or AEOF).
Effective 1 October 2019, new applications for AEO authorisation are submitted electronically via the EU Trader Portal.
Among other things, this standardised EU interface for operators is used to communicate information on AEO authorisation-related applications and decisions. The portal was designed for the purpose of facilitating and streamlining the communication of information on AEO operator-related applications, decisions, authorisations and management procedures.
To apply for authorisation, economic operators must have an EORI number (Economic Operator Registration and Identification number), which is issued by the ADA.
Economic operators must also create a user account and UUM&DS password to log on the EU Trader Portal for eAEO.
How to proceed
Processing the application and audit
Upon receiving the application, the ADA will assess its admissibility within 30 days.
If additional information is required, it must be submitted to the ADA within 30 days.
If the application is found to be admissible, an in-depth audit will be conducted to ascertain whether the business fulfils the criteria required to be granted AEO status.
Based on the outcome of this audit, the ADA will either:
- grant AEO authorisation; or
- deny the application.
The ADA will issue its decision within 120 days of receiving the application.
This time limit may be extended by up to 60 days.
When AEO status is granted, the operator is registered in the European authorised economic operators database.
Benefits of authorisation
Depending on the type of AEO authorisation, businesses enjoy many:
- direct benefits, such as:
- easier access to customs simplifications;
- fewer physical and document inspections;
- prior notice if selected for a document or physical inspection, etc.;
- indirect benefits that are not directly related to customs activity in and of itself. These include:
- recognition as a safe and reliable trading partner;
- better relations with customs authorities and other public authorities, etc.
A full list of the direct and indirect benefits may be found on the official customs and excise duty portal.
In addition, AEOC authorisation or compliance with certain AEOC criteria is often one of the conditions for qualifying for customs simplification in a range of procedures, such as centralised customs clearance, self-assessment and entry in declarants' records (EiDR).
AEO status granted by Luxembourg is recognised by all EU customs authorities.
Businesses must notify the ADA of any major event that could affect their authorisation.
Validity and regular inspections
AEO certificates are valid indefinitely.
However, the ADA regularly assesses AEO authorisations and the benefits granted to AEO businesses.
ADA assessments are based on:
- the outcome of the inspections described in the inspection plan;
- notifications issued by the AEO business on changes in its activities, structure, procedures, etc.;
- other general or specific information that could affect the benefits granted to the business;
- a determination of whether the AEO authorisation holder is still in control of the risks to which they are exposed.
If one of the components of the regular assessment indicates that the business no longer has control over one or more risks, the ADA will notify the business in question and provide instructions on how to improve.
In the event of non-compliance with the conditions of granting AEO status, the ADA may suspend or withdraw the AEO authorisation.
A negative decision further to an application for authorisation of AEO status, or a decision to withdraw or suspend AED authorisation, is an administrative decision. As such, the business may dispute them through the usual channels of appeal. As such, they may lodge either:
Appeals must be lodged within the legally required time limits to be admissible.