The final phase of ICS2: An update for businesses selling in the EU

Release 3 of Import Control System 2 (ICS2) goes live from June 3, 2024. This is the third and final phase of ICS2 — the EU safety and security initiative that screens shipments prior to their arrival in Europe. 

As previously reported, ICS2 regulations are designed to help EU customs authorities identify high-risk items entering the EU and take any necessary action. The EU now accounts for around 15% of the world’s trade in goods, meaning a huge number of shipments are constantly moving through customs. Though the EU wants to — quite understandably — ensure the safety of EU citizens, its aim is to do so in a way that does not inhibit trade. Instead, the EU hopes ICS2 requirements help to simplify the exchange of information between businesses and customs authorities.

As such, ICS2 requires carriers, couriers, and postal services transporting goods through the EU to submit safety and security information to EU customs authorities prior to a shipment’s arrival. This information is submitted as an Entry Summary Declaration (ENS). This is the process of informing the relevant customs authorities of the details of goods being sent into a specific customs territory — in this case, the EU — in a manner and timeframe prescribed by that authority. 

Carriers are legally responsible for the accuracy, completeness, and timeliness of the ENS. They must obtain correct information from their clients. However, if you’re moving goods into the EU, you may also need an EORI number — an Economic Operators Registration and Identification. This is mandatory for customs clearance in the EU, and is needed for all types of customs operations such as export, import, and transit. It may be beneficial to ensure your EORI number (if you need one) is readily available.

ISC2 has been rolled out in phases, or ‘releases’, since March 2021, when these new requirements came into place for mail and express shipments. Phase 2 followed in March 2023 for shipments by air.  

Phase/Release 3 affects all operators carrying goods by sea, inland waterways, road, and rail. From June 3, 2024, they too will have to submit a complete ENS dataset to ICS2. Phase/Release 3 was previously scheduled to begin from March 1, 2024. In addition to a new live date of June 3, Release 3 itself will happen in phases for different types of operators: 

• June 3, 2024: maritime and inland waterways carriers 
• December 4, 2024: maritime and inland waterways house level filers 
• April 1, 2025: road and rail carriers 

As mentioned, carriers, couriers, and postal services are responsible for complying with ICS2 requirements. But it would be wise for businesses to take the opportunity and pay closer attention to how they’re moving their goods through customs — particularly in the EU — to help keep their cross-border activity moving as smoothly as possible. 

An important step is making sure you’re getting your Harmonised System (HS) codes right. HS codes are six-digit identifiers assigned to every product sold across international borders. They enable customs authorities to apply the correct duties and taxes to every product. 

No business wants unnecessary customs delays, surprise costs, or unhappy customers. Yet failing to assign accurate HS codes to shipments could result in all three. Carriers and couriers will not necessarily ensure the correct ones are assigned on behalf of businesses, as they lack the information to do so. However, in circumstances where it’s necessary for carriers and couriers to assign HS codes, there’s a strong chance of them being incorrect. 

It’s important, therefore, to adopt an efficient way of classifying products and assigning the correct HS codes to your shipments. Avalara can help by automating the process, reducing the chance of errors that result in customs holdups. The same solution can also flag prohibited goods, so the chances of returns or items being held indefinitely by customs authorities are reduced. 

For more recommendations for cross-border sales success, our guide International tax and compliance solutions can help.