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By:  Dirk Pohl
WINHELLER Attorneys at Law & Tax Advisors
Frankfurt, Germany

Business Travel Under the Oversight of Customs

Karl-Heinz Rummenigge has been through this: In 2013, the president of FC Bayern was stopped by customs at Munich Airport when arriving in Germany from Qatar with two luxury watches in his possession that he had failed to register as in free circula-tion and to pay customs duty on. He was fined a handsome sum of EUR 249,000, plus an entry relating to tax evasion was made in his certificate of conduct.

What happens, however, if an expensive watch is already on its owner's wrist when leaving the country and it is in fact not a souvenir from a trip? Customs law, which applies to the same extent in all 28 European Member States, stipulates that any goods that leave Community territory without specifically being registered to do so are given the status of non-Community goods. When re-entering Community territory, non-Community goods must once again be subjected to a customs clearance procedure, which typically involves registering the goods for transfer into free intra-Community traffic. According to customs law, these goods would constitute return goods, which are generally exempt from customs duty.

Business travelers carry valuable objects, often unknowingly - laptops, company cell phones or product samples, just to name a few. Upon re-entering the country, customs typically asks where the goods in fact originated. Because only very few travelers carry purchase receipts with them for their personal luggage, it becomes impossible to provide receipt evidence during a customs check. This might result in import duty notices and penal proceedings.

The solution to this problem is to register with customs any objects the traveler carries prior to leaving the country and to have "identification measures" performed. The traveler will then be given a written confirmation about the goods being exported with a detailed description of their quality or with serial numbers. When returning, the traveler then once again registers the goods presenting the certificate. The goods are then exempt from customs as return goods.

PLEASE NOTE: When carrying cash amounts of EUR 10,000 or more, the process is the same. Though importing cash is always duty free, registering serves to combat international money laundering. Offenses against the registration obligation usually result in penalties of 25 % of the amount carried if the irregular transfer was deliberate. Even if this was a negligent action, the penalty rate is still 12.5 %.

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