The European Union has politically agreed on the most ambitious overhaul of its customs framework since the customs union was established in 1968. Across the Channel, the United Kingdom is pursuing its own, though earlier-stage, customs modernisation agenda, the first since its withdrawal from the EU. Together, these reforms will reshape how goods move across Europe’s borders.
This briefing is the fifth in our Customs Reform Unpacked series. The new Union Customs Code and implementing laws (together, the EU Customs Reform or the Reform) not only change who is responsible for goods at the border but also fundamentally change how border enforcement works. The EU has pursued more effective customs enforcement for years, through initiatives such as the EU Single Window Environment for Customs and successive upgrades to its risk management framework, but the Reform represents a step change in ambition: it centralises risk management under the new EU Customs Authority, structures cooperation between customs and other enforcement agencies across the EU, and ensures broader and centralised data access and exchange.
Where this fits
The EU’s customs enforcement approach has until now been defined by its fragmentation. Each of the 27 Member States applies its own risk management priorities, cooperates with other national authorities on its own terms, interprets customs laws according to its own views, and operates its own penalty and prosecution regime. While integration improvements have been made over the years, the result is a system in which the same infringement can be treated very differently, both in terms of the risk of detection and in terms of the consequences once detected. Critically, non-compliance identified at one entry point is often not effectively followed up on at others. This creates two key issues: bad actors exploit the weakest link in the EU’s external border, routing goods through Member States with less rigorous controls; and economic operators engage in “import point shopping”, selecting the entry point that offers the most favourable enforcement environment. The lack of a central risk analysis capacity and the absence of coordinated customs action across Member States have made these gaps difficult to close.
The EU Customs Reform addresses enforcement through two distinct lenses. The first is the e-commerce challenge: billions of low-value parcels enter the EU each year with minimal scrutiny, and the surge in non-compliant products reaching consumers has raised serious concerns, not only about citizen safety but also about the competitive disadvantage faced by EU-based manufacturers and retailers who are held to strict product standards while non-compliant imports undercut them. The second is geopolitical: customs is increasingly seen as a pivotal instrument for enforcing the EU’s broader regulatory agenda, from sanctions and export controls to environmental standards, deforestation rules, and the EU Carbon Border Adjustment Mechanism (CBAM). The Reform positions customs authorities not just as revenue collectors but as frontline enforcers of the EU’s policy objectives, and equips them, for the first time, with the institutional infrastructure, data tools, and harmonised penalty framework to do so consistently across all 27 Member States.
The groundwork for more effective enforcement is already being laid. The EU has been gradually moving toward a layered customs declaration model in which customs data elements are connected to underlying product compliance databases, enabling automated goods stoppage in specific scenarios, for instance, where CBAM-regulated goods are imported without the importer holding authorised CBAM declarant status. What the Reform brings is a qualitative leap beyond these individual mechanisms, connecting them through the EU Single Window Environment for Customs. Once the EU Customs Data Hub (the Data Hub), a centralised EU platform for submitting and sharing customs and product compliance data, is operational, comprehensive data (including non-fiscal product compliance data) will be available for analysis at Union level rather than remaining siloed in individual Member States. This will give customs authorities the capability to automatically stop goods that do not meet EU standards at any point of entry, regardless of which Member State is involved. And where non-compliance is identified, the authorities will have the tools to coordinate customs duty claims and recovery across the Union, rather than relying on each Member State to act independently.
Key changes introduced by the Reform
- Expanded data sharing requirements for economic operators. The EU Customs Reform requires carriers, importers, and exporters to make available significantly more data to customs authorities than under the current legal framework, and to do so as early as possible. Data will include transactional information, product compliance data, and supporting documentation. Customs authorities will have far greater visibility of what is crossing the border, and businesses will need the data infrastructure to deliver it.
- Central risk management by the EU Customs Authority. Risk management will operate at EU level: the EU Customs Authority (EUCA) will conduct centralised risk analysis across all Member States, issue control recommendations on a “comply or explain” basis, develop supervision strategies, and have the power to instruct that goods destined for the EU may not be loaded or transported where a risk is identified. This replaces the current model in which each Member State runs its own risk analysis in isolation, with limited coordination and no central capacity to prioritise or direct action.
- Data sharing between enforcement authorities through the Data Hub. The Data Hub will enable structured data exchange between customs authorities and a wide range of other enforcement bodies, including market surveillance authorities, food safety authorities, law enforcement (Europol), border management (Frontex), the European Anti-Fraud Office (OLAF), and the European Public Prosecutor’s Office (EPPO). Rather than relying on bilateral, ad hoc information requests, these authorities will be able to access relevant data directly through the Data Hub. This creates the conditions for coordinated enforcement action across policy areas and across Member States.
- Interoperability of the Data Hub with other EU systems. The Data Hub will be designed to interoperate with existing EU regulatory systems, including the Safety Gate rapid alert system for non-food products, the Information and Communication System for Market Surveillance (ICSMS), the IP Enforcement Portal, the Rapid Alert System for Food and Feed (RASFF), and the EU Customs Single Window Certificates Exchange System (EU-CSW-CERTEX). This means that customs data can be cross-checked against product compliance databases automatically, enabling risk signals and goods stoppages to be triggered by information already held elsewhere in the EU’s regulatory infrastructure.
- Customs penalty harmonisation. The penalty provisions were among the most contested elements of the political negotiations, and the final text is significantly scaled back from the European Commission’s original proposal. The new Union Customs Code establishes a harmonised floor, a minimum list of infringements, and a framework for non-criminal penalties, but it stops short of prescribing uniform penalty levels, leaving Member States considerable discretion in how they sanction infringements. In practice, this means that the vast disparities in penalties across Member States for the same conduct are likely to persist, at least in the short term. The Commission must review the framework six years after entry into force and assess whether it is functioning effectively or whether further harmonisation is needed to prevent continued enforcement divergence.
- Recording of penalties in the Data Hub. All non-criminal penalties imposed by customs authorities must be recorded in the Data Hub, including the nature of the infringement and the amount or type of penalty imposed. This creates a centralised, Union-wide record of enforcement actions that feeds directly into the risk profiling of economic operators, meaning that a penalty imposed in one Member State will be visible to customs authorities across the Union and will affect how that operator’s future consignments are treated.
- Sanctions supervision mechanism. The EU Customs Reform gives the EUCA a formal role in supervising the implementation of restrictive measures (sanctions) adopted under Article 215 of the Treaty on the Functioning of the European Union. The EUCA will monitor how customs authorities across the Union apply sanctions affecting the flow of goods, identify discrepancies between Member States, report regularly to the Commission, and provide non-binding guidance to promote consistent customs practices. Customs authorities must inform the EUCA and the Commission of any suspected circumvention and the risk mitigation measures taken, creating a structured reporting loop that did not previously exist at Union level.
When does this apply?
The enforcement changes follow the same phased timeline as the broader Reform. The penalty provisions will apply 12 months after publication of the new Union Customs Code and are therefore expected to apply from around October 2027. From that date, Member States must ensure that their national penalty regimes meet the harmonised floor. The EUCA will be established when the new Union Customs Code enters into force, but its substantive enforcement tasks will apply from 1 July 2028. Until that date, the Commission may carry out the EUCA’s risk management tasks on a transitional basis.
The full enforcement capability depends on the Data Hub. The Data Hub becomes mandatory for distance sales from 1 July 2028 and available on a voluntary basis to all other operators from 1 March 2031. By 1 March 2034, all economic operators must use the Data Hub, at which point the Data Hub’s interoperability with other EU systems, the centralised penalty record, and the Union-level risk analysis will be fully operational. The enforcement landscape will, in other words, be built progressively, but the foundational obligations on operators and the penalty framework will arrive well before the technology is fully in place.
Three reasons why this matters for your business
Reason 1: The enforcement net is widening beyond duty compliance and will be more effective. Customs authorities are being equipped to enforce far more than customs duties. Through the Data Hub’s interoperability with systems like Safety Gate, ICSMS, and the IP Enforcement Portal, your shipments can be flagged and stopped based on product safety alerts, market surveillance intelligence, or IP infringement signals that have nothing to do with tariff classification or valuation. If your goods are subject to the CBAM, the EU F-gas Regulation, the EU Deforestation Regulation, sanctions, or other regulatory regimes enforced at the border, the chances of automated detection of non-compliance are increasing significantly. You should ensure that your compliance teams are not operating in silos; customs, product safety, environmental, and sanctions compliance must be coordinated, because the enforcement infrastructure increasingly treats them as one.
Reason 2: Your compliance history will follow you across the Union and it will shape how you are treated. Every non-criminal penalty imposed on you by any customs authority in the EU will be recorded in the Data Hub and will feed directly into your risk profile. That profile will be visible to customs authorities in all 27 Member States, meaning that an infringement in one Member State will increase the likelihood of controls, inspections, and delays on your consignments everywhere else. If you are an importer, exporter, or customs representative, you should treat every enforcement interaction as one that will affect your operations Union-wide, and invest accordingly in the accuracy of your declarations, the quality of your product compliance records, and the reliability of your classification and origin determinations.
Reason 3: The penalty framework is harmonised at the floor, not the ceiling. The new Union Customs Code sets a minimum list of infringements and a framework for non-criminal penalties, but it leaves Member States significant discretion in how severely they penalise. In practice, this means that enforcement disparities between Member States will persist, at least until the Commission’s six-year review. For compliant businesses, this is a double-edged sword: the harmonised floor raises the baseline in historically lenient jurisdictions, but it does not prevent aggressive enforcement in others. You should map the penalty regimes of the Member States where you import or export most frequently, understand how national authorities are likely to implement the new framework, and factor enforcement risk into your decisions about where and how you structure your customs operations.
About the Reed Smith International Trade team
Reed Smith’s International Trade team is known for its deep experience in customs law, advising clients across the globe on the full spectrum of customs and international trade matters – from regulatory compliance, customs classification, origin, and valuation, to anti-dumping proceedings, sanctions, and export controls. Our team represents clients in customs litigation before courts and regulatory authorities worldwide, and advises multinational businesses on complex cross-border trade projects in every major jurisdiction. If you have questions about how the reforms discussed in this briefing may affect your operations, please reach out to your usual Reed Smith contact or one of the team members below.
This briefing is based on publicly available EU and UK legislative proposals and official policy documents as at the date of publication. The legislative process has not yet been fully completed, and key operational details are still to be determined. Timelines, thresholds, and specific requirements discussed in this briefing may change as the legislative process advances. Readers should verify any information against the final legislative texts and official authority guidance before making compliance or business decisions.