Authorised Economic Operator

Module: MGMT8058 Int’l SC in the Customs Environment

Source: www.europe.eu

International Supply Chain

The international end-to-end supply chain from a customs perspective represents the process
from manufacturing goods destined for export until delivery of the goods to the party to
whom the goods are consigned in another customs territory.

 What is AEO
 Who can become AEO
 AEO Benefits
 Mutual Recognition
 Cooperation with other government authorities
 AEO logo

What is AEO
The AEO concept is based on the Customs-to-Business partnership introduced by the World
Customs Organisation (WCO). Traders who voluntarily meet a wide range of criteria work in
close cooperation with customs authorities to assure the common objective of supply chain
security and are entitled to enjoy benefits throughout the EU.
The EU established its AEO concept based on the internationally recognised standards, creating
a legal basis for it in 2008 through the 'security amendments' to the "Community Customs
Code" (CCC) (Regulation (EC) 648/2005) and its implementing provisions.

The programme, which aims to enhance international supply chain security and to facilitate
legitimate trade, is open to all supply chain actors. It covers economic operators authorised for
customs simplification (AEOC), security and safety (AEOS) or a combination of the two.
On the basis of Article 39 of the Union Customs Code (UCC), the AEO status can be granted
to any economic operator meeting the following common criteria:

Conditions and criteria

 Compliance with customs legislation and taxation rules and absence of criminal offences related t
economic activity.
 Appropriate record keeping.
 Financial solvency.
 Proven practical standards of competence or professional qualifications.
 Appropriate security and safety measures.

The AEO status granted by one Member State is recognised by the customs authorities in all
Member States (Article 38 (4) UCC).

Types of certificates

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There are three types of AEO certificates and the qualifying criteria will depend on the type of
certificate applied for:
AEO – Customs Simplifications (AEOC)
An AEO customs simplifications certificate is issued to any economic operator who fulfils the
criteria of customs compliance, appropriate record keeping standards and financial solvency.
The holder of this certificate is entitled to:
 Easier admittance to customs simplifications mentioned in Article 14b(1) of CCIP –see
list of relevant customs simplified procedures at appendix 5;
 Fewer physical and document based controls;
 Priority treatment if selected for control;
 Possibility of requesting a specific place for any physical controls to be carried out.

As the criteria used to qualify for AEOC status applies to almost all customs simplifications,
obtaining AEOC status makes it easier for the economic operator to gain access to the various
simplifications. Commission Regulation 1192/2008 introduced harmonised rules for simplified
procedures and these rules aligned the criteria for granting both the AEOC and authorisations
for both simplified declaration procedure and local clearance procedure. In addition, the
Guidelines on simplified procedures/Single authorisation for simplified procedures
(TAXUD/1284/2005, Rev.5.5) fully reflect this.
The criterion for appropriate security and safety standards is not required for this type of
AEO certificate. Therefore holders of AEOC are not entitled to any of the AEO benefits
related to security and safety of the international supply chain. AEO status in the form of
AEOC is not currently taken into account in any MRA with third countries.
AEO – Security and Safety (AEOS)
An AEO Security and Safety certificate is issued to any economic operator established in the
Community who fulfils the criteria of customs compliance, appropriate record keeping
standards, financial solvency and maintains appropriate security and safety standards. The
holder of this certificate is entitled to:
 Possibility of prior notification
 Reduced data set for summary
 Fewer physical and document based controls in respect of security and safety;
 Priority treatment if selected for control;
 Possibility of requesting a specific place for any physical controls to be carried out.

The holder of an AEOS is recognised as an economic operator who has taken appropriate
measures to secure their business and is thus a reliable actor in the international supply chain
both from the customs perspective and from the perspective of their business partners. AEOS
status is taken into account in all MRA with third countries.
The WCO SAFE existing international mandatory security standards for maritime and air
transport and ISO/PAS 28001 have been taken into consideration when framing the AEO

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security and safety requirements. Integration of the WCO SAFE was very important, as mutual
recognition of secure AEO status could not be ensured without a globally recognised common
standard.
AEO – Customs Simplifications/Security and Safety (AEOF)
An AEO Customs Simplifications/Security and Safety certificate is issued to any economic
operator established in the Community who fulfils the criteria of customs compliance,
appropriate record keeping standards, financial solvency and maintains appropriate security
and safety standards. The holder of this certificate is entitled to all of the benefits mentioned
for the two certificates above.
Note: While applicants are free to choose whichever type of certificate best suits their business,
Revenue recommends that if an economic operator can meet the qualifying criteria then they
should apply for the full AEO Simplifications/Security and Safety Certificate. This type of
certificate entitles the holder to all of the benefits of being an AEO and will have wider
international recognition especially in relation to Mutual Recognition.

What part of an applicant’s operations does an AEO certificate cover?

AEO’s can only be held responsible for their part of the supply chain, for the goods in their
custody and for the facilities they operate. When making an application economic operators
cannot select premises for inclusion under their certificate, all premises under their control must
be included.
During an evaluation -in the case of a large number of premises – an officer may decide to only
physically examine a representative proportion of those premises, if the applicant maintains
corporate security standards, which are commonly used in all their premises. There are many
variations to the type of business organisation that could be encountered, from one corporate
entity with several independent sites to several corporate entities forming part of one business
venture.

Who can become AEO

Any economic operator established in the customs territory of the Union who is part of the
international supply chain and is involved in customs-related operations, may apply for the
AEO status.
Applications for AEO status may only be accepted from an economic operator who in the
course of his business is involved in activities covered by customs legislation. On the basis of
this definition there are number of situations where the economic operator cannot apply for
AEO status as they are not involved in customs activities, for example:
 an EU based supplier who distributes only goods already in free circulation to an EU
based manufacturer;
 a transport operator that moves only goods in free circulation which are not under any
other customs procedure within the customs territory of the Community;

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 a manufacturer producing goods only for the EU internal market and using raw
materials already in free circulation.

The definition of economic operator does not restrict the notion of "involvement in activities
covered by customs legislation" to direct involvement only. A manufacturer producing goods
to be exported can apply for AEO status even if the export formalities are performed by another
person.
The concept of AEO Security and Safety is closely linked to supply chain management.
Operators who are handling goods subject to customs supervision or handling customs related
data regarding these goods can apply for AEOS.
However, each case has to be treated separately with due consideration given to all
circumstances unique to the particular economic operator.

How do Parent/Subsidiary companies apply?

Multinational companies usually consist of a parent company and subsidiary companies or/and
branches. A subsidiary is an individual legal person, i.e. an individual legal person or an
association of persons. Therefore, if a parent company wishes to achieve AEO status for a part
or all of its subsidiaries, AEO applications must be submitted by all the separate subsidiary
companies wishing to achieve AEO status. However, if the subsidiary companies are applying
the same corporate standards/procedures for their customs related activities, the self-
assessment questionnaire may be completed by the parent company on behalf of all the
subsidiaries that have submitted an application.
However, if some of these subsidiaries are in other member states then it should be noted that
they might request all documentation in their own native language.
A "branch", on the other hand, is a simple sub office of the company itself and forms part of
the company's total assets and thus is not an individual legal person. In this case a single
application, covering all the EU branches that are not individual legal persons, has to be
submitted by the parent company wishing to acquire AEO status.

AEO Benefits
AEO benefits are an integral part of the EU legislation governing the AEO status. The AEO
benefits, dependant on the type of the authorisation, are:

 Easier admittance to customs simplifications –

Economic operators do not need to have AEO status in order to get an authorisation for a
simplification provided for under the customs rules. However, if the operator requesting
a simplification is the holder of an AEO Customs Simplifications certificate or an AEO

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Customs Simplifications/Safety and Security certificate the customs authority does not
need to re-examine those conditions that have already been examined when granting the
AEO certificate.

 Fewer physical and document-based controls

o related to security & safety
o related to other customs legislation

This benefit is applicable to all categories of AEO. Article 14b (4) of the CCIP lays
down that an AEO shall be subject to fewer physical and document based controls
than other economic operators. However, the customs authorities may decide to
control shipments of an AEO in order to take into account a specific threat, or control
obligations set out in other Union legislation (i.e. related to product safety etc.).
It is also important that the distinction between controls related to security and safety
and controls related to application of other measures provided for in the customs
legislation is made. Consequently only AEOS and AEOF who fulfil the security and
safety criterion will benefit from fewer physical and document-based controls related
to security and safety.
Similarly, only AEOC and AEOF will benefit from fewer physical and document-
based controls related to other measures provided for in customs legislation. This
includes fewer controls at the point of importation or exportation and can be taken
into account for post clearance controls as well. To deliver this benefit, a lower risk
score is incorporated into the customs risk management systems.
Nevertheless, while the lower risk score is due to the fact that the status of the AEO
is always favourably taken into account, the level of reduction can vary depending
on the role and responsibility of the AEO in the particular supply chain.
It has to be also taken into account that this benefit is related to the overall risk
assessment carried out for a particular transaction. Therefore, although the AEO
status would always count for favourable treatment, other risk indicators (e.g. country
of origin etc.) might trigger the necessity for a control to be done.
If a foreign AEO (consignor) has identified themselves by the use of box 44 code
Y031 (from one of the mutual recognition agreement countries) together with their
AEO identification number, due account must be taken of their AEO status before
proceeding with the examination.
This benefit is factored into all of Revenue’s transaction systems. However, import
stations must take AEO status into consideration when making any decision in
relation to controls.

 Prior notification in case of selection for physical control (related to safety and security)

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This benefit is only applicable to holders of AEO Security and Safety or an AEO
Customs Simplifications/Safety and Security certificate. When a summary declaration
has been lodged by an AEO, the competent customs office may, before the
arrival/departure of the goods into/from the Community, notify the AEO when, as a
result of security and safety risk analysis, the consignment has been selected for
further physical control. This notice will only be provided where it does not jeopardise
the control to be carried out. The customs authorities may, however, carry out a
physical control even where an AEO has not been notified.

 Priority treatment if selected for control

This benefit is applicable to all categories of AEO. Article 14b (4), second sub-
paragraph of the CCIP states that when, following risk analysis, goods that are covered
by an entry or exit summary declaration or a customs declaration lodged by an AEO
are selected for examination, the necessary controls shall be carried out as a matter of
priority. This means that the consignment should be the first to be controlled if others
are selected from non-AEO's.

 Possibility to request a specific place for customs controls

This benefit is applicable to all categories of AEO. Article 14b (4), second sub-
paragraph of the CCIP provides the possibility that an AEO can request that customs
control be diverted to an alternative location which might offer a shorter delay and/or
lower costs. However, this is subject to individual agreements with the customs
authority concerned. The selected place for control should always allow Customs to
carry out the necessary controls and not jeopardise the results of the controls.
Although the possibility for choice of the place of controls is also provided under
Article 239 (2) of the CCIP for all economic operators under other conditions and
procedures, there is a distinction between the general provisions and the provision in
the form of a benefit for AEOs, as Customs can take account of the status in
determining whether to grant the request. The movement of any goods from the point
of import to the place of control can only take place under Customs supervision and
control.

 Indirect Benefits

It is important to highlight that, in addition to the direct benefits provided for in the
legislation, an AEO may derive benefits that are not directly linked to the customs side
of their business. Although they are considered as 'indirect' benefits and therefore not
explicitly reflected in the legislation they are important as they may have a highly
positive effect on the overall business of the AEO.
The AEO approach helps economic operators to analyse in detail all their related
international supply chain processes. Activities of all concerned departments are
generally assessed during the preparation of the AEO application. In most cases

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efficiency and cooperation between these services are optimised in order to obtain
more transparency and visibility of the supply chain.
Investments by operators in increasing their security and safety standards may yield
positive effects in the following areas: visibility and tracking, personnel security,
standards development, supplier selection and investment, transportation and
conveyance security, building organisational infrastructure awareness and capabilities,
collaboration among supply chain parties, proactive technology investments and
voluntary security compliance.
Some examples of the indirect benefits that may result from these positive effects
could be as
follows:
 reduced theft and losses;
 fewer delayed shipments;
 improved planning;
 improved customer service;
 improved customer loyalty;
 improved inventory management
 improved employee commitment;
 reduced security and safety incidents;
 lower inspection costs of suppliers and increased co-operation;
 reduced crime and vandalism;
 improved security and communication between supply chain partners.

Recognised as a secure and safe business partner

An AEO who meets the security and safety criterion is considered to be a secure and safe
partner in the supply chain. This means that the AEO does everything in their power to reduce
threats in the supply chains where they are involved. The AEO status, including the
possibility to use the AEO logo enhances the reputation of the operator.

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The AEO logo is copyrighted by the EU. An economic operator who wants to use it has to
request permission from the competent customs authority (generally the one who has issued
the status). The AEO logo can be used under the following conditions:
 the right to use the logo is subject to the condition that a valid AEO certificate is held
and only the holder of the AEO certificate can use it;
 the AEO must stop using it as soon as its AEO status is suspended or revoked;
 any abuse or misuse of it will be subject to prosecution by the EU.

Improved relations with Customs

An AEO has a designated contact point in Customs to which it can address its questions. The
contact point might not be able to provide all answers on all questions but would guide the
AEO on how best to proceed and to whom further questions can be addressed. The designated
contact point is the AEO Helpdesk.

Requirement for Financial Security may be waived

Some customs procedures require the provision of financial security before an authorisation
is issued in accordance with the requirements of the Customs Code. An AEO certified trader
who holds such authorisations may have the requirement to provide security waived or
reduced. A decision on the waiving of the security requirement will be taken by Corporate
Affairs and Customs Division following receipt of the recommendation of the officer(s) in
the District who signed off the AEO Evaluation Report. It should be noted that where the
security requirement has been waived, the decision will be subject to ongoing review and the
security requirement can be re-instated should circumstances warrant this action

 Mutual Recognition with third countries

What is Mutual Recognition of AEOs?

Mutual Recognition of AEOs is a key element of the WCO SAFE Framework of Standards to
strengthen end-to-end security of supply chains and to multiply benefits for traders.
By mutual recognition of AEOs two customs administrations agree to

 recognise the AEO authorisation issued under the other programme and
 provide reciprocal benefits to AEOs of the other programme.

The EU has concluded and implemented Mutual Recognition of AEO programmes with
Norway, Switzerland, Japan, Andorra, the US and China. Further negotiations are currently
taking place or will be launched in the near future with the other most important trading
partners. In addition, the EU is providing technical assistance to a number of countries to
prepare them to set up AEO programmes.
What are the benefits of Mutual Recognition?
The specific benefits are contained in each individual Mutual Recognition Agreement (MRA),
but in general the benefits include the following core elements:

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 Fewer security and safety related controls

 Recognition of business partners during the application process
 Priority treatment at customs clearance
 Business continuity mechanism

How to participate in Mutual Recognition?

Holders of AEO authorisations with the safety and security component (AEOS or
AEOC/AEOS) are eligible to participate in Mutual Recognition. They have to provide their
written consent to exchange company details with partner countries (e.g. name, address,
identifier). The consent can be provided by filling in the respective box in the Annex to the
Self-assessment questionnaire (SAQ), but it also can be provided or withdrawn at any time by
written request to the competent customs authority of the EU Member State concerned.
How to get the Mutual Recognition benefits?

 In order to benefit from the “Recognition of business partners during the

application process” EU companies applying for AEOC/AEOS status in the EU are
requested to indicate the name, address and AEO number of any business partner
which is AEO in one of the countries that the EU has an MRA with in the SAQ
section 6.10. These business partners are considered safe and secure and generally no
additional requirements (security declaration etc.) will be asked from the applicant.

 In order to benefit from “fewer security and safety related controls and priority
treatment at customs clearance” the AEO has to communicate its EORI number to
their business partner in the respective MRA partner country. The business partner
enters the EORI number in the declaration form for the import process into the MRA
partner country. Further details are available in the FAQs referred to under 6.III of the
AEO Guidelines.

List of mutual recognition agreements/arrangements and further

information
CHINA

Joint statement Search for available translations of the preceding link••• (C/2015/4270-annex)
Information note Search for available translations of the preceding link••• on the joint statement
Information note Search for available translations of the preceding link••• on implementing mutual
recognition
FAQs on EU-China mutual recognition of AEOs
JAPAN
Decision (OJ L 279 of 23 of October 2010)
Information note
NORWAY
Agreement (OJ L 232 of 3 of September 2009)
SWITZERLAND

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The agreement (OJ L 199 of 31 of July 2009)

USA
Press release with video (IP/12/449)
Decision (OJ L 144 of 5 of June 2012)
Information note
Instructions on CBP portal for matching EORI and MID Number
FAQ on EU-USA mutual recognition of AEO's

C-TPAT: Customs-Trade Partnership Against Terrorism Mutual Recognition

Mutual Recognition refers to those activities associated with the signing of a document between
U.S. Customs and Border Protection (CBP) and a foreign Customs Administration that
provides for the exchange of information. The document, referred to as an “arrangement”,
indicates that the security requirements or standards of the foreign industry partnership
program, as well as its validation or audit procedures, are the same or similar with those of the
Customs-Trade Partnership Against Terrorism (C-TPAT) program.

The essential concept of MR is that C-TPAT and the foreign program are compatible in both
theory and practice so that one program may recognize the validation findings of the other
program. Mutual Recognition as a concept is reflected in the World Customs Organization’s
Framework of Standards to Secure and Facilitate Global Trade, a strategy designed with the
support of the United States which enables Customs Administrations to work together to
improve their capability in detecting high-risk consignments and expediting the movement of
legitimate cargo. Through Mutual Recognition, international industry partnership programs are
linked so that together they create a unified and sustainable security posture that can assist in
securing and facilitating global cargo trade. Mutual Recognition promotes end to end supply
chain security based on program membership.

Cooperation with other government authorities

Cooperation with other competent authorities and alignment of programmes have been
identified and recognised as a key element for the further development of a robust AEO
programme. It is to ensure global supply chain security and to avoid duplication of efforts and
costs for authorities and economic operators.
As such it has been incorporated since the beginning at an international level in the WCO SAFE
as well as in the EU legislation.
At EU level work has been initiated in a number of areas (e.g. aviation security, maritime,
export controls, etc.) with a view to identify synergies and to avoid duplication of
administrative burden.

The EU Strategy and Action Plan for customs risk management and in particular the inclusion
of a specific objective related to interagency cooperation and information sharing between
customs and other authorities had a crucial role in this area.

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Besides, there are a number of certificates or authorisations in other policy areas for which the
requirements are identical or similar to one or more of the AEO criteria, or directly linked to
the AEO status:

 Civil aviation - Regulated Agent, Known Consignor, Account Consignor

If a holder of an AEOS applies for the status of a Regulated Agent (RA) or a Known Consignor (KC), the
respective security requirements are deemed to be met to the extent that the criteria for issuing the AEO status are
identical or correspond to those for RA or KC status. The same principle applies vice versa.
In case of an Account Consignor (AC), holders of an AEOS do not need to sign the declaration of commitments
'account consignor’, and are recognised as AC by the regulated agent, provided that all other requirements
established by the Union legislation in the field of aviation security are met.

 Approved Economic Operator (APEO)

For economic operators dealing with fishery products and catch certificates it is possible to
apply for the status of an APEO. APEO should be eligible to use simplified procedures
regarding the import of fishery products into the EU.
For issuing the status of an APEO it is mandatory to have an AEO status as laid down in the
relevant regulations. Besides, if the APEO applicant is holder of an AEOS authorisation, the
application process is simplified.

 Others

Security and safety is gaining in significance and importance for different stakeholders. The
AEO status is one of the biggest security initiatives worldwide and attracting increasing
attention.
At the same time, certificates and authorisations granted by customs or other government
authorities facilitate the authorisation procedures.

Authorised Economic Operator (AEO)

Self-Assessment Questionnaire

This self-assessment questionnaire is designed to help you ensure that you are confident your
business can meet the relevant qualifying conditions and criteria before you submit an
application for an AEO certificate. This is a Community-wide questionnaire and is used in all
28 Member States. Notes for completion of this questionnaire are available at EU notes.

You should not submit an application for AEO status until all of your relevant procedures
are documented and available for inspection. In this regard you should create a tabulated
folder of your procedures cross-referencing it with the relevant questions in this self-

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assessment questionnaire. It may be the case that some of your responses will simply be
cross-references to sections in your procedures.

As well as studying the accompanying explanatory notes in advance of completing this self-
assessment questionnaire we also recommend that you familiarise yourself with the EU AEO
Guidelines at EU Guidelines. Please note, the references (in italics) under headings in Sections
1 to 5 in the questionnaire, are taken directly from the EU Guidelines.

When you have completed this self-assessment questionnaire and compiled your
documentation you should submit the application form to the AEO section in Customs Division
in Nenagh. The application form is at Application form. Please note the 11 annexes that must
accompany your application. The self-assessment questionnaire and documentation should also
be submitted at this stage. Your local Revenue official will visit your premises to verify the
information in your questionnaire and to conduct a physical inspection.

If you have any questions or queries on the process or on this questionnaire you can contact
your local Revenue official or contact the central AEO Section in Nenagh –contact details
below.
Summary of Application Procedure
1. Familiarise yourself with the EU AEO Guidelines.
2. Complete the AEO self-assessment questionnaire, create a tabulated folder of your relevant
document procedures and retain it in your premises.
3. Complete the application form, compile the accompanying annexes and submit to the AEO
section in Nenagh along with the self-assessment questionnaire.
4. Following acceptance of your application you will be contacted by your local Revenue
official who will request your documented procedures.
5. Your local Revenue official will visit you to review your procedures and conduct a physical
examination of your premises.
Applicants should note that an application will automatically be rejected before
examination of any other criteria if:
 the applicant has been convicted of a serious criminal offence linked to the
economic activity of the applicant or is subject to bankruptcy proceedings;

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 if the applicant has a legal representative in customs matters who has been
convicted of a serious criminal offence related to an infringement
of customs rules and linked to his activity as legal representative
 if the application is submitted within three years of the revocation of an AEO
certificate.

The conditions and criteria for AEO authorisation will apply to all businesses regardless of
their size. However, the means to achieve compliance may vary and be in direct relation to the
size and complexity of the business and the type of goods handled.
The four main blocks of qualifying criteria are as follows:

Customs Compliance Section 2

Accounting and Logistical System Section 3
Financial Solvency Section 4
Safety and Security Section 5

There are three types of AEO certificates and these are outlined in section 1 of the EU
guidelines. While applicants are free to choose whichever type of certificate best suits their
business, Revenue is recommending that if you can meet the qualifying criteria you should
apply for the full AEO Simplifications/Security and Safety Certificate. This type of certificate
entitles the holder to all of the benefits of being an AEO and will have a wider international
standing.

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