Direct and indirect representation
Also known as: direct representation, indirect representation
In direct representation the forwarder files the declaration in the name and on behalf of the client. In indirect they do so in their own name but on behalf of the client, and they are jointly liable for the customs debt.
What is the difference between direct and indirect on the declaration?
The Union Customs Code knows two forms. In direct representation the forwarder acts in the name and on behalf of the client. The client is the declarant. In indirect representation the forwarder acts in their own name but on behalf of the client. The forwarder is the declarant. On the import declaration that is visible in the parties and in the representation code. Direct: EORI of the client as declarant, EORI of the forwarder as representative. Indirect: EORI of the forwarder as declarant, the client as the instructing party. Swap those and the customs debt hangs on the wrong legal person. The choice is not a preference of the declarant. It follows from who may declare and from what the power of attorney covers. A power of attorney for direct representation does not cover an indirect declaration, and the other way round. Anyone who switches the form per file because the field in the software happened to stand that way builds a series of declarations that at a control do not match the power of attorney.
Who may be the declarant, and when is indirect representation required?
The declarant must as a rule be established in the customs territory of the Union. A client outside the Union can therefore not themselves be the declarant on import, and not through direct representation either. Then indirect representation remains: the forwarder is declarant, in their own name, on behalf of the foreign client. For a client established in the Union both are allowed. Direct is then the clean variant: the client stays declarant, the forwarder is only an attorney, the customs debt hangs with the client. Indirect is heavier for the forwarder, and is still chosen if the client has no EORI, has no authorisations that have to sit on the declaration, or if the forwarder wants to pull the flow under their own simplifications. Transit, temporary admission and a few other procedures know exceptions to the establishment requirement. Those exceptions are not a free pass to sign directly for a non-established party on import into free circulation. The procedure on the declaration decides whether the exception applies, not the wish of the customer.
Where does the customs debt hang, and what does joint liability mean?
In direct representation the client is the debtor. Customs collects duty and, without article 23, VAT from them. The forwarder is attorney, not jointly liable, as long as they stay within the power of attorney and do not themselves put inaccuracies into the declaration that they knew or ought to have known. In indirect representation the forwarder is declarant and jointly liable. Customs can collect the duties from them, even if the client has disappeared or does not pay. That is the risk that belongs in the fee for indirect representation, and it is why forwarders apply a security, a screening and a limit per client. Knew or ought to have known is the grey zone in direct. A declarant who leaves a value of one euro on a machine of two hundred tonnes, or a goods code that bypasses a permit requirement, can personally be brought into the debt. Direct representation is therefore no shield for a declaration you yourself have drawn up and whose papers you have seen.
How does the power of attorney hang on the form of representation?
Without a power of attorney you may not declare. The power of attorney, in practice a POA or a Fenex model, must name the form: direct, indirect, or both. It must identify the client, the forwarder, the scope of the acts and the term. A mail with 'please clear this' is not a power of attorney, and it is the most common reason a consignment stays on Incomplete. The power of attorney must match the declaration. A direct power of attorney plus an indirect declaration is a gap. A power of attorney on the old company plus a declaration on the new one too. A power of attorney issued for export does not cover import. Keep the document with the client's master data, with the form, the date and the EORI on which it was issued, and test it before the first declaration goes out. On vehicles and on one-off clients the power of attorney is the document that is missing most often. The rest of the file can be complete. Without a POA the forwarder does not file, and rightly: they would otherwise sign for a debt or a statement that has not been granted to them.
What does the form mean for authorisations, AEO and article 23?
Authorisations hang on the declarant. In direct representation you use the article 23 authorisation, the warehouse authorisation or the AEO status of the client. In indirect you use those of the forwarder. An article 23 number of the customer on an indirect declaration does not close. A warehouse of the forwarder on a direct declaration of the customer neither. That makes the form a setup question per client, not a field the declarant chooses per file. First the form, then the authorisations that belong with that form, then the power of attorney that covers that form. Anyone who starts with the authorisation and puts the form next to it gets the refusal in DMS or, worse, an accepted declaration on which the VAT has been collected while everyone thought it had been deferred. AEO follows the same logic. The status of the forwarder counts if they themselves are declarant, so in indirect. The status of the client counts if they are declarant, so in direct. An AEO-C of the forwarder does not turn the direct declaration of a non-AEO customer into a simplification of the forwarder.
How do you choose the form per client, and what do you record?
Start with establishment. Not established in the Union: indirect, plus, if the import in the Netherlands is VAT-liable, fiscal representation. Established: direct, unless there is a reason to go indirect, for example because the forwarder pulls the consignment under their own simplifications or because the client has no EORI. Then record which authorisations go on the declaration, whose they are, and which power of attorney covers the form. That set belongs in the master data, with a date on which it was checked. A client who switches from direct to indirect, or the other way round, is a change of the whole set, not of one field. On the file itself the form stays visible, so that later it can be reconstructed who was declarant and where the debt hung. At a post-clearance recovery three years later that is the first thing Customs asks, and the last thing you want to fish out of a mailbox.