The direct representation authorization

If, as a company, you conduct import or export activities that require all kinds of customs formalities, you will soon end up with a third party that can take care of such matters for you. These are usually forwarding agents and/or customs agents who offer support in making import and export declarations and handle communication with Customs. However, this representation will first have to be laid down in a signed authorization between your company and the representative. The most common method of representation included in this authorization is Direct Representation. Often, EvoFenedex's model agreement is used to clinch this "formality". I would like to advise you to carefully consider precisely what you are agreeing to in this authorization.

With Direct Representation, the customs representative acts in the name and on behalf of the interested party, in this case your company. The financial consequences of those actions can be far-reaching. Research into the party with whom you establish such a contract is therefore of the greatest importance.

The previously mentioned model agreement (https://www.evofenedex.nl/kennis/internationaal-ondernemen/douane/douanezaken/vertegenwoordiging) lists a number of acts for which you authorise the representative. I would like to highlight the specific act of making a return request.

When a mistake is made and/or an incorrect entry is detected in the customs (import) declaration, the representative is authorized to send a refund request, or in some cases additional payment, to Customs on your behalf. In practice, this turns out to be quite a fraud-sensitive issue. You ask the following questions with this construction:

  • Are you notified by your representative that a refund request has been posted? Errors are sometimes not communicated by your declarant/representative and Customs in many cases transfers the amount directly to the representative's bank account instead of yours.
  • Do you still calculate the import duty that has been paid yourself? In this construction, a representative could hypothetically "forget" tariff preferences (import duty rebate) and still recover them through a refund request, without you ever being informed about this.

The above by no means implies that this is a common phenomenon, however, it is bound to happen. In any case, the issue deserves more attention than it currently receives. We would like to remind you to be careful when dealing with contracts and third parties. Authorization is often signed, without hesitation, for an indefinite period. Did you know that you can limit an authorization to a specific period or one-off use? After all, the financial consequences can be very significant. Would you like to know more about this, or would you like to review your current agreements with third parties? Do not hesitate to contact one of our specialists so that we can assist you in streamlining your customs processes and ensuring their due diligence.

22 Dec 2022 at 1:56 pm
3 min
Published by:
Steven Sewberath Misser
Customs Specialist
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