Customs legislation

What is ship supply under European customs legislation?
European ship supply is greatly affected by European customs legislation. This is because of the specialized nature of the ship supply operations. In the EU, formally, ship supplies are ship stores, supplies and spare parts delivered on board of vessels that are exempted from VAT under Article 148 of Council Directive 2006/112/EC and/or excise duties under Article 14(2) of Directive 2008/118/EC.

Blog entry: "Why ship supply guidance is no longer enough"

The integration of customs legislation into a single community customs code and the provisions regulating value-added tax and excise duties on petroleum, alcoholic beverages and tobacco products, combined with the work of the European Ship Suppliers Organization (OCEAN), have highlighted the need for harmonised ship supplying procedures in all EU Member States for the surveillance of products delivered to ships.

They cover for instance foodstuffs as well as other items that are consumed or sold on board or used by crew, as well as passengers, items for incorporation as part of or accessories in vessels and for the operation of the engines, machines and other equipment on-board.

The following examples, which are not exhaustive, illustrate the use of ship supplies: 

  • Spare and repair parts intended for incorporation in ships for equipping, repairing and the maintenance of the vessel (for example critical safety and lifesaving equipment, tarpaulins, ropes and cables, paint, varnishes and chemicals, etc.), 
  • Motor fuels, lubricants, and gas which are necessary for the operation of machines and apparatus used on board of the ship, ? Foodstuff and beverages used for consumption on board of the ship,
  • Durable goods and equipment (delivery of bed linen, musical instruments and TV sets for cabins),
  • Products for personal use, such as toiletries etc. for personal use of crew and passengers,
  • Textiles and Synthetic Products, such as synthetic products for cabins, including carpets, curtains as well as flags, ? Electro-technical stores, including specialist navigational equipment, 
  • Machine, Cabin, Deck, and Engine Stores (technical equipment and spares which may be required at the deck department, the engine department or the steward’s department),
  • Excise goods (alcoholic beverages, tobacco products) sold on board.

Consumption, use, incorporation, and operation of ship supplies takes place on board. 
Goods delivered onboard a vessel are being used and consumed exclusively within that vessel during the entire voyage of that vessel. These goods are not destined to be imported into another country nor transported by other means of transport through it. In other words, once onboard, they never leave the vessel again.


Ship supplies are associated with the export procedure
The relevance of the export procedure for ship supply has been pointed out many times, and its unique status in terms of special trade conditions and legal interpretation. This is because in the case of ship supply, the old saying "one country's export is another country's import" does not apply here. Goods designated as ship supply should be considered as having left the EU once they have been loaded onboard of a vessel which is bound for another country. The vessel should be considered to be similar to a “third country” regardless its origin or destination.
Mr. Pinto, Chair of the OCEAN CEVVT Working Group that deals with Customs, explains: "To design a customs policy for ship supply that works, it is fundamental to understand that the key difference between goods delivered for ship supply as supposed to for traditional cargo in containers. Our goods, ship stores, are being used and consumed exclusively on board of the vessel during its voyage. Traditional cargo means that goods are only transported using the vessel from one point inside the EU to one point outside the EU. In our case, the vessel is the final destination, not merely a means of transport. Ship supply goods are neither destined for import into another country nor will they be able to leave the vessel (unless they are officially imported following EU rules). At OCEAN, we, therefore, believe that goods designated as ship supply should be considered to have left the EU once they have been loaded onboard of a vessel which is bound for another country. The vessel should therefore consider being equivalent to a “third country”. Speaking as a European Shipsuppliers and Board member of OCEAN, I can say that in order to obtain a workable, single policy regime for European Ship Supply, OCEAN is calling for a recognition in EU law that:
  1. Goods designated as ship supply have left the EU once they have been loaded onboard of a vessel which is bound for another country.
  2. The vessel is considered to be similar to a “third country” regardless its origin or destination.
  3. Ship Supply is considered to be similar to export.
I believe that the Union Customs Code and its implementing provisions allow us to advance on this interpretation"

READ OUR BLOG ENTRY: "When have ship supplies left the EU"? A commentary from the Chair of OCEAN Working Group on Customs. In the debate on the right customs guidance for EU ship suppliers, the Chairman of the OCEAN Working Group Customs & Taxation weighs in to ask a fundamental question: When have ship supplies left the EU?

Ship supply is a world-wide international business, and it is normal for foreign ships to require technical stores and food stuffs from their homeland to be delivered under the transit customs procedure. Frequently, goods from one country are delivered by ship suppliers from a second country to ships in a third country. If necessary, such goods can be temporarily stored in a customs / bonded warehouse for delivery at the right time to ship. Customs and other authorities should control transit traffic only to the extent of ensuring such traffic is not used for purposes other than intended. However, the non-interference with transit and transit traffic deliveries on sea going ships is a basic condition for smooth ship supplying. So, today, transit traffic is the basic condition for international trade in general and especially for ship supplying. It is one of the most common form of trade for ship supply. This is because a ship supplier removes goods no longer used on board, faulty goods for repair or spare parts for storage. For instance, inflatable life-rafts on vessels have to be regularly inspected. Ship suppliers therefore have to land them, bring them back to their company for inspection and deliver them back on board during the short period that the vessel is in port. This can also take the form of an import operation. 
Freeports and customs warehouses
Ship suppliers use public and private customs warehouses. In principle free ports and bonded warehouses have the same function, although Free Ports have advantages because customs control is mainly at Entry or Exit of the Free Port, and ships can be supplied in the free port without further systematic customs control. Supervision of private bonded warehouses is exercised by Customs officials, checking every input and delivery from the warehouse. Regulations for bonded warehouses are laid down by custom authorities. In several cases, deliveries from private Bonded warehouses are only permitted for supplies to ships. Regulations for bonded warehouses and Free Ports differ in many countries, and even in different port areas of the same country. Sometimes only limited categories of goods may be put into bonded warehouses.
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