Contract analysis

I. Issue This memorandum addresses the following question: What is Thessaloniki Shipping & Logistics S.A.'s ("TSL") exposure to administrative penalties and late payment interest arising from the Independent Authority for Public Revenue ("AADE") additional duty assessments issued under Assessment Notice AADE/ADAN/2022/0073 (Classification) and Assessment Notice AADE/ADAN/2022/0074 (Valuation), and what mitigation str

II. Summary of the Applicable Penalty Regime The penalty regime applicable to customs duty underpayments in Greece operates on two levels: the overarching EU-level framework established by the Union Customs Code and its implementing regulations, and the Greek national framework enacted to give effect to the EU's mandate that member states impose penalties for customs non-compliance. Both levels must be considered in

Article 42(1) of the UCC provides that "[e]ach Member State shall provide for penalties for failure to comply with the customs legislation." The provision goes on to specify that such penalties "shall be effective, proportionate, and dissuasive." This tripartite standard — effectiveness, proportionality, and dissuasiveness — is a well-established principle of EU law that the Court of Justice of the European Union ("C

Article 42(2) of the UCC further provides that member states may impose either administrative or criminal penalties, or both, for customs violations. This provision recognizes the member states' sovereign authority over penalty design and enforcement while maintaining the EU-level constraint that any penalties adopted must satisfy the effectiveness, proportionality, and dissuasiveness standard. The choice between adm

1. Standard Penalty — Good-Faith Error (Article 42(1) UCC; Article 77 UCC Delegated Regulation) The lowest tier of the penalty regime applies where the customs debtor acted in good faith and the under-declaration of duties resulted from an error or misinterpretation of the applicable customs rules, rather than from intentional conduct or culpable negligence. This tier is consistent with the EU-level framework establi

2. Elevated Penalty — Negligence (Article 147 Greek Customs Code, Law 2960/2001) The second tier of the penalty regime applies where AADE determines that the customs debtor was negligent — that is, that the customs debtor failed to exercise the degree of diligence reasonably expected of an importer of its size, sophistication, and level of customs activity. Under Article 147 of the Greek Customs Code (Law 2960/2001),

3. Maximum Penalty — Fraud or Willful Non-Compliance (Article 147(3) Greek Customs Code) The most severe tier of the administrative penalty regime applies where AADE determines that the under-declaration of duties was intentional or fraudulent. Examples of conduct that may trigger this tier include the deliberate misclassification of goods for the purpose of avoiding or reducing applicable duties, the deliberate unde

III. Late Payment Interest In addition to administrative penalties, TSL faces substantial exposure to late payment interest on the assessed additional duties. Interest accrual is governed by the UCC and Greek implementing provisions and represents a significant — and continuously growing — component of TSL's total financial exposure. The ongoing accrual of interest during the administrative and legal proceedings intr

Article 114 of the UCC provides the EU-level framework for the imposition of interest on customs debts. Under Article 114 and the corresponding Greek implementing provisions, interest accrues on underpaid customs duties from the date the original customs duty was incurred — that is, the date each individual import entry (Single Administrative Document, or "SAD") was accepted by the AADE Piraeus Regional Customs Offic

IV. Total Exposure Summary Including Penalties and Interest The following table consolidates TSL's total financial exposure under each of the three penalty scenarios, incorporating the additional customs duties (classification and valuation), the import VAT adjustment, administrative penalties, and late payment interest: Several observations regarding this exposure summary are warranted. First, the high-end internal

V. Mitigation Analysis This section evaluates the available strategies for mitigating TSL's penalty and interest exposure. The mitigation analysis proceeds in order of strategic importance, beginning with the affirmative good-faith defense — which is the strongest and most broadly applicable mitigation tool — and continuing through additional strategies that may operate independently or in combination to reduce the u

1. Classification Ambiguity — Divergent BTI Rulings The most compelling evidence of TSL's good faith is the existence of divergent BTI rulings among EU member states on the precise classification question at issue in this case. Binding Tariff Information rulings, issued by the customs authorities of individual EU member states pursuant to Articles 33 and 34 of the UCC, represent the formal, authoritative determinatio

2. Reliance on Licensed Customs Broker TSL did not independently determine the CN codes for its import declarations. Instead, TSL relied on Peloros Customs Agency S.A. (EORI: GR801234567000), a professionally licensed Greek customs brokerage firm, to prepare and file its Single Administrative Documents. The specific customs broker responsible for selecting the CN codes on all 47 SADs was Stavros Liapis, who holds Lic

3. No Prior Adverse Rulings TSL has never been the subject of a prior adverse customs classification or valuation ruling from AADE or from any other customs authority in the European Union or elsewhere. TSL's customs compliance record is clean, and the current Assessment Notices represent the first occasion on which any customs authority has challenged TSL's classification or valuation practices. This is directly rel

4. Technology License — Separate Contract Structure The treatment of the technology license fees payable under the Technology License Agreement dated January 10, 2019 (the "TLA") as outside the customs value of the imported equipment was based on the separate contractual structure of the TLA. The TLA was executed as a standalone agreement with its own commercial terms, pricing structure, and 10-year duration. It was

5. Nereus — Buying Commission Characterization TSL engaged Nereus Maritime Procurement S.A. ("Nereus") under a formal Procurement Services Agreement dated December 1, 2018 (the "PSA"). The PSA described Nereus's role as identifying, evaluating, and recommending manufacturers of port equipment, coordinating the procurement process on TSL's behalf, and providing logistical and administrative support throughout the proc

Article 9.1 of the CBA provides that Peloros shall indemnify and hold harmless TSL from and against "all losses, damages, penalties, interest, costs, and expenses (including reasonable attorneys' fees) arising from Peloros's negligent or erroneous performance of customs clearance services, including but not limited to errors in tariff classification, customs valuation, or the completion of import documentation." If t

VI. Criminal Exposure Assessment A. Legal Framework

Article 155 of the Greek Customs Code (Law 2960/2001) provides for criminal prosecution of customs fraud, including the intentional misclassification or undervaluation of imported goods for the purpose of evading customs duties. Criminal prosecution under Article 155 requires a finding of intent — that is, the prosecution must establish that the importer knowingly and deliberately filed false customs declarations wit

1. No evidence of fraudulent intent. TSL's classification and valuation positions were based on the professional advice of Peloros Customs Agency S.A. (a licensed customs broker), were consistent with published BTI rulings in other EU member states (specifically, the Dutch ruling NL-BTI-2021-01234), and were adopted through formal contractual structures (the TLA and the PSA) that were not designed to evade customs du

2. Classification ambiguity. The divergent BTI rulings issued by the Netherlands and Germany demonstrate that the classification question is genuinely uncertain as a matter of law. A classification dispute arising from regulatory ambiguity — particularly one that the Commission itself has taken up for resolution through the DG TAXUD consultation process — is fundamentally different from deliberate fraud. Criminal pro

3. AADE's own characterization. AADE has applied a 30% good-faith error penalty in its initial Assessment Notices, rather than the elevated penalties associated with negligence (100%) or fraud (300%). This penalty level reflects AADE's own determination — at least at this stage of the proceedings — that TSL's conduct falls within the good-faith error category. AADE's choice to assess the lowest penalty tier is incons

4. Valuation issues involve interpretation, not fabrication. The valuation dispute in this case concerns the proper characterization of legitimate commercial payments — technology license fees under the TLA, procurement coordination fees under the PSA, and commissioning services costs — under UCC Articles 70–74. The dispute is about whether these payments should be included in or excluded from the customs value of th

5. Industry context. TSL is a major Greek shipping and logistics company with FY 2021 revenue of approximately €387.2 million and a workforce of approximately 1,450 employees. TSL operates under long-term port concession agreements with the Hellenic Republic Asset Development Fund and is a significant participant in the Greek maritime and logistics industry. The company has no history of customs violations, no prior

VII. Impact on Insurance Coverage The penalty characterization in this case has direct and significant implications for TSL's ability to recover under its Oceanos Underwriters Financial Lines policy (Policy No. OCU-FIN-2021-GR-0487). This section provides a summary of the key coverage issues; a comprehensive analysis is set forth in the Insurance Coverage Analysis Memorandum (Document 12 of the matter file). The Ocea