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PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION

CALDERWOOD & HARKNESS LLP Avenue Louise 480 1050 Brussels, Belgium

Tel: +32 2 891 7400

Fax: +32 2 891 7401

www.calderwoodharkness.com

February 10, 2023

VIA ENCRYPTED EMAIL AND REGISTERED POST

Mr. Nikolaos Andreadis Chairman & Chief Executive Officer Thalassa Shipping & Logistics SA 47 Akti Miaouli 185 35 Piraeus, Greece

Ms. Elena Papadimitriou Chief Financial Officer Thalassa Shipping & Logistics SA 47 Akti Miaouli 185 35 Piraeus, Greece

Re: DG TAXUD Referral of Binding Tariff Information Application — C&H Matter No.: C&H-2022-ITS-04781

Dear Mr. Andreadis and Ms. Papadimitriou,

We write to advise you that on February 7, 2023, the Independent Authority for Public Revenue of the Hellenic Republic ("AADE") referred Thalassa Shipping & Logistics SA's ("TSL") Binding Tariff Information application (reference BTI-GR-2022-003847, filed on November 15, 2022) to the European Commission's Directorate-General for Taxation and Customs Union ("DG TAXUD") for consultation. The referral was made pursuant to Article 34(10) of the Union Customs Code (Regulation (EU) No. 952/2013) ("UCC"), which requires a customs authority to consult with DG TAXUD before issuing a new BTI ruling where divergent rulings exist among EU member states for substantially similar goods. We learned of the referral through Vournas & Theodorakis Dikigiriko Grafeio ("V&T"), TSL's local Greek counsel, specifically through Alexandros Vournas, Managing Partner (Athens Bar No. 18744), who received formal notification from AADE's Customs Division on the same date.

This letter sets out the background to the referral, its significance for TSL's ongoing customs dispute, the possible actions DG TAXUD may take, the impact on pending proceedings and current financial exposure, and our recommended next steps. We encourage you to review this letter carefully and to contact us at your earliest convenience to discuss the matters addressed herein.

I. Background — Divergent BTI Rulings Triggering the Referral

The referral to DG TAXUD was prompted by the existence of divergent Binding Tariff Information rulings issued by customs authorities in different EU member states regarding the classification of marine cargo-handling equipment substantially similar to TSL's imported ship-to-shore ("STS") gantry cranes and automated stacking crane ("ASC") systems. Specifically, two BTI rulings issued by the customs authorities of the Netherlands and Germany, respectively, reached opposite conclusions on the appropriate Combined Nomenclature ("CN") classification for equipment of this type:

Netherlands — BTI Ruling NL-BTI-2021-01234 (issued June 14, 2021): The Dutch customs authority (Douane Nederland, Belastingdienst) classified substantially similar STS cranes and ASC-type systems under CN heading 8426, and specifically under CN subheading 8426 19 00, which covers "other" ship derricks, cranes (including cable cranes), mobile lifting frames, straddle carriers, and works trucks fitted with a crane. This classification is consistent with TSL's position throughout this dispute. CN heading 8426 and all of its subheadings carry a 0% Most Favoured Nation ("MFN") duty rate under the EU Common Customs Tariff.

Germany — BTI Ruling DE-BTI-2020-05678 (issued September 3, 2020): The German customs authority (Hauptzollamt Hamburg-Hafen) classified an automated stacking crane system — a system that is functionally and structurally comparable to the ASC systems imported by TSL — under CN subheading 8428 90 90, which covers "other lifting, handling, loading or unloading machinery" not elsewhere specified within heading 8428. This classification is consistent with the position advanced by AADE in its Assessment Notices. CN subheading 8428 90 90 carries a 2.2% MFN duty rate.

The divergence between these two rulings lies at the heart of the classification dispute in the present case. Under Article 34(10) UCC, where customs authorities in different member states have issued conflicting BTI rulings on substantially similar goods, the issuing authority — here, AADE — is obligated to consult with DG TAXUD before issuing a new BTI ruling. AADE was unable to resolve the classification question independently in light of this divergence and accordingly made the referral to DG TAXUD.

It bears noting, for completeness, that TSL originally classified the imported STS gantry cranes and ASC systems under CN subheading 8426 41 00 in its customs declarations. The BTI application filed on November 15, 2022, requests classification under CN subheading 8426 19 00, which corrects the subheading classification for rail-mounted equipment. CN subheading 8426 41 00 applies to self-propelled machinery mounted on tyres, whereas the equipment at issue is rail-mounted. This subheading correction is, however, without any duty impact, as all subheadings within CN heading 8426 carry the same 0% MFN duty rate. The substantive question — whether the equipment falls under heading 8426 (0% duty) or heading 8428 (2.2% duty) — remains the central issue in dispute.

II. Significance of the Referral

The DG TAXUD referral carries both positive and negative implications for TSL. We address each in turn.

A. Positive Implications for TSL

Acknowledgment of genuine classification ambiguity. The fact that AADE itself acknowledged that it could not resolve the classification question without consulting DG TAXUD is significant. It demonstrates that the classification of STS gantry cranes and ASC systems under the Combined Nomenclature is a matter on which reasonable minds — and indeed the competent customs authorities of EU member states — may differ. Two member states' customs authorities, each applying the same CN and the same Harmonized System Explanatory Notes, reached diametrically opposed conclusions. This strongly supports TSL's argument, which we have advanced throughout this matter, that TSL's original classification of its imported equipment under CN heading 8426 was adopted in good faith and based on a reasonable interpretation of the Combined Nomenclature. It undermines any suggestion by AADE that the correct classification was clear or obvious, or that TSL should have known that its classification was incorrect.

Penalty mitigation. The divergence between the Dutch and German BTI rulings constitutes powerful evidence against any characterization of TSL's classification as negligent, willfully non-compliant, or fraudulent. This evidence is directly relevant to the question of administrative penalties under the Greek Customs Code (Law 2960/2001, Article 147) and UCC Article 42, both of which calibrate penalties by reference to the degree of fault attributable to the importer. As you are aware, AADE assessed penalties at the 30% good-faith error level, amounting to €509,124. AADE retains the discretion under Law 2960/2001 to escalate penalties to the 100% level (approximately €1,697,080) for negligent misclassification or to the 300% level (approximately €5,091,240) for willful non-compliance or fraud. The existence of divergent BTI rulings across EU member states makes any such escalation extremely difficult for AADE to justify and substantially strengthens TSL's position in resisting any upward revision of the penalty assessment.

EU-level resolution with binding authority. A determination by DG TAXUD — whether in the form of an advisory opinion, a classification regulation, or a Customs Code Committee opinion — would carry authoritative weight across all EU member states. Such a determination would provide finality on the classification question and prevent future disputes regarding the same or substantially similar equipment. If the determination is favorable to TSL, it would resolve not only the present dispute but also provide certainty for future importations. Even in the event of an unfavorable determination, the resulting clarity would enable TSL to adjust its import practices prospectively and would limit the basis for any retroactive penalty assessment.

Insurance coverage support. The genuine ambiguity confirmed by the DG TAXUD referral further undermines the basis for the reservation of rights issued by Oceanos Underwriters SA ("Oceanos") under Financial Lines Policy No. OCU-FIN-2021-GR-0487. As you will recall, Oceanos reserved its rights on November 22, 2022, citing the "willful non-compliance" exclusion set forth in Section 4.3(a) of the Policy. That exclusion requires Oceanos to establish that TSL made a deliberate decision to disregard a known legal obligation. The referral to DG TAXUD — and the underlying divergence in member state classification practices — provides further and compelling evidence that the correct classification was far from settled and that TSL's position cannot credibly be characterized as a willful disregard of a known obligation. We address the insurance claim in further detail in Section V.D below.

B. Negative Implications

Extended timeline. DG TAXUD consultations under Article 34(10) UCC are procedurally involved and typically require between twelve and twenty-four months to complete. This means that the classification dispute — and consequently the overall customs dispute, including the pending administrative objections before AADE's Directorate of Resolution of Disputes — will likely remain unresolved until approximately Q1 2024 at the earliest, and potentially not until Q1 2025 or later. The extended timeline introduces a prolonged period of uncertainty for TSL's financial planning and reporting.

Continued interest accrual. Statutory late payment interest under the Greek Customs Code continues to accrue on the additional duties assessed by AADE (€1,697,080 in additional customs duties) at a rate of 0.73% per month, amounting to approximately €12,389 per month. The longer the resolution period, the greater the cumulative interest exposure. As of our most recent calculations, the estimated accrued interest stands at approximately €3.9 million, and this figure continues to grow with each passing month. Even in the event of a fully favorable outcome on classification, the question of interest abatement would need to be addressed separately, and there is no guarantee that accrued interest would be fully waived.

Bank guarantee commitment. As discussed in further detail in Section V.B below, TSL will likely be required to post security — in the form of a bank guarantee — for the disputed amounts during the extended resolution period. This will tie up financial capacity under TSL's existing revolving credit facility and may have implications for compliance with financial covenants.

Uncertainty of outcome. While the referral to DG TAXUD is on balance a positive development, there is no guarantee that DG TAXUD will rule in TSL's favor. The classification question is genuinely close, particularly with respect to the ASC systems, where the degree of automation and the systems' integration with broader terminal management software could, under certain interpretive approaches, support classification under heading 8428 rather than heading 8426. The German BTI ruling relied significantly on the automated and integrated nature of the ASC system, and DG TAXUD may find that analysis persuasive, at least in part. We continue to believe that TSL's position is the stronger one, but we cannot assure a favorable outcome, and TSL should plan accordingly.

III. Possible DG TAXUD Actions

DG TAXUD may take one of several actions in response to AADE's referral under Article 34(10) UCC. We describe each below, along with the likely timeline and procedural implications.

1. Issue an Advisory Opinion

The most common outcome of an Article 34(10) consultation is for DG TAXUD to provide the referring customs authority — here, AADE — with a non-binding advisory opinion on the correct classification of the goods in question. In this case, DG TAXUD would analyze the characteristics and functions of STS gantry cranes and ASC systems against the relevant CN headings and subheadings, the Harmonized System Explanatory Notes, and any applicable WCO classification opinions, and would communicate its conclusions to AADE in the form of a written advisory opinion. AADE would then issue the BTI ruling guided by that opinion. While the advisory opinion is technically non-binding, AADE would in practice be extremely unlikely to depart from DG TAXUD's recommended classification. This is the most likely outcome and would typically resolve the matter within twelve to eighteen months of the referral date.

2. Initiate a Classification Regulation

Under Article 57(4) UCC, the European Commission has the authority to adopt an implementing regulation establishing the binding and uniform classification of specific goods across all EU member states. If DG TAXUD determines that the divergence between the Dutch and German rulings reflects a systemic classification problem requiring a definitive, pan-EU solution, it may choose to initiate the formal process of adopting a classification regulation. Such a regulation would definitively resolve the classification question not only for TSL but for all EU importers of STS gantry cranes and ASC systems. This process is more formal and typically takes eighteen to twenty-four months, as it involves drafting by DG TAXUD, deliberation and vote by the Customs Code Committee (Section for Tariff and Statistical Nomenclature), and formal adoption and publication in the Official Journal of the European Union. While this path would take longer, the resulting regulation would have the force of law and would provide the highest degree of legal certainty.

3. Refer to the Customs Code Committee

DG TAXUD may also choose to convene the Customs Code Committee (Section for Tariff and Statistical Nomenclature) to deliberate on the classification question and to provide a committee opinion. The committee is composed of representatives of all EU member states' customs administrations and meets regularly in Brussels. The committee's opinion would then inform either a non-binding advisory to AADE or, if DG TAXUD determines it appropriate, the adoption of a classification regulation. This procedural path may also involve a public consultation period, during which interested parties — including TSL — could have the opportunity to provide additional technical and legal input directly to the committee.

We note that in all three scenarios described above, TSL has the opportunity to submit additional materials and argument directly to DG TAXUD, channeled through AADE as the procedural conduit. As discussed in Section V.C below, we strongly recommend that TSL take advantage of this opportunity by filing a comprehensive supplemental submission as soon as practicable.

IV. Impact on Pending Proceedings and Current Exposure

The DG TAXUD referral occurs in the context of TSL's substantial ongoing exposure arising from the AADE customs audit and the Assessment Notices issued in 2022. For your reference, we summarize the current financial exposure as follows:

It is important to understand that the valuation assessment (ADAN/2022/0074) is interlinked with the classification outcome. The additional duty on the €9,940,000 valuation adjustment is calculated at the 2.2% MFN duty rate that applies only if the imported equipment is reclassified under CN subheading 8428 90 90. If TSL prevails on the classification question and the equipment is confirmed as falling under CN heading 8426 at the 0% MFN duty rate, the valuation adjustments would have no customs duty impact whatsoever, as 0% applied to the €9,940,000 valuation adjustment produces no additional duty liability. This linkage means that a favorable classification outcome at DG TAXUD would effectively eliminate both the classification-based and valuation-based additional duty assessments in their entirety.

The administrative objections filed by V&T on TSL's behalf with AADE's Directorate of Resolution of Disputes ("DED") on November 30, 2022 — against Assessment Notice AADE/ADAN/2022/0073 (classification) and Assessment Notice AADE/ADAN/2022/0074 (valuation) — remain pending. No substantive action has been taken by DED on the objections to date, and we anticipate that DED will hold the objections in abeyance pending the outcome of the DG TAXUD consultation, although this has not yet been formally confirmed.

We note that no enforcement action has been taken by AADE to date with respect to either Assessment Notice. However, in the absence of a formal standstill agreement, AADE retains the legal right under the Greek Customs Code and the UCC to enforce the Assessment Notices and to pursue collection of the assessed amounts at any time. This underscores the importance of securing a formal standstill arrangement, as discussed in Section V.A below.

V. Recommended Actions

In light of the DG TAXUD referral and the extended timeline it implies, we recommend that TSL take the following actions promptly.

A. Seek a Formal Standstill Agreement with AADE

We recommend that TSL, through V&T, negotiate and execute a formal standstill arrangement with AADE to suspend enforcement of Assessment Notices AADE/ADAN/2022/0073 and AADE/ADAN/2022/0074 during the pendency of the DG TAXUD consultation. The negotiation would be conducted with Meridian & Drakos Dikigiriko Grafeio, AADE's external legal advisors, specifically through Panagiotis Drakos, Senior Partner (Athens Bar No. 29481).

We propose the following principal terms for the standstill arrangement:

(a) AADE agrees not to enforce, collect, or take any other compulsory measures with respect to Assessment Notices AADE/ADAN/2022/0073 and AADE/ADAN/2022/0074, and any related interest or penalty claims, during the standstill period;

(b) The proceedings before DED are held in abeyance during the standstill period, with all applicable time limits tolled;

(c) Both parties preserve all substantive and procedural rights, including TSL's right to appeal to the Administrative Court of First Instance of Piraeus in the event of an unfavorable DED determination;

(d) The standstill is terminable by either party upon sixty (60) days' written notice to the other party; and

(e) TSL posts security for the disputed amounts in the form of a bank guarantee, as discussed in Section V.B below.

V&T (Alexandros Vournas) will lead the negotiation with Meridian & Drakos under C&H's direction and oversight. We believe that AADE has a reasonable incentive to agree to a standstill, given that the DG TAXUD consultation was initiated by AADE itself and given the practical futility of pursuing enforcement while the classification question remains unresolved at the EU level.

B. Post a Bank Guarantee as Security

It is our expectation that AADE will require the posting of security for the disputed amounts as a condition of agreeing to a standstill. We recommend that TSL arrange for the issuance of a bank guarantee from Compass Maritime Bank SA, through Andreas Papathanasiou, Relationship Manager, Shipping & Logistics Division (5 Kolokotroni Street, 105 62 Athens, Greece), in the amount of approximately €5,000,000. This amount represents approximately 57% of the mid-case total assessment (€8,818,620) and is, in our judgment, a reasonable security level that AADE is likely to accept, given the genuine uncertainty surrounding the classification question and the significant likelihood of a favorable or partially favorable outcome.

The bank guarantee would be issued under TSL's existing €75,000,000 revolving credit facility with Compass Maritime Bank. We note, however, that the issuance of the guarantee will reduce available capacity under the facility by the guaranteed amount and may have implications for TSL's compliance with financial covenants. We understand that TSL's Net Debt / EBITDA ratio currently stands at 2.9×, against a covenant maximum of 3.5× under the credit agreement. We recommend that Elena Papadimitriou coordinate directly with Compass Maritime Bank to assess the impact of the guarantee on covenant headroom and overall facility availability.

We further note that material litigation disclosure was already provided to Compass Maritime Bank on October 3, 2022, pursuant to the €2,000,000 material litigation disclosure threshold set forth in Section 6.2(d) of the credit agreement. No further disclosure obligation should arise solely from the posting of the guarantee, but we recommend confirming this with Compass Maritime Bank at the time of the guarantee request.

C. File a Supplemental Submission with DG TAXUD

We recommend that TSL prepare and file a comprehensive supplemental submission with DG TAXUD, channeled through AADE as the procedural conduit, presenting additional expert analysis and legal argument in support of TSL's classification position. The DG TAXUD consultation process provides TSL with a valuable opportunity to place its strongest arguments and evidence before the decision-making authority, and we believe this opportunity should be seized without delay.

The supplemental submission will include the following components:

(a) Expert opinion of Dr. Lukas Brenner. Dr. Brenner is the Managing Director of Argonaut Trade Consulting GmbH, based in Berlin, and a former member of the World Customs Organization ("WCO") Harmonized System Committee (2008–2016). Dr. Brenner has extensive expertise in the classification of industrial and port-handling equipment under the Harmonized System and the Combined Nomenclature. His expert opinion will address the technical characteristics of STS gantry cranes and ASC systems and will explain why those characteristics support classification under CN heading 8426 rather than CN heading 8428.

(b) Survey of EU member state classification practices. The submission will include a comprehensive survey of BTI rulings and classification practices across EU member states with respect to STS gantry cranes and ASC systems, demonstrating that the majority of member states have historically classified such equipment under heading 8426.

(c) Summary of relevant WCO HS Committee precedent. We will identify and analyze any relevant decisions, opinions, or classification advice issued by the WCO Harmonized System Committee regarding automated cranes, gantry cranes, and related port-handling equipment, including any guidance bearing on the significance of automation as a classification factor.

(d) Legal argument rebutting the German BTI ruling. The submission will include a detailed legal argument addressing and rebutting the reasoning of the German BTI ruling (DE-BTI-2020-05678), which relied significantly on the degree of automation of the ASC system as a classification-determinative factor. We will argue that automation is a feature that enhances the crane function but does not transform the equipment into a different category of machine under the Harmonized System nomenclature, and that the General Interpretive Rules and the Harmonized System Explanatory Notes do not support the German authority's approach.

Christy Bauer, Senior Associate in C&H's International Trade & Sanctions Group, will prepare the supplemental submission in close coordination with Alexandros Vournas at V&T and Dr. Brenner at Argonaut. Our target filing date is mid-March 2023, and we will circulate a draft to TSL for review and comment before filing.

D. Continue Insurance Claim Pursuit

TSL's claim under the Oceanos Underwriters Financial Lines Policy (Policy No. OCU-FIN-2021-GR-0487) was filed through Aether Insurance Brokers Ltd. (Fiona Hartwell, Senior Account Executive) on October 15, 2022. The Policy provides a sublimit for customs disputes of €3,000,000, subject to a retention of €250,000.

As noted above, Oceanos issued a reservation of rights letter on November 22, 2022, reserving its position with respect to two policy exclusions: (a) the "willful non-compliance" exclusion under Section 4.3(a), and (b) the "deliberate undervaluation" exclusion under Section 4.3(b). C&H is preparing a formal response to the reservation of rights letter, arguing in detail that neither exclusion applies to the facts of this case. The DG TAXUD referral — and the underlying divergence in member state classification practices that prompted it — provides significant additional factual support for rebutting the "willful non-compliance" reservation. It is difficult for Oceanos to maintain that TSL willfully disregarded a known legal obligation when the customs authorities of the EU's member states themselves cannot agree on the correct classification.

We anticipate transmitting the response to the reservation of rights letter in the near term and will keep TSL informed of Oceanos's response and any subsequent developments in the coverage dispute. We also recommend that TSL instruct Aether Insurance Brokers to maintain close engagement with Oceanos throughout the DG TAXUD process, ensuring that Oceanos is kept apprised of developments that further support TSL's coverage position.

VI. Next Steps and Timeline

We summarize below the immediate action items arising from the DG TAXUD referral and the recommended actions described above:

1. Standstill negotiations. V&T (Alexandros Vournas) to initiate standstill negotiations with Meridian & Drakos Dikigiriko Grafeio (Panagiotis Drakos). Target: execution of a formal standstill agreement by end of February or early March 2023.

2. Bank guarantee. TSL (Elena Papadimitriou) to coordinate with Compass Maritime Bank SA (Andreas Papathanasiou) regarding the issuance of a bank guarantee in the approximate amount of €5,000,000. Target: issuance within ten (10) business days of execution of the standstill agreement.

3. Supplemental DG TAXUD submission. C&H (Christy Bauer) to prepare and file a supplemental submission with DG TAXUD through AADE, incorporating the expert opinion of Dr. Lukas Brenner, a survey of member state classification practices, WCO HS Committee precedent analysis, and legal argument. Target filing date: mid-March 2023.

4. Insurance reservation of rights response. C&H (James Prentice) to finalize and transmit the formal response to Oceanos Underwriters' reservation of rights letter.

5. Quarterly monitoring. C&H and V&T to conduct quarterly monitoring of the DG TAXUD consultation status, with the first status check targeted for June 2023.

Based on historical precedent for DG TAXUD consultations under Article 34(10) UCC, we estimate that the resolution of the classification question at the EU level will take approximately twelve to twenty-four months from the date of referral — placing the likely resolution window in the range of approximately Q1 2024 to Q1 2025. We will provide further updates as the standstill negotiation progresses and as we receive any indication from DG TAXUD regarding the procedural path it intends to follow.

We are available to discuss the contents of this letter at your convenience, whether by telephone or videoconference. We recognize that the DG TAXUD referral extends the timeline for resolution of this matter, and we understand that this prolonged uncertainty is not welcome. However, we wish to reiterate our assessment that the referral is, on balance, a positive development for TSL. It strengthens TSL's position on the merits of the classification dispute by confirming the genuine ambiguity that underlies TSL's original classification, and it significantly bolsters TSL's position on penalty mitigation by making it exceedingly difficult for AADE to characterize TSL's conduct as negligent or willful.

Finally, we respectfully remind TSL to continue to refrain from any direct communication with AADE or with Meridian & Drakos Dikigiriko Grafeio on the substance of the dispute, consistent with the terms of our engagement letter. All communications with AADE and its advisors should continue to be channeled through V&T and C&H.

We look forward to speaking with you soon.

Yours faithfully,

CALDERWOOD & HARKNESS LLP

By: ________

James Prentice Partner Brussels / London

Tel: +32 2 891 7412 / +44 20 7429 3100

Email: j.prentice@calderwoodharkness.com

cc: (via encrypted email)

Christy Bauer, Senior Associate, Calderwood & Harkness LLP

Garrett Simmons, Associate, Calderwood & Harkness LLP

Alexandros Vournas, Managing Partner, Vournas & Theodorakis Dikigiriko Grafeio (under common interest privilege)

Component	Amount (€)
Additional customs duties — classification dispute (CN 8428 90 90 vs. CN 8426 19 00)	1,478,400
Additional customs duties — valuation adjustment (ADAN/2022/0074)	218,680
Subtotal — additional customs duties	1,697,080
Import VAT adjustments	2,740,416
Administrative penalties (30% — good-faith error)	509,124
Late payment interest (estimated through August 2022, continuing to accrue at approximately €12,389/month)	3,872,000
Total AADE mid-case claim	approximately €8,818,620
High-end exposure (including escalated penalties at 100%–300%)	approximately €14.7 million

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION
CALDERWOOD & HARKNESS LLP Avenue Louise 480 1050 Brussels, Belgium
Tel: +32 2 891 7400
Fax: +32 2 891 7401
www.calderwoodharkness.com
February 10, 2023
VIA ENCRYPTED EMAIL AND REGISTERED POST
Mr. Nikolaos Andreadis Chairman & Chief Executive Officer Thalassa Shipping & Logistics SA 47 Akti Miaouli 185 35 Piraeus, Greece
Ms. Elena Papadimitriou Chief Financial Officer Thalassa Shipping & Logistics SA 47 Akti Miaouli 185 35 Piraeus, Greece
Re: DG TAXUD Referral of Binding Tariff Information Application — C&H Matter No.: C&H-2022-ITS-04781
Dear Mr. Andreadis and Ms. Papadimitriou,
We write to advise you that on February 7, 2023, the Independent Authority for Public Revenue of the Hellenic Republic ("AADE") referred Thalassa Shipping & Logistics SA's ("TSL") Binding Tariff Information application (reference BTI-GR-2022-003847, filed on November 15, 2022) to the European Commission's Directorate-General for Taxation and Customs Union ("DG TAXUD") for consultation. The referral was made pursuant to Article 34(10) of the Union Customs Code (Regulation (EU) No. 952/2013) ("UCC"), which requires a customs authority to consult with DG TAXUD before issuing a new BTI ruling where divergent rulings exist among EU member states for substantially similar goods. We learned of the referral through Vournas & Theodorakis Dikigiriko Grafeio ("V&T"), TSL's local Greek counsel, specifically through Alexandros Vournas, Managing Partner (Athens Bar No. 18744), who received formal notification from AADE's Customs Division on the same date.
This letter sets out the background to the referral, its significance for TSL's ongoing customs dispute, the possible actions DG TAXUD may take, the impact on pending proceedings and current financial exposure, and our recommended next steps. We encourage you to review this letter carefully and to contact us at your earliest convenience to discuss the matters addressed herein.
I. Background — Divergent BTI Rulings Triggering the Referral
The referral to DG TAXUD was prompted by the existence of divergent Binding Tariff Information rulings issued by customs authorities in different EU member states regarding the classification of marine cargo-handling equipment substantially similar to TSL's imported ship-to-shore ("STS") gantry cranes and automated stacking crane ("ASC") systems. Specifically, two BTI rulings issued by the customs authorities of the Netherlands and Germany, respectively, reached opposite conclusions on the appropriate Combined Nomenclature ("CN") classification for equipment of this type:
Netherlands — BTI Ruling NL-BTI-2021-01234 (issued June 14, 2021): The Dutch customs authority (Douane Nederland, Belastingdienst) classified substantially similar STS cranes and ASC-type systems under CN heading 8426, and specifically under CN subheading 8426 19 00, which covers "other" ship derricks, cranes (including cable cranes), mobile lifting frames, straddle carriers, and works trucks fitted with a crane. This classification is consistent with TSL's position throughout this dispute. CN heading 8426 and all of its subheadings carry a 0% Most Favoured Nation ("MFN") duty rate under the EU Common Customs Tariff.
Germany — BTI Ruling DE-BTI-2020-05678 (issued September 3, 2020): The German customs authority (Hauptzollamt Hamburg-Hafen) classified an automated stacking crane system — a system that is functionally and structurally comparable to the ASC systems imported by TSL — under CN subheading 8428 90 90, which covers "other lifting, handling, loading or unloading machinery" not elsewhere specified within heading 8428. This classification is consistent with the position advanced by AADE in its Assessment Notices. CN subheading 8428 90 90 carries a 2.2% MFN duty rate.
The divergence between these two rulings lies at the heart of the classification dispute in the present case. Under Article 34(10) UCC, where customs authorities in different member states have issued conflicting BTI rulings on substantially similar goods, the issuing authority — here, AADE — is obligated to consult with DG TAXUD before issuing a new BTI ruling. AADE was unable to resolve the classification question independently in light of this divergence and accordingly made the referral to DG TAXUD.
It bears noting, for completeness, that TSL originally classified the imported STS gantry cranes and ASC systems under CN subheading 8426 41 00 in its customs declarations. The BTI application filed on November 15, 2022, requests classification under CN subheading 8426 19 00, which corrects the subheading classification for rail-mounted equipment. CN subheading 8426 41 00 applies to self-propelled machinery mounted on tyres, whereas the equipment at issue is rail-mounted. This subheading correction is, however, without any duty impact, as all subheadings within CN heading 8426 carry the same 0% MFN duty rate. The substantive question — whether the equipment falls under heading 8426 (0% duty) or heading 8428 (2.2% duty) — remains the central issue in dispute.
II. Significance of the Referral
The DG TAXUD referral carries both positive and negative implications for TSL. We address each in turn.
A. Positive Implications for TSL
Acknowledgment of genuine classification ambiguity. The fact that AADE itself acknowledged that it could not resolve the classification question without consulting DG TAXUD is significant. It demonstrates that the classification of STS gantry cranes and ASC systems under the Combined Nomenclature is a matter on which reasonable minds — and indeed the competent customs authorities of EU member states — may differ. Two member states' customs authorities, each applying the same CN and the same Harmonized System Explanatory Notes, reached diametrically opposed conclusions. This strongly supports TSL's argument, which we have advanced throughout this matter, that TSL's original classification of its imported equipment under CN heading 8426 was adopted in good faith and based on a reasonable interpretation of the Combined Nomenclature. It undermines any suggestion by AADE that the correct classification was clear or obvious, or that TSL should have known that its classification was incorrect.
Penalty mitigation. The divergence between the Dutch and German BTI rulings constitutes powerful evidence against any characterization of TSL's classification as negligent, willfully non-compliant, or fraudulent. This evidence is directly relevant to the question of administrative penalties under the Greek Customs Code (Law 2960/2001, Article 147) and UCC Article 42, both of which calibrate penalties by reference to the degree of fault attributable to the importer. As you are aware, AADE assessed penalties at the 30% good-faith error level, amounting to €509,124. AADE retains the discretion under Law 2960/2001 to escalate penalties to the 100% level (approximately €1,697,080) for negligent misclassification or to the 300% level (approximately €5,091,240) for willful non-compliance or fraud. The existence of divergent BTI rulings across EU member states makes any such escalation extremely difficult for AADE to justify and substantially strengthens TSL's position in resisting any upward revision of the penalty assessment.
EU-level resolution with binding authority. A determination by DG TAXUD — whether in the form of an advisory opinion, a classification regulation, or a Customs Code Committee opinion — would carry authoritative weight across all EU member states. Such a determination would provide finality on the classification question and prevent future disputes regarding the same or substantially similar equipment. If the determination is favorable to TSL, it would resolve not only the present dispute but also provide certainty for future importations. Even in the event of an unfavorable determination, the resulting clarity would enable TSL to adjust its import practices prospectively and would limit the basis for any retroactive penalty assessment.
Insurance coverage support. The genuine ambiguity confirmed by the DG TAXUD referral further undermines the basis for the reservation of rights issued by Oceanos Underwriters SA ("Oceanos") under Financial Lines Policy No. OCU-FIN-2021-GR-0487. As you will recall, Oceanos reserved its rights on November 22, 2022, citing the "willful non-compliance" exclusion set forth in Section 4.3(a) of the Policy. That exclusion requires Oceanos to establish that TSL made a deliberate decision to disregard a known legal obligation. The referral to DG TAXUD — and the underlying divergence in member state classification practices — provides further and compelling evidence that the correct classification was far from settled and that TSL's position cannot credibly be characterized as a willful disregard of a known obligation. We address the insurance claim in further detail in Section V.D below.
B. Negative Implications
Extended timeline. DG TAXUD consultations under Article 34(10) UCC are procedurally involved and typically require between twelve and twenty-four months to complete. This means that the classification dispute — and consequently the overall customs dispute, including the pending administrative objections before AADE's Directorate of Resolution of Disputes — will likely remain unresolved until approximately Q1 2024 at the earliest, and potentially not until Q1 2025 or later. The extended timeline introduces a prolonged period of uncertainty for TSL's financial planning and reporting.
Continued interest accrual. Statutory late payment interest under the Greek Customs Code continues to accrue on the additional duties assessed by AADE (€1,697,080 in additional customs duties) at a rate of 0.73% per month, amounting to approximately €12,389 per month. The longer the resolution period, the greater the cumulative interest exposure. As of our most recent calculations, the estimated accrued interest stands at approximately €3.9 million, and this figure continues to grow with each passing month. Even in the event of a fully favorable outcome on classification, the question of interest abatement would need to be addressed separately, and there is no guarantee that accrued interest would be fully waived.
Bank guarantee commitment. As discussed in further detail in Section V.B below, TSL will likely be required to post security — in the form of a bank guarantee — for the disputed amounts during the extended resolution period. This will tie up financial capacity under TSL's existing revolving credit facility and may have implications for compliance with financial covenants.
Uncertainty of outcome. While the referral to DG TAXUD is on balance a positive development, there is no guarantee that DG TAXUD will rule in TSL's favor. The classification question is genuinely close, particularly with respect to the ASC systems, where the degree of automation and the systems' integration with broader terminal management software could, under certain interpretive approaches, support classification under heading 8428 rather than heading 8426. The German BTI ruling relied significantly on the automated and integrated nature of the ASC system, and DG TAXUD may find that analysis persuasive, at least in part. We continue to believe that TSL's position is the stronger one, but we cannot assure a favorable outcome, and TSL should plan accordingly.
III. Possible DG TAXUD Actions
DG TAXUD may take one of several actions in response to AADE's referral under Article 34(10) UCC. We describe each below, along with the likely timeline and procedural implications.
1. Issue an Advisory Opinion
The most common outcome of an Article 34(10) consultation is for DG TAXUD to provide the referring customs authority — here, AADE — with a non-binding advisory opinion on the correct classification of the goods in question. In this case, DG TAXUD would analyze the characteristics and functions of STS gantry cranes and ASC systems against the relevant CN headings and subheadings, the Harmonized System Explanatory Notes, and any applicable WCO classification opinions, and would communicate its conclusions to AADE in the form of a written advisory opinion. AADE would then issue the BTI ruling guided by that opinion. While the advisory opinion is technically non-binding, AADE would in practice be extremely unlikely to depart from DG TAXUD's recommended classification. This is the most likely outcome and would typically resolve the matter within twelve to eighteen months of the referral date.
2. Initiate a Classification Regulation
Under Article 57(4) UCC, the European Commission has the authority to adopt an implementing regulation establishing the binding and uniform classification of specific goods across all EU member states. If DG TAXUD determines that the divergence between the Dutch and German rulings reflects a systemic classification problem requiring a definitive, pan-EU solution, it may choose to initiate the formal process of adopting a classification regulation. Such a regulation would definitively resolve the classification question not only for TSL but for all EU importers of STS gantry cranes and ASC systems. This process is more formal and typically takes eighteen to twenty-four months, as it involves drafting by DG TAXUD, deliberation and vote by the Customs Code Committee (Section for Tariff and Statistical Nomenclature), and formal adoption and publication in the Official Journal of the European Union. While this path would take longer, the resulting regulation would have the force of law and would provide the highest degree of legal certainty.
3. Refer to the Customs Code Committee
DG TAXUD may also choose to convene the Customs Code Committee (Section for Tariff and Statistical Nomenclature) to deliberate on the classification question and to provide a committee opinion. The committee is composed of representatives of all EU member states' customs administrations and meets regularly in Brussels. The committee's opinion would then inform either a non-binding advisory to AADE or, if DG TAXUD determines it appropriate, the adoption of a classification regulation. This procedural path may also involve a public consultation period, during which interested parties — including TSL — could have the opportunity to provide additional technical and legal input directly to the committee.
We note that in all three scenarios described above, TSL has the opportunity to submit additional materials and argument directly to DG TAXUD, channeled through AADE as the procedural conduit. As discussed in Section V.C below, we strongly recommend that TSL take advantage of this opportunity by filing a comprehensive supplemental submission as soon as practicable.
IV. Impact on Pending Proceedings and Current Exposure
The DG TAXUD referral occurs in the context of TSL's substantial ongoing exposure arising from the AADE customs audit and the Assessment Notices issued in 2022. For your reference, we summarize the current financial exposure as follows:
It is important to understand that the valuation assessment (ADAN/2022/0074) is interlinked with the classification outcome. The additional duty on the €9,940,000 valuation adjustment is calculated at the 2.2% MFN duty rate that applies only if the imported equipment is reclassified under CN subheading 8428 90 90. If TSL prevails on the classification question and the equipment is confirmed as falling under CN heading 8426 at the 0% MFN duty rate, the valuation adjustments would have no customs duty impact whatsoever, as 0% applied to the €9,940,000 valuation adjustment produces no additional duty liability. This linkage means that a favorable classification outcome at DG TAXUD would effectively eliminate both the classification-based and valuation-based additional duty assessments in their entirety.
The administrative objections filed by V&T on TSL's behalf with AADE's Directorate of Resolution of Disputes ("DED") on November 30, 2022 — against Assessment Notice AADE/ADAN/2022/0073 (classification) and Assessment Notice AADE/ADAN/2022/0074 (valuation) — remain pending. No substantive action has been taken by DED on the objections to date, and we anticipate that DED will hold the objections in abeyance pending the outcome of the DG TAXUD consultation, although this has not yet been formally confirmed.
We note that no enforcement action has been taken by AADE to date with respect to either Assessment Notice. However, in the absence of a formal standstill agreement, AADE retains the legal right under the Greek Customs Code and the UCC to enforce the Assessment Notices and to pursue collection of the assessed amounts at any time. This underscores the importance of securing a formal standstill arrangement, as discussed in Section V.A below.
V. Recommended Actions
In light of the DG TAXUD referral and the extended timeline it implies, we recommend that TSL take the following actions promptly.
A. Seek a Formal Standstill Agreement with AADE
We recommend that TSL, through V&T, negotiate and execute a formal standstill arrangement with AADE to suspend enforcement of Assessment Notices AADE/ADAN/2022/0073 and AADE/ADAN/2022/0074 during the pendency of the DG TAXUD consultation. The negotiation would be conducted with Meridian & Drakos Dikigiriko Grafeio, AADE's external legal advisors, specifically through Panagiotis Drakos, Senior Partner (Athens Bar No. 29481).
We propose the following principal terms for the standstill arrangement:
(a) AADE agrees not to enforce, collect, or take any other compulsory measures with respect to Assessment Notices AADE/ADAN/2022/0073 and AADE/ADAN/2022/0074, and any related interest or penalty claims, during the standstill period;
(b) The proceedings before DED are held in abeyance during the standstill period, with all applicable time limits tolled;
(c) Both parties preserve all substantive and procedural rights, including TSL's right to appeal to the Administrative Court of First Instance of Piraeus in the event of an unfavorable DED determination;
(d) The standstill is terminable by either party upon sixty (60) days' written notice to the other party; and
(e) TSL posts security for the disputed amounts in the form of a bank guarantee, as discussed in Section V.B below.
V&T (Alexandros Vournas) will lead the negotiation with Meridian & Drakos under C&H's direction and oversight. We believe that AADE has a reasonable incentive to agree to a standstill, given that the DG TAXUD consultation was initiated by AADE itself and given the practical futility of pursuing enforcement while the classification question remains unresolved at the EU level.
B. Post a Bank Guarantee as Security
It is our expectation that AADE will require the posting of security for the disputed amounts as a condition of agreeing to a standstill. We recommend that TSL arrange for the issuance of a bank guarantee from Compass Maritime Bank SA, through Andreas Papathanasiou, Relationship Manager, Shipping & Logistics Division (5 Kolokotroni Street, 105 62 Athens, Greece), in the amount of approximately €5,000,000. This amount represents approximately 57% of the mid-case total assessment (€8,818,620) and is, in our judgment, a reasonable security level that AADE is likely to accept, given the genuine uncertainty surrounding the classification question and the significant likelihood of a favorable or partially favorable outcome.
The bank guarantee would be issued under TSL's existing €75,000,000 revolving credit facility with Compass Maritime Bank. We note, however, that the issuance of the guarantee will reduce available capacity under the facility by the guaranteed amount and may have implications for TSL's compliance with financial covenants. We understand that TSL's Net Debt / EBITDA ratio currently stands at 2.9×, against a covenant maximum of 3.5× under the credit agreement. We recommend that Elena Papadimitriou coordinate directly with Compass Maritime Bank to assess the impact of the guarantee on covenant headroom and overall facility availability.
We further note that material litigation disclosure was already provided to Compass Maritime Bank on October 3, 2022, pursuant to the €2,000,000 material litigation disclosure threshold set forth in Section 6.2(d) of the credit agreement. No further disclosure obligation should arise solely from the posting of the guarantee, but we recommend confirming this with Compass Maritime Bank at the time of the guarantee request.
C. File a Supplemental Submission with DG TAXUD
We recommend that TSL prepare and file a comprehensive supplemental submission with DG TAXUD, channeled through AADE as the procedural conduit, presenting additional expert analysis and legal argument in support of TSL's classification position. The DG TAXUD consultation process provides TSL with a valuable opportunity to place its strongest arguments and evidence before the decision-making authority, and we believe this opportunity should be seized without delay.
The supplemental submission will include the following components:
(a) Expert opinion of Dr. Lukas Brenner. Dr. Brenner is the Managing Director of Argonaut Trade Consulting GmbH, based in Berlin, and a former member of the World Customs Organization ("WCO") Harmonized System Committee (2008–2016). Dr. Brenner has extensive expertise in the classification of industrial and port-handling equipment under the Harmonized System and the Combined Nomenclature. His expert opinion will address the technical characteristics of STS gantry cranes and ASC systems and will explain why those characteristics support classification under CN heading 8426 rather than CN heading 8428.
(b) Survey of EU member state classification practices. The submission will include a comprehensive survey of BTI rulings and classification practices across EU member states with respect to STS gantry cranes and ASC systems, demonstrating that the majority of member states have historically classified such equipment under heading 8426.
(c) Summary of relevant WCO HS Committee precedent. We will identify and analyze any relevant decisions, opinions, or classification advice issued by the WCO Harmonized System Committee regarding automated cranes, gantry cranes, and related port-handling equipment, including any guidance bearing on the significance of automation as a classification factor.
(d) Legal argument rebutting the German BTI ruling. The submission will include a detailed legal argument addressing and rebutting the reasoning of the German BTI ruling (DE-BTI-2020-05678), which relied significantly on the degree of automation of the ASC system as a classification-determinative factor. We will argue that automation is a feature that enhances the crane function but does not transform the equipment into a different category of machine under the Harmonized System nomenclature, and that the General Interpretive Rules and the Harmonized System Explanatory Notes do not support the German authority's approach.
Christy Bauer, Senior Associate in C&H's International Trade & Sanctions Group, will prepare the supplemental submission in close coordination with Alexandros Vournas at V&T and Dr. Brenner at Argonaut. Our target filing date is mid-March 2023, and we will circulate a draft to TSL for review and comment before filing.
D. Continue Insurance Claim Pursuit
TSL's claim under the Oceanos Underwriters Financial Lines Policy (Policy No. OCU-FIN-2021-GR-0487) was filed through Aether Insurance Brokers Ltd. (Fiona Hartwell, Senior Account Executive) on October 15, 2022. The Policy provides a sublimit for customs disputes of €3,000,000, subject to a retention of €250,000.
As noted above, Oceanos issued a reservation of rights letter on November 22, 2022, reserving its position with respect to two policy exclusions: (a) the "willful non-compliance" exclusion under Section 4.3(a), and (b) the "deliberate undervaluation" exclusion under Section 4.3(b). C&H is preparing a formal response to the reservation of rights letter, arguing in detail that neither exclusion applies to the facts of this case. The DG TAXUD referral — and the underlying divergence in member state classification practices that prompted it — provides significant additional factual support for rebutting the "willful non-compliance" reservation. It is difficult for Oceanos to maintain that TSL willfully disregarded a known legal obligation when the customs authorities of the EU's member states themselves cannot agree on the correct classification.
We anticipate transmitting the response to the reservation of rights letter in the near term and will keep TSL informed of Oceanos's response and any subsequent developments in the coverage dispute. We also recommend that TSL instruct Aether Insurance Brokers to maintain close engagement with Oceanos throughout the DG TAXUD process, ensuring that Oceanos is kept apprised of developments that further support TSL's coverage position.
VI. Next Steps and Timeline
We summarize below the immediate action items arising from the DG TAXUD referral and the recommended actions described above:
1. Standstill negotiations. V&T (Alexandros Vournas) to initiate standstill negotiations with Meridian & Drakos Dikigiriko Grafeio (Panagiotis Drakos). Target: execution of a formal standstill agreement by end of February or early March 2023.
2. Bank guarantee. TSL (Elena Papadimitriou) to coordinate with Compass Maritime Bank SA (Andreas Papathanasiou) regarding the issuance of a bank guarantee in the approximate amount of €5,000,000. Target: issuance within ten (10) business days of execution of the standstill agreement.
3. Supplemental DG TAXUD submission. C&H (Christy Bauer) to prepare and file a supplemental submission with DG TAXUD through AADE, incorporating the expert opinion of Dr. Lukas Brenner, a survey of member state classification practices, WCO HS Committee precedent analysis, and legal argument. Target filing date: mid-March 2023.
4. Insurance reservation of rights response. C&H (James Prentice) to finalize and transmit the formal response to Oceanos Underwriters' reservation of rights letter.
5. Quarterly monitoring. C&H and V&T to conduct quarterly monitoring of the DG TAXUD consultation status, with the first status check targeted for June 2023.
Based on historical precedent for DG TAXUD consultations under Article 34(10) UCC, we estimate that the resolution of the classification question at the EU level will take approximately twelve to twenty-four months from the date of referral — placing the likely resolution window in the range of approximately Q1 2024 to Q1 2025. We will provide further updates as the standstill negotiation progresses and as we receive any indication from DG TAXUD regarding the procedural path it intends to follow.
We are available to discuss the contents of this letter at your convenience, whether by telephone or videoconference. We recognize that the DG TAXUD referral extends the timeline for resolution of this matter, and we understand that this prolonged uncertainty is not welcome. However, we wish to reiterate our assessment that the referral is, on balance, a positive development for TSL. It strengthens TSL's position on the merits of the classification dispute by confirming the genuine ambiguity that underlies TSL's original classification, and it significantly bolsters TSL's position on penalty mitigation by making it exceedingly difficult for AADE to characterize TSL's conduct as negligent or willful.
Finally, we respectfully remind TSL to continue to refrain from any direct communication with AADE or with Meridian & Drakos Dikigiriko Grafeio on the substance of the dispute, consistent with the terms of our engagement letter. All communications with AADE and its advisors should continue to be channeled through V&T and C&H.
We look forward to speaking with you soon.
Yours faithfully,
CALDERWOOD & HARKNESS LLP
By: ________
James Prentice Partner Brussels / London
Tel: +32 2 891 7412 / +44 20 7429 3100
Email: j.prentice@calderwoodharkness.com
cc: (via encrypted email)
Christy Bauer, Senior Associate, Calderwood & Harkness LLP
Garrett Simmons, Associate, Calderwood & Harkness LLP
Alexandros Vournas, Managing Partner, Vournas & Theodorakis Dikigiriko Grafeio (under common interest privilege)
Component | Amount (€)
Additional customs duties — classification dispute (CN 8428 90 90 vs. CN 8426 19 00) | 1,478,400
Additional customs duties — valuation adjustment (ADAN/2022/0074) | 218,680
Subtotal — additional customs duties | 1,697,080
Import VAT adjustments | 2,740,416
Administrative penalties (30% — good-faith error) | 509,124
Late payment interest (estimated through August 2022, continuing to accrue at approximately €12,389/month) | 3,872,000
Total AADE mid-case claim | approximately €8,818,620
High-end exposure (including escalated penalties at 100%–300%) | approximately €14.7 million

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