The Electronic Transport Supervision System (SENT) is one of the key instruments used by the Polish tax administration to monitor the transport of goods particularly vulnerable to tax fraud. In practice, however, its operation extends beyond purely fiscal objectives, affecting the organisation of international supply chains and the level of security of commercial transactions.

The dynamic development of international supply chains creates a need for solutions that reconcile two values that are often in tension: the security of commercial transactions and the free movement of goods. The state seeks to ensure the effective collection of public-law dues and eliminate tax fraud, while businesses expect administrative burdens to be reduced and procedures to be predictable. One of the most important instruments used to strengthen the Polish tax system has become the Electronic Transport Supervision System (SENT), operating pursuant to the Act of 9 March 2017 on the monitoring system for road and rail transport of goods. At the level of European Union law, a similar function in ensuring the security of international trade is performed by the institution of the Authorised Economic Operator (AEO), regulated by the Union Customs Code. Although SENT and AEO were established to pursue different regulatory objectives, both mechanisms use risk analysis as a fundamental tool of public administration. This raises the question of whether a business that has been recognised as a trusted partner by the customs administration should also benefit from certain facilitations when fulfilling its obligations under the SENT system.

1. Origins and Functions of the SENT System

The Electronic Transport Supervision System was introduced into the Polish legal system as one element of a broader package of reforms aimed at tightening the tax system. The immediate impetus for its establishment was the scale of tax fraud observed in previous years, particularly in relation to value added tax (VAT) and excise duty involving trade in so-called sensitive goods. Practices such as carousel fraud, fictitious fuel trading, illegal trade in alcohol and fraudulent VAT refund claims resulted in significant losses to the state budget while also distorting the principles of fair competition in the market. The explanatory memorandum to the draft legislation emphasised that the existing tax-control instruments had proved insufficient in the face of the dynamic growth of cross-border road transport and increasingly complex supply-chain structures. The legislator therefore considered it necessary to establish a system enabling the ongoing monitoring of the movement of specified categories of goods while they were still in transit, rather than only after the transaction had been completed and a tax audit had been conducted. In this way, the focus of administrative activities shifted from subsequent tax inspections towards preventive and analytical measures.

The essence of the SENT system is the obligation to electronically report the transport of goods specified by law and to update information concerning the transport on an ongoing basis. A notification includes data identifying the parties involved in the transaction, the goods being transported, the means of transport, the place where the transport begins and ends, and the anticipated route. The system uses ICT solutions enabling the authorities of the National Revenue Administration to monitor whether the actual course of transport corresponds to the information provided by the parties involved. A characteristic feature of the legal structure of the SENT system is the distribution of obligations among all participants in the logistics process. The legislator has imposed specific obligations on the consignor, consignee and carrier, recognising that effective monitoring depends on cooperation among all participants in the transport process. Each of these parties is responsible for the accuracy of the data submitted within the scope of its statutory obligations, and failure to comply with these obligations or improper compliance may result in substantial administrative fines. This structure reflects contemporary trends in administrative law, whereby participants in commercial transactions share responsibility for fulfilling public-law obligations.

Over the subsequent years of the Act’s operation, the material scope of the SENT system has been systematically expanded. Initially, monitoring primarily covered liquid fuels, lubricating oils and denatured alcohol, but subsequent amendments extended the relevant obligations to other categories of goods characterised by an increased risk of tax irregularities or threats to public safety. The catalogue of monitored goods has come to include, among other things, certain types of waste, heating fuels, raw tobacco, specified chemical products and certain agri-food products. The expansion of the material scope has been accompanied by the development of technical tools used to monitor transport, including the obligation to geolocate means of transport using positioning devices or appropriate mobile applications.

Legal scholarship has noted that SENT has gradually ceased to perform an exclusively fiscal function and has become part of a broader risk-management system within public administration. The data collected through the system are used not only to prevent tax fraud but also for risk analysis, the planning of inspections, the identification of illegal trade in goods, and the support of cooperation between the National Revenue Administration, customs authorities, the Police, the Border Guard and the Road Transport Inspection. This means that the functions of the system now extend beyond traditionally understood tax supervision and form part of the concept of integrated oversight of supply-chain security.

The preventive aspect of the system is also significant. The mere awareness among businesses that the transport of certain categories of goods is subject to electronic monitoring and may be verified in real time influences their propensity to engage in unlawful activities. SENT therefore performs both a supervisory and preventive function, increasing the transparency of commercial transactions and strengthening the effectiveness of the tax administration.

2. Legal Nature of the Authorised Economic Operator (AEO) Status

The institution of the Authorised Economic Operator (AEO) was introduced into European Union law as part of the common customs policy, whose objective is to strike a balance between the security of the international supply chain and the free movement of goods. The origins of the AEO programme are connected with global changes in the approach to international trade security following events at the beginning of the twenty-first century, when customs administrations began to play an increasingly important role not only in the collection of customs duties but also in protecting the economic security and critical infrastructure of states. Under European Union law, the legal basis for the AEO institution is provided by the Union Customs Code and the European Commission’s delegated and implementing regulations. These provisions implement standards developed by the World Customs Organization (WCO) under the SAFE Framework of Standards, the fundamental premise of which is to develop partnerships between customs administrations and businesses participating in international supply chains.

AEO status is voluntary and is granted to a business upon application following a detailed audit conducted by the competent customs authority. An applicant must demonstrate that its operations meet a range of criteria relating both to compliance with the law and to the organisation of the business. These criteria include, in particular, compliance with customs and tax legislation; the maintenance of an appropriate system for keeping commercial and transport records that enables effective controls to be carried out; an adequate financial position guaranteeing the stability of the business; evidence of appropriate professional qualifications or competencies related to customs activities; and compliance with requirements concerning the physical security of premises, information protection and supply-chain security.

The procedure for granting AEO status involves a comprehensive assessment of the company’s management system. The customs authority does not merely verify formal compliance with statutory requirements but analyses the company’s internal procedures, control mechanisms, risk-management methods and level of compliance culture. For this reason, obtaining AEO status is widely regarded as confirmation of a high level of reliability on the part of the business in its relations with public administration.

It is emphasised that the AEO programme reflects a change in the philosophy underlying the operation of customs administrations. A model based exclusively on intensive inspections is being replaced by a concept of selective supervision, in which the frequency and scope of inspections depend on the level of risk attributed to a particular business. As a result, the administration can concentrate its resources on entities posing the greatest threat to fiscal interests or the security of commercial transactions, while businesses demonstrating a high level of compliance benefit from certain procedural facilitations.

The principal benefits of AEO status include fewer physical and documentary inspections, priority treatment when inspections are ordered, the possibility of designating the location where an inspection is to be carried out, easier access to customs simplifications, and increased credibility in relations with business partners. Of particular importance is also the recognition of AEO status by the customs administrations of countries with which the European Union has concluded mutual recognition agreements for trusted-trader programmes, contributing to the facilitation of international commercial transactions.

AEO status is not a classic administrative authorisation that constitutes a condition for conducting business activity. Rather, it is a specific public-law status, the acquisition of which entails the granting of certain preferences in exchange for maintaining high standards of legal compliance. This structure reflects the developing concept of responsive regulation, according to which the intensity of administrative intervention should depend on the degree to which the regulated entity complies with the law.

In business practice, AEO status is increasingly viewed not only as an instrument of customs law but also as an element of corporate strategy and the development of competitive advantage. The certificate enhances a company’s credibility with contractors, financial institutions and logistics partners by confirming the application of high standards of security and legal compliance. Consequently, its significance extends beyond the field of customs law, influencing the operation of businesses participating in global supply chains and the development of international trade.

3. SENT and AEO as Complementary Risk-Management Instruments in Tax Administration

Despite their different legal bases and scopes of application, the SENT system and the institution of the Authorised Economic Operator (AEO) embody a similar regulatory philosophy centred on risk management in commercial transactions. Modern administrative law is increasingly moving away from a model of universal and uniform control of all market participants towards selective supervision based on an assessment of the likelihood of legal violations. Both national and EU legislators assume that the effectiveness of public administration depends not on the number of inspections conducted but on their proper targeting.

The SENT system is an example of risk management focused on a specific economic event: the transport of goods subject to monitoring obligations. Risk analysis conducted by the National Revenue Administration primarily concerns a particular transport operation, its participants, the type of goods being transported, the route taken and the consistency of the information provided with data held in other public-administration systems. This mechanism is dynamic because the risk assessment takes place in real time and may result in immediate supervisory action while the transport is still in progress.

The AEO programme adopts a different structure. The subject of assessment is not a single economic operation but the business as a whole, its internal organisation and its ability to ensure compliance with customs and tax legislation. AEO certification is based on the assumption that a business applying effective compliance mechanisms and appropriately managing its internal risks presents a significantly lower probability of legal violations than an entity without such procedures. Consequently, customs administrations can reduce the intensity of inspections involving AEO-certified businesses and focus their resources on entities assessed as posing a higher risk.

Despite their structural differences, both instruments are based on common methodological assumptions. First, both use risk analysis as the primary criterion for administrative decision-making. In both the SENT system and the AEO programme, the random selection of entities for inspection is replaced by selection based on data, statistical analysis and an assessment of the likelihood of irregularities.

A second common element is the far-reaching digitalisation of administrative processes. The SENT system operates almost entirely within an ICT environment, enabling the electronic submission and updating of transport notifications and ongoing monitoring. Similarly, procedures related to obtaining and maintaining AEO status make use of advanced customs-administration IT systems, electronic information exchange and integrated databases. The digitalisation of both instruments increases the effectiveness of supervision while reducing administrative costs.

The role of both systems in increasing the transparency of business activities should also be emphasised. Both a business subject to SENT obligations and an AEO-certified entity are required to ensure high-quality documentation and the traceability of logistics processes. Such transparency serves not only supervisory purposes but also strengthens the security of the entire supply chain.

Another important common element is the gradual shift away from the traditional administration–business relationship based exclusively on control and sanctions towards a model based on cooperation. The AEO programme explicitly relies on building partnerships between customs administrations and businesses that meet high compliance standards. In the case of SENT, this element is less visible; nevertheless, risk analysis is also intended to enable more rational planning of supervisory activities and to limit intervention in relation to entities that properly fulfil their statutory obligations.

This does not mean, however, that the two instruments have an identical legal character. The differences primarily concern their regulatory functions and the manner in which they affect businesses. The SENT system is mandatory and applies to all participants in the transport of goods specified by law. Failure to comply with transport-notification or data-update obligations is subject to substantial administrative fines, giving the system a distinctly punitive character.

The AEO programme, by contrast, operates as a voluntary mechanism relying primarily on positive economic and organisational incentives. A business decides for itself whether to participate in the programme, while the incentives include procedural facilitations and greater predictability in its cooperation with the customs administration.

Consequently, SENT and AEO should not be viewed as competing models of administrative supervision but rather as complementary instruments. The former provides ongoing control over the movement of goods particularly vulnerable to abuse, while the latter enables the identification of businesses that, due to their high level of legal compliance, merit a more partnership-based relationship with the administration. From the perspective of state efficiency, it therefore appears justified to make greater use of information arising from AEO certification when performing tasks related to the operation of the SENT system.

4. Significance of AEO Status for a Business Fulfilling Obligations under the SENT System

A business holding AEO status has previously undergone a detailed assessment by the customs administration. The verification covers, among other things, the company’s organisational structure, security procedures, record-keeping practices, risk-management system, the level of security of its logistics infrastructure, staff qualifications and its history of compliance with the law. Obtaining the certificate therefore means that the business has been recognised as an entity characterised by a high level of reliability and an ability to ensure compliance of its operations with applicable regulations.

Against this background, the question arises as to whether it is justified to disregard AEO status when fulfilling obligations under the SENT system. If the customs administration has detailed knowledge of the operation of a business, has conducted a comprehensive audit of its activities and has determined that its procedures comply with high security standards, disregarding these findings when planning SENT inspections may result in an inefficient use of administrative resources.

This issue should also be considered in light of the principle of proportionality expressed in European Union law and the Constitution of the Republic of Poland. Imposing the same level of supervisory requirements on AEO-certified businesses as on entities that have not previously undergone such verification may result in excessive interference by public administration in business activity. This does not, of course, mean that such businesses should be completely exempt from the obligations arising under the SENT Act. Rather, it suggests the need to take the level of risk associated with their activities into account when planning inspections and analysing notifications.

The significance of AEO status is also demonstrated by economic research concerning the operation of international supply chains. Such research indicates that certified businesses achieve higher levels of operational efficiency, reduce costs associated with customs procedures, increase the predictability of deliveries and build greater trust among their business partners. Certification also contributes to improved internal risk management and the development of a compliance culture, thereby reducing the likelihood of legal violations.

From the perspective of public administration, making use of information arising from AEO certification could contribute to more effective planning of SENT inspections. This would make it possible to focus supervisory resources on entities posing a genuine threat to the state’s fiscal interests while simultaneously reducing administrative burdens on businesses whose reliability has already been verified.

5. Conclusion

The SENT system and the institution of the Authorised Economic Operator (AEO) constitute two separate but functionally interconnected instruments for managing risk in international trade. The former focuses on monitoring specific transport operations and preventing tax-related abuses in real time, while the latter serves to identify businesses that guarantee a high level of legal compliance and security within international supply chains.

Despite their structural differences, both solutions are based on common principles, including risk analysis, the digitalisation of administrative processes and the pursuit of greater efficiency in the activities of public authorities. The current legal framework, however, does not provide for an adequate level of interaction between these instruments. The absence of mechanisms that take AEO status into account when fulfilling obligations under the SENT system leads to duplication of supervisory activities, increased compliance costs for businesses and suboptimal use of administrative resources. As a result, a business that has undergone a comprehensive certification procedure and has been recognised as a trusted partner of the customs administration does not obtain tangible benefits in the area of monitoring the transport of goods.

From the perspective of the principles of proportionality, administrative efficiency and the protection of the freedom of economic activity, it would be desirable to gradually bring the two systems closer together. This would not mean abandoning the obligations arising under the SENT Act or reducing the effectiveness of supervisory activities, but rather making use of information already collected by public administration in order to manage risk more precisely.

The integration of ICT systems, the use of the results of AEO audits and statutory recognition of certified-business status as one of the criteria for risk analysis could significantly increase the effectiveness of supervision while reducing unnecessary administrative burdens. In the longer-term development of national and EU law, a gradual shift may be expected from a model based on universal control towards a model of intelligent administrative supervision that makes use of data, risk analysis and mutual trust between public administration and businesses.

Within such a model, AEO status should play a role not only as an instrument of customs law but also as one element of a comprehensive system for assessing the reliability of businesses across all areas of tax administration, including the SENT system.

Author: Zofia Zielińska
Trainee Attorney-at-Law at Trans Lawyers

www.translawyers.eu