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The European Public Prosecutor’s Office (EPPO) has announced that it has imposed an asset freeze on an Italian company accused of major customs fraud and tax evasion of more than €9.8 million in connection with the importation of e-bikes from China.
The EPPO stepped in to investigate after a report from Italy’s Guardia di Finanza in Monza said an Italian company had been suspected of customs violations since 2019.
It was also reported that a former director of Bottecchia Cicli was accused of evading anti-dumping duties for more than €2 million, but it is not certain if this is directly related to the Patent Office statement.
Recently, the authorities have stepped up their efforts to crack down on anti-dumping violations. Meanwhile, three defendants in Brussels have been sentenced to hefty fines for tax evasion of €3.1 million, while Leon Cycles’ case is still pending.
In the latest case, the company involved was accused of avoiding high anti-dumping duties and other charges by importing Chinese-made e-bikes in batches as unassembled parts, evading a total of more than €9.8 million in taxes over four years.
The EPPO requested that more than €5 million of the company’s assets be frozen, and was approved for implementation by the Milan court.
Complex legislation affecting the investigation
EPPO stresses that all those involved are presumed innocent until a court decision is reached, but complex legislation makes it difficult to hear cases. leva-EU calls for clarity in legislation to avoid companies mistakenly crossing legal red lines.
Under the basic Dumping Regulation, European assemblers may be considered to be circumventing if they use a disproportionately high percentage of Chinese components or insufficient value added.
Under the basic Dumping Regulation (Article 13), a European assembler may be considered to be circumventing if it uses Chinese parts and components that account for more than 59% of the total value of the product or do not add 25% of the value.
However, to make a valid allegation, the Commission must first investigate and acknowledge the circumvention of the regulation. This occurred in the case of conventional bicycles, where the Commission extended the tariff to basic bicycle components through Regulation 71/97.
In the case of e-bikes, if the Commission finds circumvention as defined in Article 13, it may initiate a similar investigation and issue a regulation.
Insufficient non-Chinese components for e-bikes
LEVA-EU noted that EU e-bike assemblers generally face a shortage of components, making it difficult to comply with the regulation. In addition, customs often rely on different enforcement rules, causing problems for companies.
“Many, if not all, e-bike assemblers in the EU use more than 60% of their components or do not add 25% of their value,” LEVA-EU’s Annick Roetynck told Bike Europe.
“In one of our meetings with the Commission, they acknowledged this and said they were aware that “”assemblers in the EU are not able to comply with Article 13″” because there is an insufficient supply of e-bike components from outside China.”
“In addition, Customs does not act on the basis of the basic Dumping Regulation but on the basis of General Rule 2(a),” Roetynck added. “Therefore, if you import parts and components for an e-bike, Customs may treat it as a complete e-bike and subject it to anti-dumping and countervailing duties as a result.
The key question is whether it is possible to import e-bike components that are not considered to be complete e-bikes. For conventional bicycles, the Commission has issued an interpretive note that you should not place more than one frame+ one fork+ one basic bicycle component in a container.
However, this clarification does not apply to e-bikes, only to conventional bicycles.
Response from the Commission
In response to LEVA-EU’s concerns, the European Commission responded that in order to avoid customs problems, companies can try to spread the components in different containers and import them at different times and through different ports.
However, the Commission is honest enough to say that this does not guarantee that customs will accept this practice and that there is nothing they can do about such situations.
As a result, LEVA-EU believes that a number of e-bike-related cases, including in Italy, are likely the result of misunderstandings of complex regulations rather than intentional breaches of the law.
Existing anti-dumping regulations due for review
For the past five years, the industry has been discussing the use of anti-dumping and anti-circumvention tariffs as a means of trade regulation for Chinese e-bikes(top 10 electric two-wheeler manufacturers in China).
The tariffs were most recently imposed in 2019, following a detailed investigation by the European Commission that found significant government interference in the market and the functioning of market forces.
At the request of the European Bicycle Manufacturers Association (EBMA), the European Commission has initiated a final review of the existing anti-dumping measures on e-bikes.
The investigation will be completed within 12 months of the date of publication of the January 17, 2024 announcement, and no later than 15 months.
Read more: top 10 electric bike manufacturers in Europe, top 10 electric bike manufacturers in Italy, top 10 bike parts manufacturers in Europe.
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