In importation and the importing of goods into the European Union (EU), the customs value is decisive for the amount of customs duty and import turnover tax. The determination of the customs value of specific goods is primarily based on the sales price agreed between the parties for the goods (transaction value). This is the gross invoice price of the goods. If the customs value cannot be determined using the transaction value method, the other methods described in Art. 74 of the Community Customs Code (CCC), including the estimation of the customs value, can be applied.
Additional elements complicate the calculation of the customs value
The decisive factor is that the customs value must reflect the real economic value of an imported product. Consequently, all elements of this product with a commercial value should be included in the calculation. The invoice price includes, for example,
- loading costs,
- packaging costs or
- licence fees.
The question of which items are to be added to the invoice value repeatedly leads to delimitation problems in practice.
Pre-production inspections as part of the invoice price?
This is convincingly proven by a decision of the German Federal Fiscal Court (Bundesfinanzhof, BFH) dated March 23, 2021 (file number VII R 24/19). A company had brought an action requiring its Chinese supplier to deliver goods containing chemical ingredients only within the limits permitted by European Union law. In order to ensure this, the supplier had to send samples of the goods to be produced to a laboratory which carried out appropriate tests for harmful substances prior to production. Only then should production begin. The costs of the investigation were borne by the plaintiff.
The plaintiff did not indicate these costs in the declaration of the goods for release for free circulation. The German Central Customs Office then levied duty in the corresponding amount because it considered that these costs were part of the customs value of the goods.
Conditions for the purchase transaction may increase customs value
The court agreed with the Central Customs Office. According to the German Federal Fiscal Court, payments made by the importer of goods to a third party established in the third country for tests of harmful substances and quality tests in order to ensure that the imported goods conform to the contract are part of the customs value since they are a condition or prerequisite for the purchase transaction. The lower court had previously taken a different view.
Criminal consequences of incorrect calculation of customs value
Before importing goods to Germany, companies should carefully review the customs value of the goods. At worst, the initiation of criminal tax proceedings is imminent, namely if a false declaration leads to a tax reduction. Our customs law experts will be happy to assist you with any questions you may have regarding customs value. Feel free to contact us.