Customs Value – New guidance on customs valuation from EU Commission

Customs formalities and measures play an important role in international trade and in business transformation. Harmonization of customs legislation within the EU is virtually complete, and various chapters of customs legislation, such as those pertaining to customs valuation and the origin of goods, have been standardized around the world. There are nevertheless fundamental differences in the interpretation of these rules, both inside and outside the EU.

Please find set out below an interesting recent development concerning EU customs value. With the Union Customs Code (UCC, Regulation (EU) No 952/2013, which entered into force on 1 May 2016) also new rules have been introduced on EU customs valuation. These rules are important in order to calculate the total amount of duties and levies upon the import of goods into the EU (for example import duties but also trade protection tariffs such as anti-dumping duties).

September 2020, the EU Commission published a new version of its Guidance Document on Customs Valuation. While not legally binding, this Guidance is considered to be an important interpretation of the EU customs valuation rules in the UCC, and it is applied by most EU customs authorities. You will find the guidance on the following website: UCC - Guidance documents | Taxation and Customs Union (europa.eu)

As we mentioned in our previous blog on this subject, the most important change in the new Guidance Document on Customs Valuation is the removal from the domestic sale principle from the guidance and the incorporation of three new examples (Customs Value – EU Commission abolishes ‘Domestic Sale’ - News - Kneppelhout).

The removal of the domestics sale principle results in the following situation: a sales transaction between a seller and a buyer which are both established in the EU can be regarded as a sale for export, and can be used as the basis to determine the customs value of the imported goods. For international operating companies this can have the consequence that a subsequent or later sale in the supply chain is considered as the sale for export for EU customs valuation purposes. This sale usually has a higher value which may lead to an increase of payable import duties. We refer to the new examples in the guidance.

Companies with international supply chains involving EU import should carefully assess the possible impact of the removal of the domestic sale for their COGS (Costs of Goods Sold).

Our team has specialists dedicated to customs valuation, ensuring that we are well-placed to assist in developing and reviewing your company’s customs value approach.