Customs valuation in the EU

New cost factors can lead to new surcharges on the customs value. And how might this play out? Maritime transport was integrated into the existing European Union Emissions Trading System (EU-ETS) effective January 1, 2024. Since then, those involved in maritime shipping must purchase emission allowances. They can pass these costs along to their customers based on where the goods are introduced into the EU customs territory. The specific ETS cost indicators (EU-ETS/EU port, EU-ETS/location, etc.) are added to the customs value of the imports based on the selected Incoterm. For this reason, let’s look at the basics of customs valuation, including some helpful tips. 

Today, most customs tariffs worldwide are ad valorem tariffs based on the invoiced prices. Other tariffs based on weight, quantity, age, or other criteria have largely been relegated to the background, with a few exceptions, such as in the area of agricultural products.

That was not always the case. It took two World Wars – an experience traumatic for policymakers as well – for the conviction to take root that ever-closer economic ties between nations could also help usher in peace. So in 1947, the founders of the General Agreement on Tariffs and Trade (GATT) were careful to create a basis for customs clearance that was as uniform as possible: the actual value. Describing this actual value was no easy task, but the link to pricing had already been established, and this served as the basis for working on a uniform global customs value. This issue was quite rightly taken up by the Customs Cooperation Council, established in Brussels in 1952 and known since 1995 as the World Customs Organization (WCO).

The Brussels Convention on the Value of Goods for Customs Purposes of 1949/50 established the term “normal value,” quickly embraced by early adopters in the early 1950s and eventually throughout the EC and in 90 countries. This phrase was not universally applied in the same way, however. The United States in particular rejected it. That’s why the GATT Customs Valuation Code established the concept of customs value, which is still widely used today, including in the US, and codified in the WTO Agreement of 1994.

The method of customs valuation is set forth in the WTO Agreement on Implementation of Article VII GATT. It contains a hierarchy of valuation methods and defines the transaction value method as the primary basis for customs valuation, one that is also dominant in the commercial sector. The General Introductory Commentary of the agreement notes that Article 1 provides for “adjustments to the price actually paid or payable in cases where certain specific elements which are considered to form a part of the value for customs purposes are incurred by the buyer but are not included in the price.” It also provides for considerations “which may pass from the buyer to the seller in the form of specified goods or services rather than in the form of money.”

The US Customs and Border Protection publication on customs value lists six methods of customs valuation, the most important of which is transaction value.

1. Transaction value
2. Transaction value of identical merchandise
3. Transaction value of similar merchandise
4. Deductive value
5. Computed value
6. Final value

Rule of thumb: Where the transaction value method cannot be applied, the secondary valuation methods are applied sequentially (Article 74 UCC). As soon as one of the methods is found to be usable, the subsequent methods are no longer checked.

There are two things to always keep in mind when calculating the customs value:

• Check for special circumstances
  Irrespective of the customs value, there are other exemptions like the exemption for samples that may come as a surprise. The duty relief regulation can make for pleasant reading in that respect. There you will find interesting exemptions that include personal property (such as motor vehicles or even sports aircraft), marriage property, inheritance property, educational material, shipments between private individuals, and medals. Check whether your goods qualify for such an exemption.
  
  
• Check delivery terms
  The customs regulations do not refer to the Incoterms. The same applies to the customs valuation. Nevertheless, it is always important to know how the customs value is determined in each specific case and which costs have been included in the invoice. And this is largely determined by the choice of Incoterm. Check whether you as the buyer have to pay the freight, whether it will be invoiced separately, and whether it will then increase or decrease the customs value, and check whether you will exceed the threshold above which you must file a customs declaration.

The benefit for those using Import Filing: ATLAS
The customs value declaration is integrated into Import Filing: ATLAS – and you can see exactly what is added or deducted in the instructions from the Federal Ministry of Finance. And no worries: The AEB solution automatically reminds you about the customs value declaration DV.1 for goods with a value of 20,000 euros or more. So there’s nothing else you need to do here.