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VAT

Determination of customs value when using the unit price of similar goods

In case C-1/18, the European Court of Justice (ECJ) was asked to interpret article 30(2) of the Community Customs Code on the alternative methods of determining the customs value of imported goods (now governed by article 74 of the UCC), as well as the related implementing provisions of articles 151 and 152 (now articles 141 and 142 of the UCC Implementing Regulation). More specifically, the referring Latvian court requested the ECJ to clarify, first, the definition of ‘similar goods’ when used as an alternative valuation method, second, the time limit when using the unit price of similar goods to determine their customs value, and third, if a commercial discount on the sales price is to be taken into account when using the resale unit price.

In its judgement of the 20th of June 2019, the ECJ made clear that ‘similar goods’ are to be identified by taking into account all relevant elements, not only their composition, quality and interchangeability, but also all factors that may affect their real economic value, such as their position on the market and that of the producer. Furthermore, the ECJ pointed out that, when using the unit price to determine the customs value, this shall be the price at which the similar goods are sold at the earliest time after the importation and in any case within 90 days of that importation. This 90-day period is to be interpreted strictly; if it is not possible to determine the price within this period, an alternative valuation method has to be used. Additionally, the ECJ also clarified that commercial discounts can’t be taken into account when using the resale unit price to determine the customs value.

While this judgment confirms existing case-law, it provides for unambiguous clarification of elements to be taken into account in the determination of customs value.

Source EY