Munich court rules that a year-end TP adjustment does not justify additional import duties

The Munich Tax Court recently ruled on a case involving a lump-sum transfer pricing adjustment at the end of the fiscal year that resulted in a lump-sum increase in resale prices and an additional intercompany charge to the German distributor.
The court held that such adjustments must not affect the customs value if it is not yet certain at the time of customs declaration whether any adjustment to the intercompany resale prices will be required and, if so, whether it will be an upward or downward adjustment.
The court explained that customs valuation must always reflect the value of specific goods at the time of importation and that it is generally impossible to use an agreed transaction value that is derived from a preliminary invoice and a TP-induced adjustment made after the end of the accounting period as customs value if it is unclear whether any adjustment to the resale prices will be required.