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Spain: Retroactive transfer pricing adjustments, considerations for customs valuation purposes

Spain: Transfer pricing adjustments, customs valuation

Businesses need to analyse the implications of a Court of Justice of the European Union (CJEU) judgment on their import operations, and consider both transfer pricing and customs effects so as to identify appropriate customs procedures, according to a report prepared by the KPMG member firm in Spain.

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Earlier this year, a CJEU judgment offered clarity about the implications of retroactive transfer pricing adjustments on the customs valuation of goods imported into the European Union. The CJEU concluded that if the initial transfer price can be subject to retroactive adjustments, it cannot be used for customs valuation purposes. Consequently, goods imported by companies applying a transfer price that allows for retroactive adjustments cannot be valued based on the transaction value method. Instead, one of the other customs valuation methods must be used. Read TaxNewsFlash-Transfer Pricing

Therefore, companies conducting retroactive adjustments as a result of the application of transfer pricing policies need to consider: (1) using alternative customs valuation methods (the deductive method being the most likely to apply); and (2) submitting simplified customs declarations that could result in an increased administrative burden.

In light of the CJEU judgment and the provisions of the new Union Customs Code, importers applying retroactive transfer pricing adjustments need to consider filing simplified customs declarations on a regular basis. To do this, they must obtain authorisation from the customs authorities—and this, in turn, will trigger an Authorised Economic Operator (AEO) compliance requirement. Moreover, the transfer pricing policies will have to be aligned with the customs value declared in accordance with the alternative customs valuation method used.

 

Read a March 2018 report (English) [PDF 687 KB] and (Spanish) [PDF 690 KB] prepared by the KPMG member firm in Spain

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