EU: Customs value update; “first sale” implications

EU: Customs value update; “first sale” implications

The European Commission published a new draft version of the implementing regulation of the Union Customs Code (UCC), and concerning customs valuation, there are new developments on the transaction value to be used and the “sunset clause.”

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Transaction value

The previous version of the Implementing Regulation Article 128 provided the following:

 

1. The transaction value of the goods sold for export to the customs territory of the Union shall be determined at the time of acceptance of the customs declaration on the basis of the sale occurring immediately before the goods were brought into that customs territory.

2. Where goods are sold for export to the customs territory of the Union while in temporary storage or while placed under a special procedure other than internal transit, end-use or outward processing, the transaction value shall be determined on the basis of that sale.

 

The latest version of Article 128, second paragraph now reads as follows:

 

2. Where the goods are sold for export to the customs territory of the Union not before they were brought into that customs territory but while in temporary storage or while placed under a special procedure other than internal transit, end-use or outward processing, the transaction value will be determined on the basis of that sale.

KPMG observation

Some professionals believe it is still doubtful whether a sale that takes place while the goods are physically already in the EU territory can be considered to be “sold for export to the customs territory of the Union.” Still, others have noted that Article 128 second paragraph will be revised again shortly. 

Sunset clause

Another important customs valuation topic is the introduction of the “sunset clause.” To avoid immediate consequences of the repeal of the “first sale for export” concept, the European Commission introduced a transition rule, the so called sunset clause in Article 341 IR. Also this sunset clause has been revised as follows:

 

1. The transaction value of the goods may be determined on the basis of a sale occurring before the sale referred to in Article 128(1) where the declarant person on whose behalf the declaration is lodged is bound by a contract concluded prior to the date of entry into force of this Regulation….

2. This Article shall apply until 31 December 2017.

KPMG observation

This sunset clause cannot be regarded as a general waiver for the use of the “first sale for export” concept until 31 December 2017. There must be an agreement in place and this agreement must be concluded prior to the entry into force of the regulation. 

What’s next?

It is foreseen that EU Member States will vote on the implementing regulation on 6 November 2015.  The regulation is to have an effective date of the 20th following that of its publication in the Official Journal of the European Union—which is expected to be shortly after 6 November 2015. 

Economic operators that continue to use the” first sale for export” concept after 1 May 2016 without having binding agreements in place may face significant retroactive assessments later on. 

 

Read an October 2015 report prepared by the KPMG member firm in the Netherlands: Customs valuation developments update

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