EU: Draft guidance, new customs valuation provisions | KPMG | GLOBAL

EU: Draft guidance, new customs valuation provisions

EU: Draft guidance, new customs valuation provisions

In light of the 1 May 2016 effective date of the new Union Customs Code, the European Commission published draft guidance on the interpretation of the new customs valuation provisions.


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The draft guidance addresses three topics:

  • The “last sale for import” concept
  • Transactions in a bonded facility
  • Customs duty on royalties 

“Last sale for export”

With respect to the “last sale for import” concept, it remains unclear whether transactions between two or more EU based legal entities or persons must be taken into account for customs valuation purposes. Although the draft guideline introduced the concept of “domestic” sale to determine the applicable “sold for export” transaction in a bonded warehouse, the concept also seems to suggest that a “domestic” sale never qualifies as a transaction within the meaning of Article 70 of the Union Customs Code (UCC), and as such, is not to be taken into account. 

KPMG observation

The “domestic sale” concept is neither defined nor explained in the draft guidance. As such, many different interpretations of this concept exist. It is therefore likely that a revised draft guidance could be circulated shortly. 

Bonded facility

The draft guidance with respect to transactions occurring in a bonded facility appear to provide the necessary clarity for economic operators. The measures only apply to a sale of goods in a bonded facility or other “suspensive arrangement” in the absence of a sale related to the same goods that covered the goods on arrival into the EU. 

KPMG observation

The guidelines do not provide a clear view on the transaction that needs to be used for valuation purposes if multiple transaction occur in a bonded facility. For example, up until now, the position of the Dutch customs administration has been that any such sale may be used, provided that the relevant documents can be provided and that the transaction can be audited by the authorities. 


With regard to the new royalty provision, the draft guidelines seem to provide some relief for importers because of a clear reference made to commentary of the World Customs Organization (WCO). The WCO commentary provides a set of criteria to be used in order to determine whether a royalty payment must be considered a “buying condition” and as such is dutiable. It regards the following factors: 

  • There is a reference to the royalty or license fee in the sales agreement or related documents.
  • There is a reference to the sale of the goods in the royalty or license agreement.
  • According to the terms of the sales agreement or the royalty or license agreement, the sales agreement can be terminated as a consequence of breaching the royalty or license agreement because the buyer does not pay the royalty or license fee to the licensor. This would indicate a link between the royalty or license fee payment and the sale of the goods being valued.
  • There is a term in the royalty or license agreement that indicates if the royalties or license fees are not paid, the manufacturer is forbidden to manufacture and sell the goods incorporating the licensor's intellectual property to the importer.
  • The royalty or license agreement contains terms that permit the licensor to manage the production or sale between the manufacturer and importer (sale for export to the country of importation) that go beyond quality control.

KPMG observation

Even though this set of conditions seems to be rigid and strict, professional believe that the criteria could be useful in arguing that, not by definition, all royalty payments must be included in the customs value of the imported merchandise. 


Read an April 2016 report prepared by the KPMG member firm in the Netherlands: Customs valuation

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