The renewal of EU customs legislation has been going on for almost a decade, manifesting itself in numerous proposals. Finally, there is light at the end of the tunnel, even though it may not be as straightforward as desired. The concept of customs valuation, one of the core pillars of EU customs law is being reformed, leading to more ambiguity, than before. Let us look at a few aspects in detail.
Transaction value – what it actually means
Under the present rules, the customs value of imported goods is the transaction value, which corresponds to the price actually paid or payable for the goods when sold for export to the customs territory of the Community, with certain adjustments where required. Despite being relatively straightforward, this definition already gave rise to numerous debates and interpretative questions.
Under the newly proposed rules, the value of the goods is to be determined at the time of acceptance of the customs declaration on the basis of the transaction occurring immediately before the goods are declared for free circulation.
We dare say that words like “immediately” and “before”, though seemingly comprehensible, give rise to a number of questions. Does one look at the timing of when parties entered into the contract/sale i.e. the ordering process? Or will the timing of when the sale is finalised be leading, in which case the moment of finalization of a sale should be defined?
These aspects are relevant for a number of successive transactions and complex structures, where the physical introduction of the goods to EU territory may differ from the time the transaction is finished from a legal point of view. Also, the use of customs suspension regimes such as bonded warehousing in the EU and successive sales prior to clearance for free circulation seems to be challenged by the definition. Another stab with a dagger to the new wording is its non-alignment with the WTO Valuation Agreement that focuses on the ‘sale for export’.
No mercy for the First Sale for Export principle
Rumors on abolishing the First Sale for Export principle, namely the possibility to rely (under conditions) on the transaction value of a prior transaction in a chain for customs valuation purposes seem to have been confirmed by the draft Implementing Act.
Despite the argumentation on combatting loss of customs revenue in general, it remains unclear why first sale has to be abolished. Any reasoning that relates to the fact that such sale is harder to control and/or audit does not take the modern business processes into account where insight can be given into almost any aspect of the transaction on which a customs value is built via electronic means.
Standards of weight measurements established
Increased level of control seems to be an issue in the EU though. As of 1 February 2014, the Commission has introduced new ‘plausibility’ measures for cross-checking the weight of goods declared pro measurement unit. For a number of customs tariff numbers (ranging from cucumber to cigars and rubber tires), thresholds of plausible weight limits are introduced to verify the weight of goods declared for import. Should the declared weight pro measurement unit not fall within these standardized thresholds, the declarant will receive an error message and the customs declaration will be refused/returned for correction.
Although there are still some amendments to come, it seems that the framework has been set for the future of EU customs. It is now a tall order for the legislative, judiciary and administrative powers to fill in the concepts with factual and to the point meanings benefiting the business community. We shall have confidence and see what comes. After all, when the going gets tough, the tough get going.