1 June 2011
Duties are in most cases imposed as ad-valorem duties where the duty is calculated as a percentage of the value of the product, instead of on the basis of the properties of the product. The duty is therefore imposed on the customs value of the goods which must be determined according to the rules contained in the Community Customs Code and the Implementing Provisions. Importers must therefore take into account specific rules to determine the customs value on which the import duty will be applied.
As a general rule, the Member States’ customs authorities impose import duties on the CIF value of the imported goods. For this purposes, the general rule is that the customs value will be the transaction value, that is, the price actually paid or payable for the goods when sold for export to the customs territory of the EU. Indeed, this is commonly known as the transaction value. Special rules apply when the buyer and the seller are related undertakings.
However, as demonstrated below, a number of additions must be made to the price paid or payable if those elements have not already been taken into account when setting the price. Similarly, certain costs must not be part of the customs value and must be excluded if necessary before applying the customs duty.
The following should be added to the price actually paid or payable for the imported goods:
- commissions and brokerage, except buying commissions; the cost of containers which are treated as being one, for customs purposes, with the goods in question; the cost of packing, whether for labour or materials to the extent that they are incurred by the buyer but are not included in the price actually paid or payable for the goods;
- the value, apportioned as appropriate, of the following goods and services where supplied directly or indirectly by the buyer free of charge or at reduced cost for use in connection with the production and sale for export of the imported goods, to the extent that such value has not been included in the price actually paid or payable: materials, components, parts and similar items incorporated in the imported goods; tools, dies, moulds and similar items used in the production of the imported goods; materials consumed in the production of the imported goods; engineering, development, artwork, design work, and plans and sketches undertaken elsewhere than in the EU and necessary for the production of the imported goods;
- royalties and licence fees related to the goods being valued that the buyer must pay, either directly or indirectly, as a condition of sale of the goods being valued, to the extent that such royalties and fees are not included in the price actually paid or payable;
- the value of any part of the proceeds of any subsequent resale, disposal or use of the imported goods that accrues directly or indirectly to the seller;
- the cost of transport and insurance of the imported goods, and loading and handling charges associated with the transport of the imported goods to the place of introduction into the customs territory of the EU.
Provided that they are shown separately from the price actually paid or payable, the following shall not be included in the customs value:
- charges for the transport of goods after their arrival at the place of introduction into the customs territory of the EU;
- charges for construction, erection, assembly, maintenance or technical assistance, undertaken after importation of imported goods such as industrial plant, machinery or equipment;
- charges for interest under a financing arrangement entered into by the buyer and relating to the purchase of imported goods, irrespective of whether the finance is provided by the seller or another person, provided that the financing arrangement has been made in writing and where required, the buyer can demonstrate that: such goods are actually sold at the price declared as the price actually paid or payable, and the claimed rate of interest does not exceed the level for such transactions prevailing in the country where, and at the time when, the finance was provided;
- charges for the right to reproduce imported goods in the EU;
- buying commissions;
- import duties or other charges payable in the EU by reason of the importation or sale of the goods.
When the transaction value cannot be used, the importer must rely on the following alternatives in the order specified below, except that the last two options can be reversed at the request of the declarant:
- the transaction value or where there is more than one, the lowest transaction value, of identical goods sold for export to the EU and exported at or about the same time as the goods being valued.
- the transaction value of similar goods sold for export to the EU and exported at or about the same time as the goods being valued.
- the deductive method: The value, based on the unit price, at which the imported goods, or identical or similar imported goods, are sold within the EU in the greatest aggregate quantity to buyers which are not related to the sellers.
- the computed value: This consists of three main elements. First, there is the cost or value of materials and fabrication, or other processing, employed in producing the imported goods. Secondly, there is an amount for profit and general expenses, equal to that usually reflected in sales of goods of the same class or kind as the goods being valued and made by producers in the country of exportation for export to the EU. Finally, there is the cost or value of transport and insurance of the imported goods and loading and handling charges associated with the transport of the imported goods to the place of introduction into the customs territory of the EU.
Determining the customs value of the goods concerned can sometimes be a difficult task. Importers should take into account the provisions contained in the Community Customs Code and the Implementing Provisions to the Community Customs Code. Additional information can be obtained in the “Compendium of Customs Valuation texts of the Customs Code Committee – Customs Valuation Section” which is regularly updated by the European Commission TAXUD. This is complemented by the “WCO Valuation Compendium” published by the World Customs Organisation.
 Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code, OJ  L302/01, as last amended. (Community Customs Code)..
 Commission Regulation (EEC) No 2454/93 of 2 July 1993 laying down provisions for the implementation of Council Regulation (EEC) No 2913/92 establishing the Community Customs Code, OJ  L253/01, as last amended. (Implementing Provisions).
 See Article 29(2) of Community Customs Code as well as Articles 41 and 42 of the MCC.