Recent decisions of the ECJ on assists to be included in the customs value

22/09/20

On 10 September and 9 July, the European Court of Justice (ECJ) issued two decisions on customs valuation matters, both relating to assists that have to be included in the customs value. The most recent case C-509/19 ‘BMW Bayerische Motorenwerke AG’ (BMW) deals with EU developed software incorporated in electronic components, whereas the earlier case C-76/19 ‘Curtis Balkan’ EOOD’ (Curtis Balkan) regards the inclusion of royalties paid for manufacturing know-how for post-importation production with imported components.

What can this possibly mean for your company?

Companies should be aware that the value of software developed in the EU incorporated in imported components as well as manufacturing know-how for post-importation production with imported components may have to be included in the customs value of the components upon importation into the EU.

If your company is importing products into the European Union, you are required to ascertain that the correct customs value is declared. In this context, it is therefore of utmost importance that all circumstances are known and evaluated to where required include royalty payments and the values of software incorporated in the imported products.

Recent decisions on customs valuation

Both BMW and Curtis Balkan have imported components that they have used for their production within the EU and used the sales prices of the suppliers for determining the customs value.

The customs authorities did assess additional customs duties after examining the customs value as reported in the import entries. In the case of BMW, the additional customs duties related to the costs of EU developed software that BMW provided to its suppliers free of charge. In the Curtis Balkan case, the additional duties related to royalty payments made by the importer for know-how on its production in the EU.

With respect to the software, the ECJ decided that since it is incorporated in the components and provides additional features to the components, it cannot qualify as EU R&D for the production that would not have to be included in the customs value. In this respect the ECJ made reference to guidance provided in conclusions of the Customs code committee.

For the royalty payments made for the production know-how, the ECJ decided that such royalties should be included in the customs value when they can be qualified as being paid as a condition for the purchase of the components.

How can we help?

These judgments on the BMW and Curtis Balkan cases demonstrate the complex nature of customs valuation for which not only the legal regulations are relevant, but also the guidance provided in conclusions, opinions and commentaries on specific valuation topics.

We can help you to find the best possible handling of determining the customs value and to ensure that the customs value declared by your company complies with customs regulations and thus avoid incurring additional customs duties.