Customs value – Transfer pricing adjustments

The EUCJ rejects the agreed customs value between the parties, which consisted partly of an amount initially invoiced and declared and partly of a flat-rate adjustment made after the end of the invoicing period, without it being possible to determine whether this adjustment will be made upwards or downwards at the end of the invoicing period.

In the case at hand, Hamamatsu, a German subsidiary, imported optical devices in Germany from its parent company established in Japan and had made transfer pricing adjustments regarding the customs value.

The EUCJ was questioned on whether Articles 28 and following of the Community Customs Code (CCC) allowed the agreed transfer price, which consisted of an amount initially invoiced and declared and a flat-rate adjustment (upwards or downwards) made after the end of the invoicing period, to be taken into account as a customs value. Nevertheless, it should be noted that some countries had implemented internal processes that allow transfer pricing adjustment after prior request.

In line with its previous case law relating to Article 29 of the CCC and to the transactional value with its possible adjustments, the Court of Justice points out in particular that the cases where an adjustment of the transaction value can be done are limited to specific situations involving, in particular, a product quality defect or defects detected after release for free circulation and  that this limit is particularly justified by the necessity for customs authorities to prevent risk that the companies will only request downward adjustments.

In these circumstances, the judge considers that the CCC does not allow for post transfer pricing adjustments of the transactional value.

According to the new EU Customs Code (ECC), which is in force since May 1st, 2016, it seems possible to make such adjustments, provided that the operator meets the following criteria:


  1.  Absence of serious and repeated infringements in customs, tax and criminal law,
  2.  Accounting providing a reliable audit trail and
  3.  Internal processes to avoid fraud.