EU Court Ruling Improves Efficiency for Multinational Importers

The European Court of Justice has clarified the correct approach to customs valuation when the final price of imported goods is determined after entry into the EU.

The court held in the Tauritus case that such pricing arrangements—when based on objective and pre-determined criteria—can still fall under the transaction value method under Article 70 of the Union Customs Code, provided that simplified procedures under Articles 166 and 167 are followed for releasing the goods.

This decision is significant for importers operating under flexible or formula-based pricing models, offering legal certainty around the use of provisional prices in customs declarations. It also underscores the importance of aligning with customs authorities.

For multinational importers and global supply chains, this ruling offers greater certainty and compliance efficiency, especially where dynamic pricing and open-term sales are prevalent.

It also reinforces the value of early engagement with customs authorities—through advanced pricing agreements or valuation rulings—to avoid disputes later.

Case History

UAB Tauritus, a Lithuanian company, imported diesel and jet fuel into the EU based on pro forma invoices with provisional prices. The prices were adjusted according to the average market price of the fuel concerned and the average exchange rate during a given period. The final price could therefore be higher or lower than the provisional price.

In the customs declaration, Tauritus used the provisional price as a customs value, based on the fallback method of customs valuation. Once in possession of the final invoices, Tauritus generally submitted requests for adjustment of the customs value.

However, Tauritus had lodged 13 customs declarations for which it didn’t subsequently request an adjustment of the goods’ customs value, even though the available final invoices indicated a higher value than initially reported.

Lithuanian customs authorities challenged this approach, asserting that the provisional values couldn’t be accepted as the basis for customs valuation. They required a post-clearance correction and sought to impose penalties.

The Supreme Administrative Court of Lithuania asked two preliminary questions to the ECJ about how to determine the customs value if, at the time the customs declaration is lodged, only a provisional price is known and the final price is fixed post-importation:

• Must the transaction value method be used if the price known at importation is provisional and subject to adjustments?
• Should the customs authorities be informed about price adjustments that take place after the release of goods?

ECJ Decision

The ECJ ruled that when only a provisional price is known at the time of importation, and the final price is calculated later based on predefined, objective criteria outside the control of the parties, the customs value must be determined by applying the transaction value method—as a general rule, the simplified customs declaration procedure.

Key elements from the court’s interpretation are that:

• The transaction value method remains applicable even if the final price is unknown at the time of importation, as long as the price adjustment is based on certain predetermined objective factors whose value is beyond the control of the buyer or the seller and unknown to them at the time of acceptance of the customs declaration. This could include for instance an average of certain currencies’ exchange rates or of the price of certain products in a given period.
  
• Articles 166 and 167 of the union customs code permit declarants to use simplified declarations when full details aren’t available at the time of lodging the customs declaration. This includes cases where the final price will be determined later.
  
• The transaction value method is broad enough to encompass transactions where the final consideration is based on exchange rate fluctuations, global commodity indices, or quarterly or monthly pricing formulas.

A crucial condition for this approach is the objectivity and predictability of the pricing formula. Customs authorities must be able to verify that the factors affecting price are external and not manipulable by the parties, the methodology is established before import, and final prices can be retrospectively substantiated with reliable documentation.

The ruling implicitly reinforces that the form of the invoice (such as pro forma) is less important than the substance of the transaction. What matters is the existence of a genuine sale and the mechanism by which the price is determined.

Planning for Importers

Importers should proactively apply for simplified declaration authorizations under Articles 166 and 167 of the union customs code where pricing is provisional.

It’s essential to:

• Retain and present contracts, pricing annexes, and price revision clauses.
• Ensure traceability between the provisional and final invoices.
• Demonstrate externality of the pricing drivers (for example, average market prices or exchange rates).

Enterprise resource planning and customs declaration systems should:

• Track provisional vs. final pricing adjustments.
• Align with audit trail and correction procedures.
• Facilitate timely post-clearance adjustments if needed.

Wider Implications

The Tauritus decision encourages EU countries to take into account price adjustments of imported goods, provided they are predictable, objectively determined, and properly documented.

The ECJ’s ruling in Tauritus provides welcome clarification for businesses using flexible pricing mechanisms in cross-border trade. It confirms that transaction value can still apply when final prices are determined after import—provided the simplified declaration procedures are followed and objective, pre-agreed pricing formulas are in place.

In situations where the price is definitively established only after importation, a correction must take place. This can result in an additional assessment due to an initially understated customs value, or a refund in case of an initially overstated value. This means that less or more customs duties could become payable.

The adjustment of the customs value also affects the payable value-added tax amount since the customs value together with customs duties forms the basis for value-added tax.

For businesses, this highlights the importance of aligning trade and contracting, customs valuation strategy, and compliance documentation.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Aiki Kuldkepp is senior manager, VAT and customs, with Grant Thornton Netherlands.

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