Customs value for B2C & B2B transactions

Consumers and companies alike order their goods increasingly often via e-commerce. E-commerce is an important theme also for Customs as this leads to totally different processes and risks. Media reports reveal large-scale VAT frauds with respect to this, but customs value and the correctness of the commodity code are re-occurring issues in e-commerce. There are, however, plenty of parties that do want to submit their declarations correctly, particularly within e-commerce.

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Unlike in stock transfer scenarios, B2C (business-to-consumer) and B2B (business-to-business) deliveries do involve transactions. For determining the customs value in B2C and B2B deliveries, several other points of attention are relevant.

Related parties

One of the requirements for applying the transaction value method is that there must be no relationship between the buyer and seller that has influenced the price. In e-commerce, this is rarely an issue and is unlikely to cause disputes. Internal transactions (transactions between related parties) typically do not occur through online e-commerce platforms.

Royalties and license fees

Royalties and license fees are also rarely a factor in e-commerce. Royalties and license fees that must be added are often paid separately by the importer and are therefore not included in the price paid to the supplier. Such situations, as far as we are aware, do not occur in e-commerce. In our view, the risk of failing to add royalties or license fees inappropriately is minimal in e-commerce.

Incoterms

As previously described, many e-commerce goods are delivered under DDP (delivered duty paid) or DAP (delivered at place) terms. If the seller delivers under DDP, they must fulfill all customs formalities. Since the logistics service provider often handles both transport and customs formalities, the transport and insurance costs are usually directly visible.

For DDP deliveries, the logistics service provider often files the declaration (or outsources it to a third party). The agreed price typically includes transport costs, insurance costs, VAT, and import duties. These are, however, elements that, under certain conditions, may be deducted when determining the customs value. To establish the correct customs value, documentation clearly distinguishing between the agreed price and the costs for transport, insurance, VAT, and import duties is essential.