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The relationship between the seller and the buyer may affect the use of the transaction value as the basis for customs value

When the seller and buyer of the goods are related, the relationship may have a bearing on whether the transaction value of the goods can be used as the basis for customs value. The relationship refers to two economic operators who are mutually dependent on each other.

If a relationship exist, you should contact Customs Business Information before you submit a customs declaration. We will find out if the transaction value can be accepted as the basis for customs value in your case. You will have to present e.g. a transfer pricing calculation to Customs.

When the transaction value is based on a price agreed by related parties, contact Customs Business Information. We will find out if the transaction value can be accepted as the basis for customs value in your case.

Prepare to answer the following questions:

  • A brief description of the operator’s role within the group of companies. Is the operator e.g. the distributor or manufacturer?
  • Brief description of goods that are essential from Customs viewpoint.
  • How many different commodity codes does the transfer price cover?
  • Will the value of the goods be corrected after the accounting period due to transfer pricing?
  • Do you know if the value will be adjusted up or down?

To support its decision-making, Customs also needs a transfer pricing calculation showing how the transfer price used in the customs declaration has been calculated. In such cases, Customs may use calculations based on OECD Transfer Pricing Guidelines.

We will assess your case based on the provisions on customs value and will also find out what price details are needed to make a decision.

If the final price is established only after the time of import

If the final price is established only after the time of import, a simplified declaration procedure may be used. You should provide a preliminary transaction price in conjunction with declaration, and the final price once it is known. Check what to do if details for determining the customs value are not available at the time of declaration.

For providing the final price, you may apply for authorisation to present missing information once the acceptability of the transaction value has been determined. The time limit for providing the final transaction value can be set to cover the whole accounting period, if needed.

When submitting the final price, there is no need to submit a separate amendment request for each customs declaration. Customs will review case by case with each operator what details Customs will need for determining the final customs value.

Relationship in the customs declaration

The relationship must be provided in the customs declaration, under “Valuation indicators”. Check the instructions on the page Providing value details.

Detailed information

Regarding customs taxation, the relationship becomes significant in situations where the following three conditions are fulfilled:

  1. Goods are declared for release for free circulation in Finland (customs procedure 4000).
  2. The import is based on a commercial transaction.
  3. The customs value is determined based on the primary method, that is, the transaction value.

Price formation in customs taxation

When the formation of the price of goods is viewed from the perspective of customs taxation, the aim is that the price of the goods should correspond to the price that would be formed between independent parties.

In contrast to corporate taxation, the only matter of significance for Customs is the import of goods and the price paid or payable for the goods, including any adjustments. In addition, what is essential is always the import declaration and the customs decision formed based on the declaration.

Therefore, the information needed by Customs is often more detailed than it is in corporate taxation. On the other hand, the price setting for intangible assets or intra-group loans is, as a rule, not relevant when determining the customs value. However, these aspects may be of relevance for the customs value if they are directly connected to the imported goods.

As a source of information, Customs may use, for example, transfer pricing calculations produced based on OECD Transfer Pricing Guidelines when assessing if the relationship has affected the transaction price.

In the EU’s Customs Code, the relationship refers to two economic operators who are mutually dependent on each other.

Two persons shall be deemed to be related if 

  1. they are officers or directors of the other person’s business;
  2. they are legally recognised partners in business;
  3. they are employer and employee;
  4. a third party directly or indirectly owns or controls or holds 5% or more of the outstanding voting stock or shares of both of them;
  5. one of them directly or indirectly controls the other;
  6. both of them are directly or indirectly controlled by a third person;
  7. together they control a third person directly or indirectly;
  8. they are members of the same family.

Persons who are associated in business with one another in that one is the sole agent, sole distributor or sole concessionaire, however described, of the other shall be deemed to be related only if they fall within the criteria referred to above. For the purposes of points 5–7, one person is deemed to control another when the former is legally or operationally in a position to exercise direction over the latter.

"Person" means a natural person, a legal person, and any association of persons which is not a legal person but which is recognised under Union or national law as having the capacity to perform legal acts.

Where two operators are related, the circumstances surrounding the sale shall be examined as may be necessary in order to determine whether such relationship did not influence the price. The declarant will have an opportunity to supply further detailed information as may be necessary about those circumstances.

However, the goods shall be valued based on the transaction value, where the declarant demonstrates that the declared transaction value closely approximates to one of the following test values, determined at or about the same time:

  1. the transaction value in sales, between buyers and sellers who are not related in any particular case, of identical or similar goods for export to the customs territory of the EU;
  2. the customs value of identical or similar goods based on the unit price at which identical or similar imported goods, are sold within the customs territory of the EU to persons not related to the sellers;
  3. the calculated value of identical or similar goods, determined in accordance with Article 74(2)(d) of the Customs Code.

These test values are to be used at the request of the declarant and they shall not substitute for the declared transaction value.

When establishing the value of identical or similar goods referred to above, account shall be taken e.g. of demonstrated differences in commercial levels, quantity levels and the items to be added listed in Article 71(1) of the Customs Code.