The reduction must concern imported goods, and the right to a reduction must exist at the time of calculating the customs value.
A reduction can be granted in three kinds of situations:
- The buyer is entitled to a reduction and, at the time when the customs value is calculated, has made a payment where the reduction is included (reduction in the invoicing price).
- The buyer is entitled to a reduction but, at the time when the customs value is calculated, has not made a payment where the reduction is included.
- A reduction is not available at the time when the customs value is calculated (retroactive offer by the seller).
If a reduction has already been applied to the payment or to the payable price at the time when the customs value is calculated, the price will be conclusive in determining the customs value.
- The reduction that is already applied at the time of determining the customs value according to the reason or extent laid out in the trade agreement will be approved if it has been itemised in the documents presented to Customs in connection with importing the goods.
- The reduction does not necessarily have to be included in the trade invoice concerning the goods, although this is common practice.
If the right to a reduction based on the agreement exists at the time of calculating the customs value, a reduction can be accepted even when the actual amount of reduction is indicated in the price only later.
If the price of the imported goods remains unpaid at the time of determining the customs value, the reduction and the final price can only be defined based on the available information. In such situations, use of the transaction price as basis for the customs value depends on whether a price reduction is granted and defined at the time when the customs value is determined.
- If the reduction is retroactive, for example a bulk discount at the end of the year, it can be taken into account in determining the customs value if it is proven that the right to the reduction existed at the time when the customs value was determined.
It is not necessary to determine whether the granted reduction is normal commercial practice or if it is granted also to other buyers.
As a rule, the price that would be payable for the goods if the payment was to be made at the time of calculating the customs value must be used as the basis for the value. A reduction granted after the date of customs value calculation, for example at the end of the year, is not taken into account. The right to a reduction must exist at the time of determining the customs value.
Generally approved reductions:
- cash reduction, i.e. reduction scaled according to the date of payment
- bulk discount to the extent that it concerns the goods on which customs value is defined
- re-sale discount
- regular customer discount
- introductory offer
- model and sample discount
- fair and exhibition offer.
Hidden defects
If a hidden defect is observed in the goods after the customs declaration is approved, the reduction in the transaction price can be taken into account retrospectively.
The conditions are as follows:
- Customs is presented with proof of the goods having been defective when the customs declaration was approved.
- The seller changes the price of the goods for the benefit of the buyer in accordance with the terms of guarantee in the import trade agreement. The terms will have been agreed upon prior the release of the goods for free circulation.
- The defect in the goods was not taken into account in the import trade agreement in question.
Reimbursement based on defects in goods
Reimbursement can take place when
- the buyer purchases the goods from the seller at the price accordant with the trade agreement
- defects that could not be observed at the time of import are detected in the goods after import
- the defects cause repair costs to distributors working under the buyer, and the distributors charge the buyer for the repair costs
- the buyer can prove that the goods were defective already at the time of import.
Based on the guarantee by the seller, the transaction price is reduced within one year of the approval of the customs declaration with an amount corresponding to the repair costs, and the customs value is revised according to the same amount.
The buyer can be regarded as being bound by a guarantee obligation due to any defects.
Cash discount
- Invoice date: 1 October 2015
- Terms of payment: 14 days –4 % (15 October 2015)
- 30 days –2 % (1 November 2015)
- Customs declaration lodged on 20 October 2015
A cash discount can be taken into account in the following way in the calculation of customs value:
- If the invoice is paid prior to 15 October 2015, 4 % will be deducted from the total sum.
- If the invoice is paid during 16–20 October 2015, 2 % will be deducted from the total sum.
- If the invoice has not been paid before the customs declaration is lodged, 2 % will be deducted from the total sum.
- If 2 % is deducted from the total invoice sum when defining the customs value, but the buyer does not however pay the invoice within 30 days, i.e. prior to 1 November 2015, the buyer must notify the customs authorities about this. Customs will assess if the taxation is to be revised.
Conditions for reductions:
- The quality of the goods is not what was agreed upon
- After the goods are released for free circulation, the buyer notices that the quality of the goods is not what was agreed upon.
- The buyer files a complaint with the seller and the two parties agree on a reduction. The buyer then presents Customs with the correspondence relating to the complaint, as well as receipts on money transfers.
- The seller provides a credit note for the goods, and the transaction price is reduced within one year of the date of when the customs declaration was approved. Customs revises the customs value based on the credit note amount.