Advance transfer pricing arrangement
On December 20th, 2017, the European Court of Justice (ECJ) issued a decision concerning transfer pricing in the proceedings Hamamatsu Photonics Deutschland GmbH v Hauptzollamt München (Case C-529-16).
Hamamatsu purchased imported goods from its parent company in Japan which charged it for those goods intra-group prices in accordance with the advance pricing agreement concluded between that group of companies and the German tax authorities.
Hamamatsu released for free circulation various goods declaring a customs value corresponding to the price charged. At the end of a period the transfer pricing adjustments were done and Hamamatsu applied for the repayment of the customs duties for the imported goods.
The Principal Customs Office of Munich rejected the application on the ground that the method adopted by the applicant was incompatible with Article 29 (1) of the Community Customs Code (CCC) which refers to the transaction value of individual goods, not that of mixed consignments.
The ECJ ruled that Articles 28 to 31 of the CCC, must be interpreted as meaning that they do not permit an agreed transaction value, composed of an amount initially invoiced and declared and a flat-rate adjustment made after the end of the accounting period, to form the basis for the customs value, without it being possible to know at the end of the accounting period whether that adjustment would be made up or down.
What can we do for your company?
Customs4trade experts can assist your Company that is dealing with post-transaction transfer pricing adjustments (upward or downward) to request customs administration to provide an advance ruling for customs valuation, as it is necessary to determine the customs value method, the mechanism and the calculation method of the adjustment.
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