The Court of Justice of the European Union (CJEU) Decision was recently published in the Case C-173/15 GE Healthcare GmbH v. Hauptzollamt Düsseldorf regarding the conditions under which the royalties / licence fees paid should be included in the customs value of imported goods, according to the customs provisions applicable prior to 1 May 2016.
The ECJ decision in the Case C-173/15 GE Healthcare GmbH v. Hauptzollamt Düsseldorf has been published. It analyses the issue of including the royalties / licence fees in the customs value of imported goods.
In the case analysed by the Court, the royalties were calculated as a percentage of the beneficiary’s turnover and were due to an affiliated entity. The goods were imported from another entity in the same group. According to the terms of the contract, certain goods were not subject to the payment of royalties.
According to the Community Customs Code, the conditions to be fulfilled simultaneously for including royalties / licence fees in the customs value are as follows:
The CJEU decided the following:
The royalties / licence fees represent a “condition of sale" when, within the same group, the payment is requested by an entity affiliated both to the seller and the buyer, and it is paid for the benefit of the same entity.
Companies paying royalties / licence fees to related parties should consider analysing the correctness of the customs valuation for imported goods.
The ECJ decision is based on the interpretation of the legislation applicable before the entry into force of the provisions of the new Union Customs Code.
As such, as of 1 May 2016, the situations in which such costs must be included in the customs value have been expanded.
In order to establish the necessity of the customs value adjustments, the circumstances of the sale have to be analysed, especially when the buyer and the seller are affiliated parties. The circumstances should also be analysed in relation to the transfer pricing policies and the transfer pricing documentation available or in development.
For a more detailed discussion of the impact that these provisions can play in your specific case, you can contact the following persons: