Customs value

What is the customs value?

The customs value or the Cost, Insurance and Freight (CIF) value is the actual value of the goods when they are shipped. As duties are calculated based on the CIF value, it is vital that it is calculated correctly.

How is the customs value determined?

The customs value is determined according to international trade regulations which include the GATT, the General Agreement on Tariffs and Trade. The aim of such regulations is to ensure correct valuation. Various different valuation methods can be used:

1. The transaction value is the most common method used. When the transaction value cannot be determined, the following secondary methods can be applied, by order of priority:
2. The transaction value of identical goods.
3. The transaction value of similar goods.
4. The selling price of the goods.
5. A procedure based on the production cost of the goods.
6. Reasonably adapting one of the previous methods to fit unusual circumstances.

What is the transaction value?

The transaction value is the price paid (or payable) to which all the costs incurred, up to the point the goods are introduced into the destination customs territory, must be added:

• Transport.
• Insurance.
• Loading and handling at point of origin.
• Other items, so long as they are paid for by the purchaser and are not included in the price of the product, such as sales commissions and brokerage fees, materials used in the production of products and licence fees.

The sum of all of these items gives us the CIF value.

Given that duties are calculated based on the CIF value, when imports are under group D Incoterm conditions (DAP, DDP) a number of items will need to be deducted, provided they are clearly identified on the shipment documentation:

• Transport costs after the goods are introduced into European Union territory.
• Installation and assembly costs.
• Other items such as interest charges and buying commissions.

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