EU Court Clarifies Customs Valuation Rules on Provisional Pricing : Key Insights for Traders

Transaction Value Still Applies, Even Provisionally

Under Article 70 of the Union Customs Code, the customs value must, as a rule, be based on the transaction value, the price actually paid or payable for the goods. The Court confirmed that this holds even where only a provisional price is known at the point of import: where the final contract price is determined by objective criteria, such as market averages or exchange rates fixed in the contract, that final price still represents the true transaction value, not merely a later adjustment to it.

This matters because it forecloses an argument some traders had relied on: that a genuinely unknown final price justified moving straight to one of the fallback valuation methods rather than working through transaction value first.

The Simplified Declaration Route Is the Correct Mechanism

Where the final price cannot be known at import, the Court confirmed the mechanism traders should use is not a fallback method but the simplified declaration procedure. A simplified declaration can be filed first, using the provisional value, under Article 166 of the Union Customs Code. A supplementary declaration must then follow once the final price is established, under Article 167, ensuring the declaration ultimately reflects the accuracy required under Article 15(2)(a).

Fallback methods, including the residual method under Article 74 that Tauritus had relied on, are only available where transaction value genuinely cannot be determined. In this case, it could be determined, simply not immediately, and the Court held that Article 70 therefore prevailed over the residual method regardless.

Liability Does Not Depend on Fraudulent Intent

A further point the ruling reinforces, one with broader relevance beyond provisional pricing specifically, is that customs liability for an inaccurate declaration does not depend on fraudulent intent. Traders remain liable for under-declaration even where the error was made honestly and without any intention to understate value. Customs law requires strict compliance with the declared value, and the absence of bad faith does not itself prevent a reassessment, additional duty, and associated interest.

The financial exposure compounds further because the customs value also forms the basis for import VAT. An under-declared customs value therefore risks an additional VAT assessment on top of the duty adjustment, plus default interest on both.

What This Means in Practice

For traders whose contracts genuinely provide for price adjustment after import, whether through market-indexed pricing, exchange rate mechanisms, or other objective post-import criteria, provisional values should not be relied on as the final declared position. The simplified declaration procedure exists specifically for this situation, and using it, followed promptly by a supplementary declaration once the final price is confirmed, is the compliant route the Court has now confirmed. Fallback methods should not be used as a substitute for this process where transaction value can, in principle, still be determined once the final price is known.

Because customs and VAT exposure move together in this scenario, the practical response benefits from coordination between customs and tax functions rather than being handled by customs teams in isolation, since a supplementary declaration that resolves the customs position correctly is also what limits the associated VAT and interest exposure.

If your organisation uses provisional pricing in any of its import contracts, feel free to reach out directly.