“MC Parts B.V.”, is part of a multinational group and from its transfer pricing documentation it follows that it has two activities within the group: distributor and support service provider. – “MC Parts B.V.” is a distributor of spare parts and accessories. The parts are supplied by both by group companies and external suppliers. Remuneration for these activities is determined on the basis of turnover (transactional net margin method, 3.1% of operating margin) in accordance with the transfer pricing documentation. – “MC Parts B.V.” performs various activities for a group company 2, including technical services, marketing and logistics. The support activities qualify as “after sales activities”. The remuneration for these activities is determined in accordance with the transfer pricing documentation on the basis of the costs to be allocated to this function, using a profit mark-up (net total cost plus 5%). On the initiative of group company 2, a transfer pricing adjustment took place for the said fiscal year in accordance with the transfer pricing documentation. On this basis, “MC Parts B.V.” was required to pay an amount of €20,091,000 to company 2. By invoice dated 31 March 2016, company 2 invoiced “MC Parts B.V.” an amount of €19,388,000. The invoice was calculated using total sales (consisting of the items sales P&A and KO parts), a margin, total G&A (March estimate based on Year to Date average), an operating profit of 11.1% and a company 2 proposed profit of 3.1%. The invoice takes into account a reservation of €703,000 for additional import duties expected to be paid by the claimant. This amount was deducted from the proposed recharge of €20,091,000. In 2020, “MC Parts B.V.” submitted an application for repayment of €711,221 in customs duties. By decision of 11 March 2021, the tax authorities rejected this application on the grounds that the customs value must be calculated using the transaction value method and that the €19,388,000 paid by “MC Parts B.V.” to company 2 is part of the price actually paid or payable for the imported goods (the transaction value) and is therefore part of the customs value. In the alternative, in case the transaction value method cannot be followed, the position is that the claimant and [company 2] have established a notional (related) transfer price that is too low and that the customs value should be determined using reasonable means, which could then be consistent with the value based on the transfer pricing agreement. According to the tax authorities, there is indeed a relationship between the transfer pricing adjustment and the imported goods. This is evidenced, inter alia, by company 2’s invoice to “MC Parts B.V.” dated 31 March 2016. The invoice set aside an amount of €703,000 for customs duties payable. “MC Parts B.V.” paid that invoice. The invoice is an after-payment for goods that “MC Parts B.V.” purchased from company 2 and does not cover the support services that the claimant performs for company 2. While “MC Parts B.V.” argues that the higher profit margin (higher than 3.1%) is caused by factors other than the purchase price for goods paid by “MC Parts B.V.” to company 2, it does not substantiate this. The reliance on the Hamamatsu judgment is not valid. In the case of “MC Parts B.V.”, imputation took place to all imported goods. In Hamamatsu, there was a flat-rate adjustment where the adjustment amount was not broken down by separately imported goods. In “MC Parts B.V.”‘s case, however, it is possible to impute by goods. Moreover, the Hamamatsu judgment only provides protection if the customs value is adjusted downwards, as this has the effect of protecting the Union’s own resources. Furthermore, the prices between [Company 2] and “MC Parts B.V.” were not contractually agreed, whereas in the Hamamatsu case they were. The transaction value of the “MC Parts B.V.”‘s goods was rightly adjusted upwards. But even if the transaction value cannot apply, the customs value was rightly adjusted, namely by applying Article 31 of the CCC, the value method of reasonable means. The tax authorities concludes by dismissing the appeal as unfounded. Judgment of the District Court The Disterict Court dismissed the appeal of “MC Parts B.V.” and upheld the decision of the tax authorities. Excerpts in English “25. Based on the foregoing, the court is of the opinion that the Hamamatsu ruling does not preclude the inclusion in the claimant’s case of the claimant’s subsequent payment to [company 2] based on a transfer pricing adjustment. The subsequent allocation of these costs to the customs value of the goods imported by the claimant is in principle possible. (…) 32. The court finds that the defendant has plausibly established a link between the transaction value of the goods and the subsequent payment under the transfer pricing adjustment. The calculation of the amount of €20,091,000 is based on a (58-page) overview of “CoS Parts” transactions between [company 2] and the claimant submitted by the claimant when requested. A percentage of 3.5 of average import duty on parts was deducted from the amount. According to the court, the use of the term “duty on parts” supports that the data included in the statement is intended to provide information on parts. The court therefore does not follow the claimant’s argument that the description “Parts And Accessories” refers to a particular division of the claimant and not to imported goods. The court further takes into account that although the claimant argues that it does not source some of the motorbike parts and accessories it sells from [company 2] but from third parties, it has not substantiated this with factual data. To the extent that these are third parties who supply goods from outside the EU, the claimant had the information to do so: it could produce the declarations for these goods. To the extent that these are third-party goods from within the EU, the claimant is pre-eminently the one who can provide information about them, the defendant does not have this information in any case. The court assumes that the ...

The customs value declared by “Import GmbH” of the goods imported from related parties X, Y and Z was in dispute. In the course of a customs audit, the customs office (Hauptzollamt, HZA) found that Y had invoiced “Import GmbH” for subsequent debit amounts of EUR (…) for 2015, EUR (…) for 2016 and EUR (…) for 2017. These were based on a Distribution Agreement of (…) concluded between “Import GmbH” and Y, according to which “Import GmbH” undertook to purchase products from the latter and to sell them in the defined distribution area. With the 1st Supplementary Agreement of (…), supplies from affiliated companies of the group company were also included in this agreement and thus, inter alia, also the supplies from Z. With the second supplementary agreement of the same date, it was stipulated that “Import GmbH” should receive an “agreed margin” which was described as customary for third parties. According to the agreement, the margin resulted from the rolling three-year average of the arm’s length ranges, which were determined on the basis of database analyses for returns on sales of comparable companies. For the period at issue here, the database analysis determined an arm’s length range for returns on sales and Y determined a margin of 1.93% from this range, which was within the arm’s length range for returns on sales of comparable companies. In fact, “Import GmbH” achieved returns on sales of 23.24% (2014/2015), 26.24% (2015/2016) and 28.49% (2016/2017) by reselling the products in the (…) business unit. During the year, “Import GmbH” received invoices for the delivered goods, which had already been reduced in advance by a calculated deduction from the list price, namely the so-called “agreed margin”. “Import GmbH” declared these transfer prices paid during the year as the basis for determining the customs value in the customs declarations. Since the double-digit returns on sales actually achieved in the business years 2015 to 2017 were considerably higher than the agreed margin and thus, in the opinion of the customs office, not at arm’s length, “Import GmbH” was charged subsequent debit amounts of EUR (…) to EUR (…) (…). According to the customs office, the unusually high profits were only possible because the transfer prices during the year had been calculated too low. The returns on sales achieved had been adjusted within the group to the margin of 1.93%, so that the aforementioned subsequent debit amounts had been determined on this basis and charged to “Import GmbH” with debit notes or paid by the latter. On the basis of the facts established, the customs office came to the conclusion that the customs values originally declared during the year had to be increased by correction factors (1.34 for the years 2014 and 2015 and 1.44 for the years 2016 and 2017) in order to determine the correct customs value for the import goods. It therefore subsequently assessed a higher duty of EUR (…) (based on a correction factor of 3.88) for the goods imported in November and December 2014 by import duty notice of 26 October 2017, which it reduced to EUR (…) (based on a correction factor of 1.34) in the opposition decision of 4 February 2020 following “Import GmbH”‘s objection. An appeal was filed by “Import GmbH”. Judgement of the Finanzgericht The Court upheld the appeal of “Import GmbH”. Excerpts “52 If the customs value is determined using the closing method, as the HZA assumes on the basis of the connection and the existing price influence, the time of importation must in principle also be taken into account with regard to the other appropriate methods to be used, according to the opinion of the BFH in the above-mentioned ruling of 17 May 2022 (marginal no. 45). 53. It follows from this, according to the BFH in its judgment of 17 May 2022 (marginal no. 49), that the dictum of the BFH of 17 May 2022 is not applicable. 49), that the dictum of the ECJ, according to which the CC does not permit the customs value to be based on an agreed transaction value that is composed partly of an amount initially invoiced and declared and partly of a lump-sum adjustment after the end of the accounting period, without it being possible to say whether this adjustment will be upward or downward at the end of the accounting period, is also decisive for the determination of the customs value according to the final method pursuant to Article 31 CC. 54. If it was not clear at the time of the customs declaration whether an adjustment would have to be made at all at the end of the accounting period and whether, if this was the case, it would have to be made upwards or downwards, then the value of the goods determined in this way – or actually still to be determined after the end of the accounting period – at the time of the customs declaration was not relevant within the meaning of Article 8(3) of the Convention on the Implementation of Article VII of the General Agreement on Tariffs and Trade. VII of the General Agreement on Tariffs and Trade of 1994. 55. The burden of proof in the case of subsequent recovery lies with the HZA. The latter must explain and, if necessary, prove that or to what extent duties have been assessed too low. If this proof cannot be provided, a subsequent levy is excluded. 56. On the basis of these legal principles, the conditions for the subsequent levy based on Article 101 or Article 105 (2) and (3) of the CCC are not met in the present case. The HZA did not prove that the customs debt paid by the applicant had to be assessed higher at the time of the acceptance of the respective customs declaration. 57. The parties initially determined the customs value on the basis of the prices invoiced to the applicant during the year in accordance with Article 29 CC/CCC using the transaction value method ...