EU: Domestic sale concept mitigates first sale repeal | KPMG Global
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EU: “Domestic sale” concept mitigates “first sale” repeal

EU: Domestic sale concept mitigates first sale repeal

The European Commission has issued updated draft guidance clarifying that a “domestic sale” is not to be considered when establishing the customs value of imported goods.


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Draft guidance from the EC in early April 2016 regarding the new customs valuation provisions under the Union Customs Code and implementing regulation implied that a “domestic sale” would not be considered when establishing the customs value of imported goods. However, the “domestic sale” concept was neither defined nor explained. 

Clarification of “domestic sales”

The EC issued an update to the draft guidance, to clarify that domestic sales within the EU do not qualify as sales for export within the EU and, as such, are not to be taken into account for customs valuation purposes. 

The updated document further clarifies the “domestic sale” concept also includes a transaction between two parties within the EU. 

KPMG observation

The updated guidance seems to deviate from settled European case law (C-11/89) in which the Court of Justice of the European Union concluded that the term “sold for export” relates to the goods—and not to the situation of the seller. According to the CJEU, there is nothing to prevent both parties to such a sale from being established in the EU. 

A similar approach was taken by the EC in Commentary 7 of the Customs Code Committee (TAXUD/800/2002-EN, September 2008) which clearly indicated that a transaction between two residents of the EU could very well be taken into account as “sold for export” for customs valuation purposes. 

The new and divergent view of the EC in the updated draft guidelines can be considered to be very favorable to the industry and is expected to mitigate the effects of repeal of the “first sale for export” concept. Still, the EC guidance is not legally binding and is only of explanatory nature. Its purpose is to provide a common understanding for both customs authorities and economic operators and to provide a tool to facilitate the correct and harmonised application by the various EU Member States. In the past, local customs administrations have been known to disregard such guidance and to take a more aggressive approach. It remains to been seen whether the draft guidelines will effectively “overturn” settled European case law. As such, importers need to remain cautious and consider discussing their individual supply chain with their local customs administration to allow for the correct and full application of the guidance provided. 


Read an April 2016 report prepared by the KPMG member firm in the Netherlands


For more information, contact a professional with KPMG’s Trade & Customs practice:

Douglas Zuvich | +1 (312) 665-1022 |

Andrew Siciliano | +1 (631) 425-6057 |

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