Methods of calculating import value
There are six methods for calculating the value of imported goods to assess the amount of Customs Duty and import VAT a business to pay. The same value is also used for trade statistics.
All six methods are outlined below and should be tried in order. If Method 1 does not apply, try Method 2. If that does not apply, try 3 and so on. However, Method 5 can be tried before 4.
Method 1
The transaction value – the price payable to the seller. This is the most common valuation and is used in most cases.
Try Method 2 if there has been no sale of goods.
Method 2
The customs value of identical goods, produced in the same country as the imports.
Try Method 3 if there are no identical goods.
Method 3
The customs value of similar goods, which must be:
- produced in the same country
- able to carry out the same tasks and be
- commercially interchangeable
Try Method 4 if there are no similar goods.
Method 4
The selling price of the goods (or identical or similar goods) in the UK.
Try Method 5 if there are no UK sales of the goods.
Method 5
The production cost of the goods, including the cost of any materials, manufacturing and any other processing used in production.
Try Method 6 if this production cost information is unavailable.
Method 6
Reasonably adapting one of the previous methods to fit unusual circumstances.
Legislation
In the UK valuation is covered by the Taxation (Cross-border Trade) Act 2018 & The Customs (Import Duty) (EU Exit) Regulations 2018 and The VAT Act 1994, Section 19.
What to include in the Method 1 calculation
If they are not already included in the seller’s price, the importer must add the costs of:
- delivery to the EU border
- most commissions (except buying commission)
- royalties and licence fees paid by you on the imported goods as a condition of sale
- containers and packing
- any proceeds of resale the seller will receive
- goods and services you provide to the seller for free or at a reduced cost – eg components incorporated in the imported goods, or development and design work carried out outside the EU and necessary for the production of the imports
If you import goods from a processor – ie a business that assembles or otherwise works on one or more sets of existing products to create your new imported products – transaction values can be built up by adding to the processing costs the value of any materials or components you provided to the processor.
What to exclude from your calculation
Items to be left out of the customs value if certain conditions are met include:
- delivery costs within the EU
- EU duties or taxes
- taxes paid in the country of origin or export
- quantity and trade discounts and those relating to cash and early settlement, that are valid at the time the goods are valued
- dividend payments to the seller
- marketing activities related to the imports
- buying commission
- export quota and licence costs
- interest charges
- rights of reproduction
- post-importation work, eg construction or assembly
- management fees
Further details here.