On September 10, 2020, the Court of Justice of the European Union has ruled judgment in case C-509/19 (BMW against German Customs Office) by means of which it considers that, to determine the customs value of an imported goods, the economic value of a software developed in the European Union (EU) and free of charge from the buyer (importer) to the seller (exporter) established in a third country, must be added to the transaction value.
BMW, within the framework of its operations, has been developing in the EU a software necessary for the correct operation of the control units that make up the on-board system of the vehicles manufactured by it. These control units, manufactured in a third country, are imported by BMW into the EU customs territory.
BMW supplies the software developed by it free of charge to the manufacturers (who act as sellers and exporters) of the aforementioned control units, as it is the main interested party in the correct functioning of the control units that are later incorporated in the vehicles of its brand.
The German Customs Office considered that the customs value declared by the control units imported by BMW should have considered the economic value of the software supplied by BMW to the exporter, by virtue of the provisions of Article 71.1.b) of the Union Customs Code (Regulation 952/2013).
Article 71.1.b) establishes that “when determining the customs value, the price actually paid or payable for the imported goods shall be completed with:
- b) the value, apportioned as appropriate, of the goods and services where supplied directly or indirectly by the buyer free of charge or at reduced cost for use in connection with the production and sale for export of the imported goods, to the extent that such value has not been included in the price actually paid or payable.”
The CJEU, in case C-509/19, endorses the criterion established by the German customs when considering that the customs treatment of software commonly considered as intangible goods must be assimilated to the concept of “services”, in the case particular, provided by the aforementioned article 71.1.b) of the EU Customs Code (the price paid will be completed with the value of the goods and services (…)). As it has resolved in previous cases, the CJEU has taken into account Conclusion No. 26 of the Customs Code Committee, Customs Value Section, who has interpreted that the value of the technology developed in the EU and supplied to the manufacturer of the imported goods, via Internet or on data storage media, must be taken into account when valuing imported goods, especially when such technology has been incorporated during the manufacture of the goods subsequently imported.
It is important to bear in mind that, even when the purpose and scope of the Union Customs Code is to regulate the introduction of goods into the EU customs territory, there are elements underlying the generality, such as services or intellectual services and intangible components, which must be taken into account for the correct application of the EU provisions on customs matters.
The rise of international trade in services and its importance within global value chains leads to the need to pay greater attention to the customs and tax treatment of certain concepts unequivocally integrated into material goods with important economic implications.
From Salinas & Partners, with more than 30 years of experience in international trade transactions, we can assist you to identify the key intangible elements within the international value chain and their consequent customs treatment in the import and / or export of goods.