A German importer declared customs values for goods purchased from related foreign entities under a distribution agreement targeting an arm's length return on sales. Following a customs audit, the tax authority challenged the declared values, arguing year-end debit adjustments should increase the customs value. The Bundesfinanzhof decided in favour of the customs authority in July 2025, confirming that transfer pricing year-end adjustments affect dutiable customs value ... Read more

A German importer declared customs values for goods purchased from related foreign entities under a distribution agreement targeting an arm's length return on sales. Following a customs audit, the tax authority challenged the declared values, arguing year-end debit adjustments should increase the customs value. The Bundesfinanzhof decided in favour of the customs authority in July 2025, confirming that transfer pricing year-end adjustments affect dutiable customs value ... Read more

A Dutch spare parts distributor within a multinational group received a transfer pricing adjustment invoice of approximately €19.4 million from a related group company. The tax authority challenged the VAT and customs valuation treatment of this adjustment. The North Holland District Court ruled in favour of the tax authority in February 2024, confirming that the transfer pricing correction had direct implications for both customs value and VAT obligations ... Read more

Nestlé Argentina disputed the tax authority's attempt to add royalties paid under a technology transfer agreement with Nestlé Switzerland to the customs value of imported goods from 2008 to 2011. The Tax Court revoked the assessment, finding the royalties were not a condition of sale of the imported goods. Argentina's Court of Appeal dismissed the authority's appeal in 2023, confirming the WTO Valuation Agreement criteria had not been satisfied ... Read more

An Argentine exporter sold products to a related Uruguayan intermediary at prices significantly below those charged on final shipment to Brazil. Argentina's Tax Court upheld the tax authority's 2023 assessment, which applied the sixth method and OECD arm's length principles to adjust the declared export price upward, resulting in additional income tax and VAT liabilities for the triangulated intercompany transaction ... Read more

A German importer disputed whether year-end debit adjustments made by related-party suppliers under a distribution agreement should increase the declared customs value of imported goods. The customs authority argued the subsequent charges raised the transaction value, referencing the Hamamatsu principle. FG München ruled mostly in favour of the taxpayer in October 2022, finding the adjustments did not automatically alter the customs value as assessed ... Read more

A German subsidiary of a Japanese parent sought a customs duty refund by applying year-end transfer pricing adjustments from an Advance Pricing Agreement to previously declared customs values. The German Customs Authorities refused the refund, and the Bundesfinanzhof upheld that decision in May 2022, confirming that APA-based transfer pricing adjustments do not automatically revise customs valuations for imported goods ... Read more

British Tobacco Centroamérica S.A. imported goods from a related foreign company under a sales contract that also covered consultancy services, including marketing studies and sales campaigns. Costa Rica's tax authority identified discrepancies between declared customs values and invoice values, then assessed additional withholding tax on source income. The Costa Rica Supreme Court dismissed the company's appeal in 2022 and upheld the withholding tax assessment in full ... Read more

Taxpayers may have competing incentives in setting values for customs and tax purposes. In general, a taxpayer importing goods may be interested in setting a low price for the transaction for customs purposes so that the customs duty imposed will be low. (There could be similar considerations arising with respect to value added taxes, sales taxes, and excise taxes.) For tax purposes, however, a higher price paid for those same goods would increase the deductible costs in the importing country (although this would also increase the sales revenue of the seller in the country of export). Cooperation between income tax and customs administrations within a country in evaluating transfer prices is becoming more common and this should help to reduce the number of cases where customs valuations are found unacceptable for tax purposes or vice versa. Greater cooperation in the area of exchange of information would be particularly useful, and should not be difficult to achieve in countries that already ... Read more

The arm’s length principle is applied, broadly speaking, by many customs administrations as a principle of comparison between the value attributable to goods imported by associated enterprises, which may be affected by the special relationship between them, and the value for similar goods imported by independent enterprises. Valuation methods for customs purposes however may not be aligned with the OECD’s recognised transfer pricing methods. That being said, customs valuations may be useful to tax administrations in evaluating the arm’s length character of a controlled transaction transfer price and vice versa. In particular, customs officials may have contemporaneous information regarding the transaction that could be relevant for transfer pricing purposes, especially if prepared by the taxpayer, while tax authorities may have transfer pricing documentation which provides detailed information on the circumstances of the transaction ... Read more

Factors other than tax considerations may distort the conditions of commercial and financial relations established between associated enterprises. For example, such enterprises may be subject to conflicting governmental pressures (in the domestic as well as foreign country) relating to customs valuations, anti-dumping duties, and exchange or price controls. In addition, transfer price distortions may be caused by the cash flow requirements of enterprises within an MNE group. An MNE group that is publicly held may feel pressure from shareholders to show high profitability at the parent company level, particularly if shareholder reporting is not undertaken on a consolidated basis. All of these factors may affect transfer prices and the amount of profits accruing to associated enterprises within an MNE group ... Read more

A Brazilian importer declared that its relationship with a foreign related-party supplier did not influence transaction prices, applying the first customs valuation method. Tax authorities found evidence the relationship did influence pricing, ruled out methods two through five, and applied the sixth residual method using transfer pricing data under Law 9,430/96. Brazil's Administrative Court of Appeal upheld the assessment in full in December 2021 ... Read more

An Argentine malt producer exported goods through a related Uruguayan intermediary before onward sale to a Brazilian brewery at a higher price. The tax authority applied Argentina's Sixth Method, determining the arm's length export price by reference to the final sale price in Brazil. The Tax Court and, on appeal in 2021, the Federal Administrative Court both upheld the assessment and confirmed substantial penalties for under-invoicing ... Read more

MAN Diesel's Kenyan permanent establishment contested a tax assessment of Kshs 347 million, which attributed offshore equipment supply income from MAN Germany to the PE under the force of attraction rule. The tax authority argued the income was attributable under Article 7 of the Kenya-Germany DTA. The High Court of Kenya ruled in favour of the taxpayer in August 2021, finding the offshore supply income was not attributable to the Kenyan PE ... Read more

Levi Strauss South Africa channelled clothing imports through Mauritius to benefit from SADC zero-duty rates and paid commissions and royalties to group entities in Singapore and Hong Kong. The South African Revenue Service challenged the validity of origin certificates and sought to include royalties in the customs transaction value. South Africa's Supreme Court of Appeal ruled predominantly in favour of the tax authority in April 2021 ... Read more

New Wave Norway AS, a subsidiary of Swedish New Wave Group AB, paid a concept fee to its parent alongside royalties and sourcing fees to Swiss group entities. Following an audit, the Customs Directorate added the concept fee to the customs value of imported goods. The Norway Court of Appeal ruled in 2021 that this was invalid, finding no sufficient connection between the concept fee and the sellers of the goods ... Read more

The Greek tax authorities challenged BMW Hellas S.A.'s pricing of imported vehicles, issuing a customs valuation adjustment following an audit. The Administrative Court of Appeal annulled the adjustment, and the tax authorities appealed. In April 2020, the Greek Supreme Administrative Court dismissed the appeal, confirming that importing vehicles at manufacturer list prices, even if lower than prior import prices, does not constitute customs fraud or smuggling ... Read more

An Argentine malt producer exported to a related Uruguayan intermediary, which resold to a Brazilian brewery at a higher price. The tax authority applied the sixth method, benchmarking the export price against the Brazil transaction and issued a fine for under-invoicing. Argentina's Tax Court confirmed the assessment in 2019, finding the declared export prices were manifestly inaccurate and that customs transfer pricing rules had been correctly applied ... Read more

A German subsidiary of Hamamatsu Photonics sought customs duty refunds after a year-end downward transfer pricing adjustment under an APA reduced its effective purchase price. German customs refused, citing no allocation to individual goods. The European Court of Justice, ruling in 2017, held that an agreed transfer price composed of a provisional amount and a year-end adjustment cannot partially serve as a customs value under EU law ... Read more

Taxpayers may have competing incentives in setting values for customs and tax purposes. In general, a taxpayer importing goods may be interested in setting a low price for the transaction for customs purposes so that the customs duty imposed will be low. (There could be similar considerations arising with respect to value added taxes, sales taxes, and excise taxes.) For tax purposes, however, a higher price paid for those same goods would increase the deductible costs in the importing country (although this would also increase the sales revenue of the seller in the country of export). Cooperation between income tax and customs administrations within a country in evaluating transfer prices is becoming more common and this should help to reduce the number of cases where customs valuations are found unacceptable for tax purposes or vice versa. Greater cooperation in the area of exchange of information would be particularly useful, and should not be difficult to achieve in countries that already ... Read more

The arm’s length principle is applied, broadly speaking, by many customs administrations as a principle of comparison between the value attributable to goods imported by associated enterprises, which may be affected by the special relationship between them, and the value for similar goods imported by independent enterprises. Valuation methods for customs purposes however may not be aligned with the OECD’s recognised transfer pricing methods. That being said, customs valuations may be useful to tax administrations in evaluating the arm’s length character of a controlled transaction transfer price and vice versa. In particular, customs officials may have contemporaneous information regarding the transaction that could be relevant for transfer pricing purposes, especially if prepared by the taxpayer, while tax authorities may have transfer pricing documentation which provides detailed information on the circumstances of the transaction ... Read more

Factors other than tax considerations may distort the conditions of commercial and financial relations established between associated enterprises. For example, such enterprises may be subject to conflicting governmental pressures (in the domestic as well as foreign country) relating to customs valuations, anti-dumping duties, and exchange or price controls. In addition, transfer price distortions may be caused by the cash flow requirements of enterprises within an MNE group. An MNE group that is publicly held may feel pressure from shareholders to show high profitability at the parent company level, particularly if shareholder reporting is not undertaken on a consolidated basis. All of these factors may affect transfer prices and the amount of profits accruing to associated enterprises within an MNE group ... Read more

Skechers Canada, a subsidiary of Skechers USA, made cost-sharing agreement payments to its parent for brand development and R&D. The Canada Border Services Agency argued these payments formed part of the customs value of imported footwear. The Federal Court of Appeal upheld the Canadian International Trade Tribunal's decision in 2015, confirming that CSA payments relating to R&D were included in the price paid or payable for customs valuation purposes ... Read more

A Coca-Cola bottling subsidiary in Spain purchased soft drink concentrate from related companies in Ireland and France. Spanish tax authorities challenged the prices as above market and issued a transfer pricing adjustment, arguing customs valuations were irrelevant. The Supreme Court disagreed, ruling in 2009 that the transfer pricing method chosen must be applied consistently for both corporate income tax and customs valuation purposes ... Read more