Shipments within a corporate group

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Interdisciplinary case

According to various estimates, in the meantime between 60 to 70% of world trade is made via intragroup transactions, and the trend is upwards.  This extremely important global development has led to controversial discussions in the media about the possibilities of corporate groups reducing or avoiding tax.
 
  
From the point of view of the customs regulations, the customs value serves as a basis for the calculation of import duties and therefore also as a basis for the customs clearance, whereby the customs value is usually determined by the transaction value method, i.e. on the basis of the price actually paid. The basic condition for this method for products delivered between affiliated companies, however, is that the price of the goods is not influenced between the buyer and seller and therefore can be accepted by the customs authorities. The basis for intragroup deliveries is usually transfer prices made according to the so-called arm's length principle which can be confirmed by an advanced pricing agreement.
 
Yet even in these cases the price might be influenced which may result in the exclusion of the applicability of the transaction value method to determine the customs value. This is particularly due to different arrangements of the valuation method used for intragroup deliveries. As a result the customs assessment of goods traffic always relates to a certain movement of goods (transaction-related approach) as the amount of the customs duties and therefore also tax revenues depend on the individual deliveries and especially on individual materials. On the other hand transfer prices are generally calculated from an average value of a number of cases and therefore do not follow the transaction approach required for the customs regulations.
 
Due to these contrary points of view regarding the international movement of goods, it may occur that despite the correct calculation of a transfer price and correct documentation made by the company the customs authorities do not recognise the transaction value due to a price influence between the affiliated companies. The result can be unplanned subsequent payments, fines and in the worst case the opening of criminal proceedings.
 
The case arrangements listed here only provide a short summary of how complex questions from everyday business can be where the resource of networked knowledge is required to solve such challenges.
 

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Ewald Plum

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