The Cost of Ignoring Customs Valuation: 4 Risks Companies Can’t Afford

Why Customs Valuation Still Gets Overlooked

In many companies, customs valuation remains an afterthought - overshadowed by classification, origin, or duty optimisation strategies. It’s often seen as a compliance formality rather than a strategic risk area. But this assumption is dangerous. Customs valuation may be just one less controlled or monitored part of a trade compliance management organisation - and when it’s wrong, the consequences spread fast and across the board.

Incorrect valuation doesn’t just lead to underpayment of duties. It triggers audits, reclaims, reputational risk, and operational disruption. The rules are complex, interpretation varies across jurisdictions, and documentation must be watertight. Yet, most multinationals still lack a clear and consistent approach - especially in the EU, where customs authorities have been paying closer attention to these aspects over the past years.

This article outlines four critical risks companies face when valuation is not properly managed - and what they must do to avoid them.

Transfer Pricing Misalignment

One of the most common valuation issues is misalignment between customs valuation method and transfer pricing policies. While the two are interconnected and strongly rely on the concept of arm’s length pricing, they operate under different concepts, principles, and regulatory frameworks. 

In short, customs valuation is set under trade compliance rules, while transfer pricing is governed by tax regulations focused on intra-group pricing. Misalignment can trigger scrutiny from both customs and tax authorities.

In the EU, customs authorities are increasingly aware of the disconnect. They expect companies to justify declared values, even in related-party transactions. Relying solely on intercompany agreements or end-of-year adjustments is no longer enough. Without a structured approach to align pricing models, provide documentation, and defend the declared value at the time of import, companies expose themselves to retroactive revaluations, penalties, and delays.

A strong customs valuation policy must be anchored in a forward-looking approach - documenting how transfer prices are set, how adjustments are made, and how this aligns with the customs value methodology. Valuation cannot be copied from tax. It must be designed for customs. 

Additions and Assists Ignored

Another common pitfall is the incorrect treatment - or total omission - of additions to the price paid. These include royalties, commissions, tooling, design and development costs, or assists provided free of charge to suppliers. Under the EU Customs Code, many of these additions must be included in the customs value. But in practice, they are often missed.

When companies fail to capture these additions systematically, they risk underreporting customs value and underpaying duties. Audits can go back years and result in substantial retroactive liabilities. Worse, these risks are often hidden - because the information about additions sits outside the customs function, in product development, engineering, or procurement.

Solving this requires cross-functional alignment. Customs teams must work closely with business units to identify, track, and capture all valuation-relevant cost elements. And they must do so in a way that is repeatable, auditable, and consistent across all import locations.

No Policy, No Defense

Many companies operate without a clear internal customs valuation policy. Very often, each country defines its own approach. Some local teams follow transfer pricing logic; others use their own judgment - sometimes the tax and legal teams operate without an in-depth understanding of the subject matter, or some misconceptions. Documentation is often incomplete, inconsistent, or missing entirely. As a result, companies can’t demonstrate how they arrived at the declared value - or how that value meets EU requirements.

This lack of documentation becomes critical during audits. Authorities will expect to see how values were determined, what methodology was used, and whether any additions or adjustments were made. Without this, even compliant companies can find themselves penalised for lack of control.

A strong customs valuation policy is not optional - it is a compliance requirement. It must clearly define the valuation method, how it is applied to related-party transactions, how additions are treated, and what documentation is retained. It should be supported by Procedures (SOPs), training, and internal controls that ensure consistency across all relevant countries and teams.

No Entry Controls Before or After Declaration

Even companies with strong valuation logic often fail in execution. Errors are introduced during import declarations - wrong prices, missing additions, outdated information. These mistakes happen because there is no structured review of the customs value before the entry is filed, and no post-entry verification once it has been processed.

In the EU, where declarations are increasingly scrutinised, this is a major risk. Authorities can audit entries months - or years - after import. If mistakes are found, companies must pay back duties, plus interest and potential penalties. The absence of pre - and post-entry controls turns minor errors into systemic failures.

To avoid this, companies must implement clear validation steps: price verification, documentation checks, escalation mechanisms, and post-entry audits. These controls ensure that the value declared is accurate, documented, and defensible. Without them, even a well-written policy will fail at the point of execution.

In practice, these actions must be incorporated into the company’s valuation policy, or into a valuation compliance program that defines the responsibilities of each team and stakeholder.

From Exposure to Control

At DOJÖ, we help companies move from exposure to control. We review valuation practices across countries, pinpoint risks, and design policies built for customs, not tax. We clarify treatment of additions, align documentation with EU audit standards, and structure governance so valuation becomes defensible, consistent, and efficient.

We also help clients leverage opportunities, such as the U.S. First Sale for Export program, to optimize the dutiable base in full compliance. Our role is simple: bring clarity, structure, and credibility, so customs valuation stops being a hidden risk and becomes a controlled, transparent function that supports the business.