The EU customs rules make it clear that when goods are imported into the EU, their customs value must reflect their true economic worth. However, case C-307/23 raises one interesting question: what happens when a key element of the presentation of imported goods is designed in the EU and provided to non-EU suppliers at no charge? 

The central dispute in a case involving a German customs warehouse operator, a German design studio, non-EU suppliers, an EU distributor, and the German Tax Authority is whether the cost of creating label templates must be factored into the customs value of the imported goods.

Background of the Case 

Between December 2012 and May 2013, a German customs warehouse operator (G) carried out ten customs clearance operations for imported canned food supplied by non-EU suppliers, with the goods intended for release into free circulation in the EU. The buyer had provided label design templates to the suppliers free of charge in electronic form, which were printed and affixed to the cans by the suppliers abroad. Notably, a German design studio created these templates on behalf of the buyer, and the buyer paid for that design work separately.

The price declared when goods were imported included the cost of the canned food itself, its retail packaging, and the printing and application of the labels. However, since most of the designing of the label templates was borne directly by the buyer and not paid to the suppliers as part of the transaction price, these costs were excluded from the declared customs value.

In February 2014, the German Customs Authority issued a recovery notice requiring additional customs duties of EUR 1,412.61, arguing that the value of the imported goods should also include the costs of designing the label templates, treating these costs as part of the dutiable customs value under EU customs rules. The Customs Authority concluded that the labels, which described and marketed the canned goods, were inseparably linked to the product packaging itself. Accordingly, their design costs should be treated as an element of the goods’ value.

G challenged this decision before the court of first instance, which dismissed the appeal, confirming that the labels were integral to the cans as retail-ready goods. Consequently, the design costs could not be excluded from the customs value. This led G to appeal to the German Federal Fiscal Court.

The Federal Fiscal Court noted that while the costs connected with manufacturing the cans, including printing and affixing the labels, had to be included in the customs value of the imported goods, it is unclear whether the same approach should apply to the separate costs for the creative design of the label templates. Therefore, it paused the proceedings and referred a question to the Court of Justice of the European Union (ECJ).

Main Questions from Request For Ruling

The Federal Fiscal Court asked the ECJ to clarify whether, under the EU Customs Code, the costs of creating label printing templates inside the EU must be added to the customs value of imported goods when those templates are provided free of charge by the EU buyer to non-EU suppliers.

More specifically, the Federal Fiscal Court wanted to know whether these costs should be included under containers and packing costs or under engineering, design, artwork, and similar services supplied by the buyer for the production of imported goods.

Applicable EU Law

In addition to Article 32(1)(a) and (b) of the Customs Code on certain costs that must be added to the transaction value where they are not already included in the price paid for the imported goods, which was directly cited in the referred question, the ECJ also interpreted Article 29(1), which establishes the basic rule for determining the customs value of imported goods. 

Additionally, the ECJ interpreted General Rule 5 of the EU Combined Nomenclature, which explains how containers and packaging should be treated for customs purposes.

Germany National Rules 

In this case, no national customs provisions were considered or interpreted, as the ECJ solely focused on the EU-wide customs rules and regulations.

Importance of the Case for Taxable Persons

The issue in question is important because the answer determines whether customs duties are payable on the value of the label design work. Moreover, the interpretation of key provisions directly affects whether additional customs duties could lawfully be charged. For those with these types of agreements and business models in place, ECJ's decision is significant as it could have a great financial impact on both past and future customs duties.

Analysis of the Court Findings

The ECJ noted that there is a significant distinction between Article 32(1)(a)(ii) and Article 32(1)(b)(iv), since the latter refers to services necessary for producing the imported goods themselves, and the former specifically concerns the containers associated with those goods. In other words, one provision relates to the production of imported goods, while the other relates to their packaging.

In this case, G included in the declared customs value the physical costs connected with the containers, namely the production of the cans and the printing of the labels attached to them. However, the separate costs arising from the intangible design services used to create the label templates were excluded.

Given that these provisions expressly distinguish between the imported goods and their containers, this distinction became central to deciding whether the design costs related to the production of the goods or instead to the packaging associated with them.

Therefore, the ECJ turned to the interpretation of the Combined Nomenclature, which defines “containers” together with the related concepts of “packing materials” and “packing containers.” All these terms refer to external or internal containers, holders, wrappings, and supports. Notably, under EU case law, the term “packing” refers not only to packaging used for transport but also to packaging intended for storage and marketing of goods.

Against that background, the ECJ considered whether the intangible design services related to the label templates could be linked to containers. The ECJ stated that although the services were not physical objects, they were used specifically to produce labels that were affixed to the cans. Thus, taking into account the wording of the Customs Code, such costs are not automatically excluded, provided the templates are closely connected to the packaging container itself.

Furthermore, the ECJ underlined that the mere fact that labels can physically be separated from the cans is not decisive. What matters is the functional role in relation to the packaging. Since the labels provide essential product information, such as contents, expiry dates, and preparation instructions, which are necessary for marketing the goods and facilitating their use, they form an integral part of the presentation and commercialisation of the canned food.

However, the absence of labels on the cans does not, in principle, make the canned food unusable. Taking that into consideration, such labels cannot be considered an essential part of the food itself or as necessary for its production.

As a result, the ECJ determined that the wording of neither of the provisions in question provides an explicit or straightforward answer regarding how the costs of designing label templates should be classified. Nonetheless, the ECJ indicated that such costs may still fall under the category of container costs under Article 32(1)(a)(ii), provided there is a sufficiently close link between the templates and the physical cans used as packaging.

While it left it to the referring court to determine whether such a close connection exists, the ECJ focused on the broader legal framework governing customs valuation under the EU Customs Code. In doing so, the ECJ recalled that the customs value of imported goods is based on the transaction value, meaning the price actually paid or payable for the goods when they are sold for export into the EU.

The established “transaction value” system is both the most appropriate and the most frequently used method in practice, where the price agreed between buyer and seller forms the starting point for customs valuation, even though it may be adjusted to reflect additional elements that are legally required to be included. Those adjustments are specifically listed in the Customs Code.

This led to the conclusion that, by including one provision specifically concerned with the “containers” of imported goods, and another that applies more broadly to the value of work and services necessary for the production of the imported goods themselves, the EU regulators intended to create two separate adjustment regimes. The first is for intangible services directly related to the production of the goods, and the other for costs closely connected to their packaging or containers.

Court's Final Decision

The ECJ concluded that there is no real dispute that design services for templates used to create can labels have a measurable economic value. This applies regardless of whether the templates are created at the EU buyer’s request, paid for by the buyer, and then provided free of charge to suppliers in electronic form. What matters is that these design templates are closely linked to the containers of the imported goods and, therefore, must be included in the price used for customs valuation.

Conclusion

With this decision, the ECJ reaffirmed a functional and economically realistic approach to customs valuation. Moreover, the ruling reiterated that the Customs Code distinguishes between production-related services and packaging-related inputs as separate adjustment regimes, but it does not allow form to override substance.