Under Section III of the Customs Code of Ukraine, customs value is not just the invoice price, but a comprehensive calculated indicator that determines the entire amount of customs payments. In this article, we look at the regulatory framework, valuation methods, grounds for adjustment, and the algorithm for protecting the declarant’s interests.
As an example, consider this situation: a company received an invoice from a supplier for 10,000 euros, prepared the documents, and proceeded to clearance. Customs suspends the declaration and sends an adjustment decision: freight was not included in the value, and the market price of a similar product in their databases is higher. Result: additional duty and VAT assessed on the difference. This kind of situation arises regularly in the practice of foreign trade participants who don’t fully understand the mechanism for forming the customs value of goods.
What Is the Customs Value of Goods
Customs value is the value of goods used as the base for calculating customs payments on import: duty, excise tax, and VAT. Put simply, the higher the customs value, the more payments the importer pays.
What customs value means in legal terms is defined by Section III of the Customs Code of Ukraine (Articles 49–72): it is the value of goods used for the purposes of levying duty. The procedure for declaring, controlling, and adjusting the customs value of goods is additionally regulated by Resolution of the Cabinet of Ministers of Ukraine No. 476 dated 20.05.2009 “On Approval of the Procedure for Declaring the Customs Value of Goods Moved Across the Customs Border of Ukraine.” This is a numerical figure that the declarant states in the customs value declaration and confirms with the relevant documents. The contract price of the goods is taken as the basis, but a number of additional costs are added to it: freight, insurance, commissions, and other elements provided for by customs legislation. That is exactly why the customs value of goods almost always differs from the amount on the invoice.
Why Customs Value Matters and Which Payments Depend on It
The amount of three main customs payments directly depends on a correctly determined customs value:
- duty is calculated as a percentage of the customs value at a rate set by the Customs Tariff of Ukraine;
- excise tax (for excisable goods) is also calculated taking the customs value into account;
- VAT is calculated on the sum of the customs value and the duty paid.
Even a small understatement of the customs value significantly reduces the total amount of payments. That is why customs authorities carefully check the declared value and have the right to adjust it if it appears understated compared to the data available in their databases for similar goods.
Methods for Determining Customs Value
Ukrainian customs legislation provides for six methods of assessing customs value, which are applied sequentially: each subsequent method is used only when the previous one cannot be applied.
Method 1: based on the transaction value of the imported goods. The main and most common method. Customs value is determined based on the price actually paid or payable for the goods, taking into account additional charges (freight, insurance, commissions, etc.). It applies when there is no relationship between the seller and buyer that affects the price.
Method 2: based on the transaction value of identical goods. The value of previously imported identical goods under transactions between unrelated persons is used.
Method 3: based on the transaction value of similar goods. Similar to Method 2, but applied to similar (not identical) goods, taking differences in characteristics into account.
Method 4: based on deductive value. Based on the sale price of the goods on the domestic market of the importing country, less selling costs and profit.
Method 5: based on computed value. Customs value is calculated by adding production costs, general expenses, and profit.
Method 6: fallback method. Applied based on data available to customs, in compliance with general valuation principles and WTO agreement requirements.
In practice, the vast majority of declarations are processed using Method 1. If customs doubts the declared price, it may move to other methods or initiate a customs value adjustment.
Practical example. A Ukrainian company imports equipment from Poland under EXW Warsaw terms. Contract price: 50,000 euros. Transportation costs from the supplier’s warehouse to the border of Ukraine: 1,800 euros. Insurance policy: 250 euros. In accordance with Article 58 of the Customs Code of Ukraine and the requirements of Cabinet of Ministers Resolution No. 476, customs value is formed as the sum of the contract price, freight to the first entry point at the customs border of Ukraine, and insurance. The final customs value will be 52,050 euros, not 50,000 as stated on the invoice. Customs calculates duty and VAT based on this amount. If the declarant states only 50,000 euros and does not add freight, customs will issue an adjustment decision and assess additional payments on the difference.
Which Costs Are Included in Customs Value
Under Method 1, the customs value of goods includes not only the contract price but also a number of additional costs added to the value of the goods:
- freight: transportation costs to the place of entry into the customs territory of Ukraine (to the first port or border crossing point);
- insurance: the cost of the insurance policy on the goods during transportation;
- commissions and customs brokerage fees (except for buying commissions);
- the cost of packaging and containers, if they form a single whole with the goods;
- royalty payments for the use of intellectual property, if related to the goods.
These elements form what is known as the valuation base, which the declarant is obliged to calculate correctly and declare in the customs value declaration.
“Problems with customs value most often arise from an incorrect determination of the base: the declarant takes only the invoice price and forgets to add freight or insurance. Or the opposite: freight is already included in the contract price, but the declarant adds it again. Both mistakes lead to an incorrect value and possible adjustment by customs. That is why involving an experienced customs broker at the stage of preparing the declaration is not a luxury but a necessity.” — Daleth Group specialist
Why Customs Adjusts (Increases) Customs Value
A customs value adjustment is an official decision by the customs authority to change the value declared by the declarant upward. The procedure for making such a decision is regulated by Article 55 of the Customs Code of Ukraine: the customs authority issues a written decision if, within the scope of control under Article 54 of the Customs Code, it is found that the declarant provided incomplete, unreliable, or incorrectly calculated information about the customs value. There are several grounds for adjustment.
First ground: discrepancy between the declared price and the price level in customs databases. Customs authorities have their own price databases for various categories of goods. If the declared value is significantly lower than the average market price for similar goods, customs treats this as a sign of understatement and initiates a review.
Second ground: insufficiency or inconsistency of the documents provided for by Article 53 of the Customs Code of Ukraine. If the documents provided do not convincingly confirm the declared price or contain contradictions (for example, different amounts on the invoice and in the payment documents), customs has grounds for adjustment.
Third ground: relationship between the seller and buyer. If the seller and buyer are related persons (a single owner, parent and subsidiary company), customs checks whether this relationship influenced an understatement of the transaction price.
Fourth ground: failure to include mandatory elements. If the declarant did not include freight, insurance, or other mandatory components in the customs value, customs adds them independently.
The decision on customs value adjustment is issued as an official document stating the new value and the grounds for adjustment in accordance with the requirements of Article 55 of the Customs Code. The declarant receives this decision and has the right to either agree with it or appeal it.
Wartime trends. Since 2022, the number of customs value adjustments has increased, and there are several practical reasons for this. First, disrupted logistics chains and changes in delivery routes (through the ports of the Baltics, Romania, and Poland instead of the usual sea routes) have led to an increase in the transport component of value, and customs more often checks new routes against outdated price databases. Second, the share of deliveries through intermediaries and new, not-yet-verified counterparties has grown, which automatically increases the attention of customs authorities. Third, martial law has increased the fiscal burden on the budget, so control over the completeness of revenues has intensified across all areas of customs clearance, including customs value. For an importer, this means one thing: in 2024–2026, the package of supporting documents needs to be even more complete and consistent than before 2022.
Documents to Confirm the Declared Value
A properly prepared package of documents is the main tool for defending the declared customs value. The list of main documents is defined by Part Two of Article 53 of the Customs Code of Ukraine:
| Document | What It Confirms |
| Customs value declaration | Calculation of the declared value |
| Foreign economic contract and its annexes | Commercial terms, pricing |
| Invoice or pro forma invoice | The price of the goods and terms of the deal |
| Bank payment documents (if the invoice has been paid) | Actual payment for the goods |
| Transport (shipping) documents | Transportation costs (freight) |
| Cargo insurance documents | The cost of insurance |
| Packing list | Quantity, weight, and composition of the shipment |
If the documents submitted are insufficient to confirm the declared value, the customs authority, based on Part Three of Article 53 of the Customs Code, has the right to request additional documents: a manufacturer’s price list, catalogs, a cost calculation, license agreements, documents on payments to third parties, and others, depending on the specific situation. The declarant is obliged to submit such documents within the period set by the customs authority. Failure to provide additional documents can be grounds for adjusting customs value even when the amount was calculated correctly.
What to Do in Case of Adjustment: Appeal and Release Under Guarantee
Upon receiving a customs value adjustment decision, the declarant has two options.
Option 1: agree with the adjustment and pay the difference in customs payments. This option is administratively simpler but financially disadvantageous if the adjustment is unjustified.
Option 2: disagree and release the goods under a financial guarantee. In accordance with Part Seven of Article 55 of the Customs Code, the declarant pays customs payments according to the value it declared, and secures the difference between the declared and adjusted amounts with a financial guarantee. The validity period of such a guarantee cannot exceed 90 calendar days from the date the goods are released. Within 80 days, the declarant has the right to submit additional documents to confirm the declared value. The customs authority is obliged to review them within 5 business days and either cancel the adjustment decision and release the guarantee, or provide a reasoned refusal. If customs does not provide a reasoned refusal within the specified period, the value declared by the declarant is considered confirmed by default, and the guarantee is released. If the refusal is reasoned, or the documents are not submitted at all, the guarantee provided is used to pay the additionally assessed payments.
For an importer, the risks and prospects of this mechanism are practical: release under guarantee allows the movement of goods to continue while the dispute is ongoing, but it requires freezing the guarantee amount for the entire review period and strictly meeting the deadline for submitting additional documents. Missing the deadline means automatic loss of the guarantee to the budget, even if the adjustment was, in substance, unjustified.
Appeals are handled administratively or through the courts. Administratively, a complaint is filed with a higher customs authority. Through the courts, a claim is filed with an administrative court. A successful appeal returns overpaid payments to the declarant.
Why it’s advantageous for customs to adjust customs value. The legislation does not establish a direct financial incentive to adjust value specifically “upward”: a decision is made solely on the grounds provided for by Article 54 of the Customs Code. But practice shows several systemic factors that increase the frequency of adjustments. First, control over the correct determination of customs value is built on a risk management system (Cabinet of Ministers Resolution of April 9, 2008, No. 339): the customs value of goods is one of the official risk criteria, so the automated system more often flags for review declarations with a price lower than the reference price. Second, budget revenue indicators through customs payments are part of customs authorities’ reporting, which in practice increases attention to understated value, especially in wartime conditions when budget needs have grown. Third, cancelling an unjustified adjustment as a result of an appeal does not entail personal liability for the official, so it is institutionally simpler to adjust the value and shift the burden of proof onto the declarant than to let a risky shipment through without review. That is why it’s important to have a complete and convincing package of documents even before submitting the declaration. Daleth Group specialists and the customs brokerage team help both with preparing documents and with supporting appeals against adjustments.
Common Declarant Mistakes When Determining Value
Mistake 1: incorrect determination of the value base. The declarant states only the invoice price, forgetting to add freight to the border or insurance. Result: an understated customs value and an inevitable adjustment.
Mistake 2: double inclusion of freight. If the goods were purchased under CIF or CPT terms, freight is already included in the contract price. The declarant mistakenly adds it again, overstating the customs value and overpaying.
Mistake 3: discrepancy between the invoice and payment documents. If the amount on the invoice differs from the amount of the bank transfer (due to exchange rate differences or staged payment), customs treats this as a contradiction and may initiate an adjustment.
Mistake 4: absence of the supplier’s price list. The price list is one of the key documents confirming the market level of the price. Its absence significantly weakens the declarant’s position during valuation and in the event of an appeal. For imports handled through customs clearance of international technical assistance, having a complete package of documents is especially critical.
Mistake 5: ignoring license payments. If the imported goods are linked to licenses or royalties, these amounts must be included in the customs value in accordance with Cabinet of Ministers Resolution of May 21, 2012, No. 446. Declarants are often unaware of this obligation and end up facing an adjustment after a review.
For a mature importer, these mistakes don’t happen by accident: they’re closed off by strategy. Such a strategy includes three elements: a preliminary check of the completeness of the document package before submitting the declaration, an agreed methodology for calculating the value base (so that freight, insurance, and royalties are accounted for correctly and without duplication), and a clear course of action in case of adjustment, including submitting additional documents on time and, if necessary, appealing to recover overpaid funds. Consistently working with one customs broker or consultant who knows the company’s shipment history significantly reduces the number of disputed adjustments and speeds up the recovery of overpaid payments after a successful appeal.
Conclusion
The customs value of goods is the foundation for calculating all customs payments and a subject of constant attention from customs. A correctly determined value, confirmed by proper documents, protects the importer from unforeseen costs and administrative hassle. If customs has sent an adjustment decision on customs value, this is not a reason to immediately pay extra: there are tools to defend your position. Contact the specialists at Daleth Group to properly prepare a customs value declaration, avoid common mistakes, and protect your interests during customs clearance.
FAQ
What is the customs value of goods?
Customs value is the calculated base from which all customs payments on import are assessed: duty, excise tax, and VAT. It includes the contract price of the goods, freight to the border, insurance, and other mandatory elements. The customs value of goods almost always differs from the invoice amount, since it includes additional components.
What methods exist for determining customs value?
The legislation provides for six valuation methods: based on the transaction value of the imported goods; based on the transaction value of identical goods; based on the transaction value of similar goods; based on deductive value; based on computed value; and the fallback method. The methods are applied sequentially, and the first one is the main one.
Why does customs adjust customs value?
Customs adjusts customs value if the declared price is significantly lower than the price level in its databases for similar goods, if the documents provided are insufficient or contradictory, if the seller and buyer are related persons, or if mandatory elements, such as freight or insurance, were not included in the value.
What documents confirm customs value?
The main package of documents includes: the invoice, the contract with the supplier, payment documents, the price list, transport documents (CMR, bill of lading), the insurance policy, the packing list, and the customs value declaration. The completeness and consistency of these documents is the main defense against adjustment.
How can a customs value adjustment be appealed?
The declarant can disagree with the customs value adjustment decision, release the goods under a financial guarantee, and file a complaint administratively or through the courts. A successful appeal returns overpaid payments. Effective appeal requires a complete package of documents and legal support from an experienced customs broker.