Customs value explained: freight, insurance and Incoterms
Last updated 26 August 2026
Customs value is the economic value used as the base for many import duties. It can look like the invoice value, but that does not mean the invoice total is automatically the right number.
The main EU method is transaction value, meaning the price paid or payable for goods sold for export to the EU, subject to required additions and permitted deductions. If that method cannot be used, other valuation methods apply in a set order.
Why Incoterms matter but do not decide the value
An Incoterm helps show which party pays transport, insurance and related costs. It does not replace the customs valuation rules. Its practical job is to tell the reviewer where costs may already sit in the invoice and which separate invoices need to be collected.
With an FCA purchase, the buyer may receive freight and insurance bills separately. With a delivered price, more of those costs may already be in the supplier invoice. Either way, the reviewer has to prevent both a gap and double counting.
A simple FCA example
Suppose goods are bought FCA for €50,000. Packing paid by the buyer costs €400. Freight and insurance to the EU border cost €2,100. Transport after the EU border costs €700 and is shown separately.
| Element | Treatment in this example | Amount |
|---|---|---|
| Price paid for the goods | Starting transaction value | €50,000 |
| Buyer paid packing | Added for illustration | €400 |
| Freight and insurance to EU border | Added because it is outside the invoice | €2,100 |
| Transport after EU border | Excluded here because it is separately identified | €700 |
| Illustrative customs value | €50,000 plus €400 plus €2,100 | €52,500 |
This is deliberately simple. The real file must prove the sale, the route, the split of costs and why each adjustment is included or excluded.
Adjustments that deserve attention
- Transport and insurance. Identify the cost to the place where goods enter the EU customs territory and separate later costs.
- Packing and containers. Check whether these costs are already in the price and whether the legal addition applies.
- Assists. Tools, moulds, materials or design work supplied by the buyer can affect value when the legal conditions are met.
- Royalties and licence fees. The contract and relationship to the imported goods matter. Do not add every royalty automatically.
- Buying and selling commissions. Their treatment is not identical, so the underlying service and agreement need to be clear.
- Related parties. A related party price is not rejected merely because the parties are related, but the relationship must not have influenced the price used for transaction value.
When transaction value does not work
The Commission lists six methods. Transaction value comes first. If it cannot be used, the sequence moves through identical goods, similar goods, deductive value, computed value and finally the fallback method. Choosing another method because the invoice is inconvenient is not the same as proving that transaction value is unavailable.
What to keep in the file
- Purchase order, commercial invoice and payment evidence.
- Incoterm and named place, not just the three letter rule.
- Freight, insurance and packing invoices with route details.
- Royalty, licence, assist and related party analysis where relevant.
- A reproducible calculation tied to the declaration line.
Official sources
- European Commission: customs valuation and duty calculation
- European Commission: customs valuation guidance and compendium
- EUR Lex: Union Customs Code, Articles 69 to 76
Valuation is fact specific. The example does not decide whether a particular assist, royalty, discount or freight split is legally correct.