Safe at First Sale

The EU has finally reached a decision to continue allowing first sale for importations through 2016. This decision is significant for those who import into the EU for the next 4 years. The “first sale” doctrine allows the entered value of qualifying transactions to be based on the purchase price between the middleman and the factory, rather than the middleman and the importer. The First Sale Rulemay also apply to import transactions where the middleman is related to the importer or the factory. The middleman’s mark up to the importer is not included in the entered value, allowing the importer to save substantial duty costs.

First Sale valuation was first established as US law in a 1988 case litigated by ST&R Senior Member Len Rosenberg (E.C. McAfee Co. v. United States, 842 F.2d 314 (Fed Cir. 1988)). Since that seminal case was decided, importers have been able to take advantage of appraisement under the First Sale Rule in the United States. The EU had allowed similar treatment to the US but had been considering the possibility of changing that policy. With this decision, first sale is “safe” for a few more years.

Now the two largest consumer economies, the US and EU both allow the use of first sale…and there are opportunities for you to save $$money$$ on your imports into both markets. If you have questions or would like to explore how you can save money by using the first sale doctrine, contact Nicole Bivens Collinson, nbc@strtrade.com, or David Cohen, dcohen@strtrade.com

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