The value of goods at the time of import is the key driver for the determination of the amount of VAT and customs duties payable.
According to Tradewin.net, the doctrine of the “first sale” means that the importer can declare the goods to Customs using the ‘first sale’, which is the transaction between the manufacturer and the middleman (vendor), which excludes the middleman’s markup, thereby lowering the customs value of the goods and the amount of duties payable.
In other words, First Sale for Export establishes the dutiable value based on the transaction between the manufacturer (factory) and the middleman (vendor) instead of between the middleman and the Importer.
See for more here: http://www.tradewin.net/services/duty-mitigation/what-is-first-sale.asp
Under new EU rules, only the sale that takes place immediately before the goods are physically brought into the territory will qualify.
My friends at PWC’s Customs team write:
“As a result, this interpretation will lead to the potential abolishment of the use of earlier or first sale whereby many EU importers for decades have been benefiting from basing the calculation of duty due on a sale that took place before the last sale upon which the goods entered the customs territory of the EU. However, based on this wording, if Customs were to take a restrictive reading and interpretation of the phrase “immediately before”, even instances where there is only one sale upon which the goods entered the customs territory of the EU, challenges could arise.”
They also note that rules are (still) very confusing. See for more information the pdf linked below: