Royalties and licence fees
Payments related to the use of intellectual property rights concerning imported goods, to be included in customs value under certain conditions.
Definition and principle
Royalties and licence fees are payments made by the buyer/importer to the seller or a third party for the use of intellectual property rights related to imported goods (patents, trademarks, copyrights, know-how, designs and models). They must be added to the transaction value when certain conditions are met.
Legal framework
The inclusion of royalties in customs value is provided for by article 71, paragraph 1, point (c) of the UCC and article 8, paragraph 1, point (c) of the WTO Customs Valuation Agreement. Delegated Regulation 2015/2446 (articles 136 and 137) and the commentaries of the WCO Technical Committee on Customs Valuation specify the inclusion conditions.
Conditions for inclusion
Royalties must be added to customs value if two cumulative conditions are met:
- They relate to the goods being valued (and not to independent services or rights)
- They constitute a condition of sale of the goods (the buyer cannot purchase the goods without paying the royalties)
Practical cases
- Trademark royalties: generally included if the trademark is affixed to the imported goods and payment is a condition of sale
- Patent royalties: included if the patent covers the manufacturing process or composition of the imported goods
- Copyright fees: depend on the type of work — rights on the medium (CD, book) are included, rights on the content (film, software) may be excluded under certain conditions
- Know-how royalties: included if the know-how is necessary for the manufacture of the goods
Common mistakes
- Systematically excluding royalties paid to a third party (other than the seller): they may be included if the seller requires their payment as a condition of sale
- Not analysing each licence agreement individually — inclusion depends on the specific circumstances of each transaction