The World Customs Organisation (WCO) on 31 May announced that a new advisory opinion on royalties and licence fees had been adopted by the Technical Committee on Customs Valuation (TCCV) at its 44th session which took place in Brussels from 8-12 May.
It provides an opinion on a scenario where royalties have been paid by a franchisee to a franchisor for the use of the brands and system connected to the operation of stores under a franchise agreement.
The advisory opinion concludes that as the payment of royalties in this particular case is not related to the imported goods but to the use of the brands and system of the franchisor in the country of importation for the manufacture and sale of the products bearing the intellectual property of the franchisor, the royalties are not to be included in the Customs value of the imported goods.
Under the World Trade Organisation (WTO) customs valuation (CV) agreement, certain royalties and licence fees are to be included in the customs value of imported goods. You are reminded that royalties and licence fees are an important and complex aspect of CV and each case must be examined on its own merits to determine whether or not the royalties and licence fees should be included.
The adopted text is now subject to approval by the WCO Council, which is due to meet in July.
If you are interested in receiving a copy of the WCO’s advisory opinion, simply send us an email with the story’s title in the subject line.
