8. Method I: Transaction value

8.14. Royalties and license fees

A royalty or licence fee is added to the price only when all four of these conditions are met.

  1.           The buyer pays it, directly or indirectly. It does not matter to whom it is paid; what matters is that the buyer is obliged to pay.
  2.           Payment of the royalty or license fee must be a condition of the sale of the imported goods. The test is: can the goods be imported without paying the royalty or license fee? If they can, it is not a condition of sale. If they cannot, it is a condition of sale.
  3.            The royalty or license fee must relate to the imported goods being  valued. It must bear directly on the goods being imported.
  4.            The royalty or license fee must not already be included in the price actually paid or payable.

The Interpretative Notes to Article 8.1 (c) give additional guidance on the treatment of royalties and license fees:

  • ·         Royalties and license fees may include payments for patents, trademarks, and copyright.
  • ·         Payments, however described, for the right to reproduce the imported goods in the country of importation are not added.
  • ·         Payments by the buyer for the right to distribute or resell the imported goods are not added, provided they are not a condition of the sale of the goods.