Effective May 1, 2016, the Implementation Act of the Union Customs Code (UCC), contains new provisions that simplify and restate the intentions of the World Trade Organization (WTO) Valuation Agreement with regard to the treatment of royalties and license fees.  Although these provisions do not change the essence of the legal intention, certain clarification rules that were contained in the “old” Implementation Regulations, are no longer appearing in the UCC.

The removal of these rules allow for a broader application of the two prime determinates as to whether or not the royalty or license fee should be included or added to the transaction value.  In this regard it is important to note guidance provided on determining when a royalty or license fee is regarded as being related to the product being valued, what is considered to be a condition of sale and the person to whom the royalty of license fee is paid.

Guidance issued by the EU Commission can be accessed through the following link here