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Do You Value Royalty?

Posted by Matt Springate

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4/12/16 11:44 AM

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Did you know that the first football match Queen Elizabeth attended was the 1953 FA Cup Final? Did you know that, during her reign, there have been 12 prime ministers? Did you know that the queen has, during her entire reign, answered around three and a half million items of correspondence?

Obviously, there’s a lot to know about the Royals. They are inescapable if you live in the UK. The Queen is on all of our money; we pay taxes and import duties to Her Majesty’s Revenue and Customs (HMRC). Heck, I even pulled all those facts off of royal.gov.uk.

As a trade consultant, the Royal family is not the only kind of royalty I am interested in. There is also plenty to know about Royalty Payments and how they impact the declared value of goods when they are brought into the European Union.

In fact, the UCC, which replaces the Community Customs Code (CCC) and comes into effect on May 1st, 2016, is broadening the rules surrounding how dutiable royalty payments are.

The language change under between the CCC and UCC is subtle, but it could have a big impact on dutiable value. Under the CCC, a royalty fee is dutiable if it (1) must be paid as a condition of sale of the imported goods, and (2) relates to the imported goods. Under the UCC, clause 2 is removed.

In the past, Customs authorities did not consider royalty payments that had to be made to third parties as a condition of sale for importation to be dutiable if the third party was not related to the seller.

What does this mean for importers now? Under the UCC, the relationship between the third-party licensor and seller is not taken into account. Rather, the UCC states that, ‘royalties are dutiable when the goods cannot be sold to, or purchased by, the buyer without payment of the royalties or license fees to a licensor.’

Thus, royalty payments that weren’t dutiable under the Community Customs Code will be dutiable under the Union Customs Code, increasing customs duties on some imported merchandise subject to royalties.

Just like with the Royal family, when it comes to royalty payments, relationship is everything.  

If you are interested in learning more, or if you just want to learn more fun facts about Queen Elizabeth, reach out to Tradewin - we got you covered.

 

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Topics: Europe

Written by Matt Springate

As Principal for Tradewin’s practice in Europe, Matt brings extensive experience in working with importers and exporters to perfect their compliance operations. He specializes in duty recovery programs, preferential trade agreement qualification, tariff classification, and audit support. Prior to joining Tradewin in Europe, Matt worked for Tradewin in the U.S. for four years. His most recent role was as Manager of Tradewin’s U.S. Duty Drawback practice. There, he pursued duty recovery programs for companies in every industry, including automotive, pharmaceutical, fashion and retail. Preceding that role, Matt supported Tradewin as an Import Services Consultant, where he assisted clients with first sale for export programs, prior disclosure presentations to U.S. Customs, and import declaration auditing. Matt holds a Master of Arts degree in Diplomacy and International Commerce from the University of Kentucky and a Bachelor of Arts degree in Political Science from Furman University. He is a Licensed Customs Broker in the U.S. and is IATA/FIATA Certified.