Do royalties and license payments increase customs value in Turkey? Learn when trademark, patent, know-how and technology fees may be added to imported goods, how multinational companies can defend customs audits, and the risks of additional duties and penalties in 2026.

International companies importing branded products, patented technology, machinery, software-integrated equipment or licensed goods into Turkey frequently make payments that go far beyond the amount appearing on the commercial invoice. A Turkish subsidiary may pay EUR 5 million annually for imported products and separately pay its foreign parent a trademark royalty equal to 5% of Turkish sales. A distributor may purchase products from one group company while paying licensing fees to another. A manufacturer may import components and separately pay for patents, designs, know-how or manufacturing technology. These structures create one of the most important customs valuation risks for multinational companies operating in Turkey. Under Turkish customs valuation rules, certain royalties and license fees must be added to the price actually paid or payable for imported goods when determining customs value. The critical questions are whether the payment relates to the imported goods and whether payment of the royalty or license fee is a condition of sale of those goods. (https://ticaret.gov.tr) A royalty payment being invoiced separately, paid to another group company or calculated after importation does not necessarily remove the customs risk. Companies therefore need to examine the commercial substance of their licensing arrangements rather than relying solely on how payments are labeled in accounting records.

Why Are Royalties Important for Customs Valuation?

Customs duties calculated on an ad valorem basis depend on the customs value of imported goods.

The commercial invoice is therefore not necessarily the final customs value.

Certain elements must be added to the price actually paid or payable when the statutory requirements are satisfied.

Royalties and license fees are among those elements.

What Is a Royalty or License Fee?

For Turkish customs valuation purposes, royalty and license payments can include payments relating to patents, designs, know-how, models, trademarks, registered designs, copyrights, manufacturing processes and similar intellectual-property rights associated with the manufacture, sale, use or resale of imported goods. (https://ticaret.gov.tr)

This definition can cover a wide range of multinational business arrangements.

Common Examples

A Turkish importer may make payments for:

trademark rights;

patent rights;

manufacturing know-how;

copyright;

industrial designs;

technology licenses;

production processes;

brand usage;

technical intellectual property;

or rights connected with resale of licensed products.

The name used in the agreement is not necessarily decisive.

When Is a Royalty Added to Customs Value?

Two questions are particularly important.

First: Does the royalty or license payment relate to the imported goods?

Second: Must the buyer make that payment as a condition of sale of those goods?

Where both requirements are satisfied and the amount has not already been included in the price actually paid or payable, the royalty or license fee can require an addition to customs value. (https://ticaret.gov.tr)

“Related to the Imported Goods” Is the First Test

The existence of a license agreement alone does not mean every payment under that agreement must automatically be added to every import declaration.

There must be a sufficient relationship between the payment and the imported goods.

Example: Trademarked Consumer Products

A Turkish distributor imports branded shoes.

The foreign supplier manufactures the shoes with the licensed trademark already attached.

The Turkish distributor separately pays a percentage of sales for the right to use that trademark.

The customs treatment of that payment requires careful analysis because the royalty is directly connected with the branded imported goods.

Example: Unrelated Corporate Software

The same Turkish distributor separately pays a group company for an internal human-resources software license used by its employees.

That payment has a fundamentally different relationship with the imported shoes.

It should not simply be grouped together with product-related royalties.

The Second Test: Is Payment a Condition of Sale?

This can become the most contested issue.

The company must examine whether the importer could actually purchase the goods without being required to make the royalty or license payment.

The contractual and economic relationship among seller, buyer and licensor must therefore be analyzed.

The Agreement’s Wording Is Important

Relevant contractual provisions may state that the importer cannot purchase, distribute or resell the goods without maintaining the license.

That can be highly significant.

But Customs May Examine More Than One Agreement

Multinational groups frequently separate their arrangements.

There may be:

an intercompany supply agreement;

a trademark license;

a distribution agreement;

a technology agreement;

and a group services agreement.

Analyzing each agreement separately can produce a misleading result.

The commercial structure should be examined as a whole.

Example: Supplier and Licensor Are the Same Company

A foreign parent sells branded products to its Turkish subsidiary.

The same parent owns the trademark and requires the Turkish company to pay a 4% royalty.

The connection between the goods transaction and licensing arrangement may receive substantial customs scrutiny.

What If the Licensor Is a Different Company?

This does not automatically eliminate customs exposure.

For example:

Company A – Germany: sells the goods.

Company B – Netherlands: owns the trademark.

Company C – Turkey: imports the goods and pays the royalty to Company B.

The fact that the royalty recipient is not Company A does not by itself determine whether the payment affects customs value.

The legal and commercial relationship between the parties must be examined.

Third-Party Royalty Payments Require Particular Analysis

Turkish customs guidance specifically addresses payments to third parties when analyzing whether the condition-of-sale requirement exists. (https://ticaret.gov.tr)

This makes group-company structures particularly important.

Related Companies Increase Complexity

A manufacturer, intellectual-property owner and Turkish importer may all belong to the same multinational group.

Customs may examine whether the foreign seller or related group entities effectively require the Turkish importer to make the royalty payment.

Corporate Separation Is Not Necessarily Enough

Companies should not assume that placing intellectual property in a separate IP holding company automatically removes royalties from customs valuation.

Commercial substance remains important.

Can Trademark Royalties Increase Customs Value?

Yes, potentially.

Turkish customs guidance contains specific rules concerning trademark royalties.

Among other matters, the analysis considers whether the royalty concerns goods resold in the same condition or after only minor processing, whether the goods are marketed under the relevant trademark, and whether the buyer is free to obtain such goods from suppliers unrelated to the seller. (https://ticaret.gov.tr)

Freedom to Purchase From Independent Suppliers Can Be Important

Suppose the Turkish licensee can source licensed products from any manufacturer worldwide, including companies unrelated to the trademark owner.

That fact may be relevant to the condition-of-sale analysis.

Contractual Freedom Should Match Commercial Reality

An agreement saying that independent sourcing is allowed may be less persuasive if, in practice, the licensor approves every manufacturer and only related factories can supply the products.

The actual supply chain should therefore be reviewed.

Patent Royalties

Patent licensing can also create customs exposure where the royalty relates to imported goods and is required as a condition of their sale.

This can arise particularly with specialized industrial products, pharmaceuticals, machinery and technology-intensive goods.

Know-How Payments

A manufacturer may import components while paying its foreign parent for technical know-how.

The company must determine whether the payment concerns the imported components themselves, domestic manufacturing activities or both.

Manufacturing Licenses

Suppose a Turkish manufacturer imports specialized components and uses them to produce finished goods under a foreign technology license.

The royalty may partly relate to the imported components and partly to manufacturing activity performed in Turkey.

This requires careful allocation.

Partial Allocation Is Possible

Turkish customs guidance recognizes that a royalty may relate partly to imported goods and partly to components added after importation or post-importation activities or services.

In such cases, an appropriate allocation may be made where it is based on objective and quantifiable data. (https://ticaret.gov.tr)

Objective and Quantifiable Data Is Essential

A company cannot simply say:

“We think only 20% of the royalty relates to imports.”

The allocation should have a defensible methodology.

Example of Allocation

A Turkish manufacturer pays EUR 2 million annually under a technology agreement.

Economic and contractual analysis demonstrates that:

EUR 800,000 relates to patented imported components;

EUR 700,000 relates to Turkish manufacturing technology;

EUR 500,000 relates to post-importation technical services.

The company should document how each amount was determined.

Percentage-of-Sales Royalties

Many license agreements calculate royalties as a percentage of Turkish net sales.

For example:

Royalty = 5% of net sales revenue.

This creates a practical customs problem because the final royalty may not be known when goods enter Turkey.

A Percentage of Sales Does Not Automatically Remove the Customs Connection

Turkish customs guidance states that where the royalty amount is calculated according to the price of imported goods, it is presumed—unless evidence indicates otherwise—that the payment relates to the goods being valued. The guidance also recognizes that a royalty calculated independently from the imported-goods price may nevertheless still relate to those goods. (https://ticaret.gov.tr)

Royalties Determined After Importation

Many companies calculate royalties quarterly or annually.

The customs implications therefore need to be managed systematically rather than ignored because the amount was unknown on the import date.

Provisional Information Requires a Compliance Process

The company should establish how later-determined royalty amounts will be reconciled with relevant imports where customs inclusion is required.

Year-End Reconciliation

Multinational companies should review royalties alongside transfer-pricing adjustments at year-end.

Otherwise, accounting may recognize millions of euros in additional payments while customs declarations continue to reflect only the original commercial invoices.

This Creates Historical Exposure

Suppose a Turkish company imports EUR 20 million of branded products annually.

It also pays EUR 1.5 million in royalties.

If customs later determines that the royalties should have been included in customs value, authorities may examine numerous historical declarations rather than one shipment.

Additional Customs Duties Can Follow

An increase in customs value can affect customs duties calculated on that value.

Depending on the imported goods and applicable tax structure, other import-related fiscal consequences may also arise.

Administrative Penalties May Follow

Where authorities conclude that customs value was understated, additional assessments and administrative penalties may become relevant under the applicable provisions.

The financial exposure can therefore significantly exceed the original royalty amount.

Example of Accumulated Exposure

A company imports branded products for several years without considering a separate royalty.

A later customs audit concludes that the payment should have formed part of customs value.

The dispute may then involve:

hundreds or thousands of declarations;

additional customs duties;

related import taxes;

interest or ancillary public receivables where applicable;

and administrative penalties.

Royalties Should Therefore Be Reviewed Before Importation

Waiting for a post-clearance audit is usually much more expensive than analyzing the licensing structure when it is created.

Reproduction Rights in Turkey

An important exception concerns payments for the right to reproduce imported goods in Turkey.

The Ministry of Trade states that charges for the right to reproduce imported goods in Turkey are not added to the price actually paid or payable when determining customs value. (https://ticaret.gov.tr)

Distribution and Resale Rights

Payments for distribution or resale rights are also not automatically added.

According to the Ministry’s guidance, payments for the right to distribute or resell imported goods are not added where such payments are not a condition of the sale for export to Turkey. (https://ticaret.gov.tr)

This Exception Is Frequently Misunderstood

Calling an agreement a “Distribution Agreement” does not automatically make the payment customs-excludable.

Customs can examine what rights the company is actually purchasing.

Franchise Arrangements

International franchise structures can involve multiple payments:

brand royalties;

marketing contributions;

software fees;

training fees;

management fees;

and product purchases.

Each payment should be analyzed separately.

Marketing Fees

Payments for genuine marketing services should not automatically be treated as royalties.

However, the company must be able to demonstrate what services were actually provided.

Global Advertising Contributions

A multinational may require subsidiaries to contribute to international advertising campaigns.

The contractual and economic relationship between that contribution and imported goods should be examined independently.

Technical Service Fees

Post-importation technical assistance can require separate treatment from royalties.

The Ministry’s customs-value guidance recognizes that certain charges for construction, erection, assembly, maintenance or technical assistance undertaken after importation may be excluded when separately distinguished and the applicable requirements are met. (https://ticaret.gov.tr)

Do Not Bundle Everything Into One License Fee

A contract charging EUR 3 million annually for “brand, know-how, technical support, management and marketing” creates unnecessary customs uncertainty.

Where commercially accurate, separate identification and valuation of different services and rights can make customs analysis much clearer.

Software Embedded in Imported Goods

Software-related imports require particular care.

A machine may contain embedded software without which it cannot function.

Another machine may use separately licensed software purchased after importation.

These situations should not automatically receive identical customs treatment.

Industrial Machinery

A Turkish factory may import machinery and separately pay for technology, installation and know-how.

The company should separate:

rights relating to the imported machine;

post-importation installation;

domestic training;

maintenance;

software;

and manufacturing know-how.

Automotive Industry

Automotive groups frequently involve trademarks, technology, engineering and manufacturing licenses alongside imports of vehicles, components and parts.

The royalty allocation can therefore become highly complex.

Pharmaceutical Companies

Patent, trademark and know-how payments may intersect with imported pharmaceutical products or active ingredients.

The exact contractual rights and imported products must be mapped carefully.

Fashion and Luxury Goods

Trademark royalties are particularly important where branded finished products are imported and sold in Turkey without substantial processing.

Consumer Electronics

Trademark, patent and software payments may all exist simultaneously.

Each payment may require separate customs analysis.

Food and Beverage Franchises

Imported ingredients, packaging, branded products, recipes and trademark rights can produce mixed royalty structures.

The company should determine what portion, if any, actually relates to imported goods.

What Documents Can Customs Examine?

A royalty investigation may extend far beyond customs declarations.

Authorities may examine license agreements, supply agreements, distribution contracts, invoices, accounting records, royalty calculations, bank transfers, transfer-pricing documentation and correspondence.

License Agreement

This is normally the starting point.

Customs may examine:

what rights are granted;

how royalties are calculated;

who receives payment;

which products are covered;

and what happens if the importer stops paying.

Supply Agreement

The supply contract should then be compared with the license agreement.

Can the Turkish company continue purchasing goods if the license ends?

Can it source goods elsewhere?

Does the seller require the license?

These questions can be critical.

Termination Clauses

Suppose failure to pay the royalty automatically terminates the Turkish company’s right to purchase the imported goods.

That provision may become highly relevant to whether the royalty is a condition of sale.

Manufacturing Approval Rights

If the licensor controls which factories may produce the imported goods, customs may examine that control.

Royalty Calculations

The company should preserve spreadsheets and ERP reports showing how each royalty payment was calculated.

Bank Transfers

Payments should be reconciled with the relevant agreements.

Accounting Entries

General-ledger accounts may show whether payments were treated as royalties, services, management fees or other expenses.

Accounting labels are not legally decisive, but inconsistencies can trigger questions.

Transfer Pricing Reports

Transfer-pricing documentation can explain the multinational group’s commercial structure.

However, customs valuation requires its own legal analysis.

Tax and Customs Policies Must Be Coordinated

A tax department may establish a royalty because it considers that the IP owner should receive arm’s-length remuneration.

The customs department must then determine whether the same payment affects customs value.

Ignoring the customs side can create substantial unintended exposure.

Related-Party Imports Require Extra Attention

Where seller, licensor and importer are related, customs may examine the overall corporate structure rather than isolated contracts.

Prepare a Corporate Relationship Chart

The company should identify:

IP owner;

manufacturer;

seller;

exporter;

Turkish importer;

distributor;

treasury entity;

and ultimate parent company.

Prepare a Payment Flow Chart

Show who pays whom.

For example:

Turkish Importer → German Manufacturer: goods

Turkish Importer → Dutch IP Company: trademark royalty

Turkish Importer → Swiss Group Company: management services

This makes the customs analysis considerably clearer.

Separate Genuine Services From IP Payments

A company should identify each financial flow according to commercial substance.

Can Customs Review Previous Years?

A royalty issue identified during one audit may cause customs authorities to examine previous declarations within the applicable statutory framework.

Companies should therefore assess historical exposure as soon as the issue arises.

Conduct a Historical Royalty Audit

For each year determine:

total imports;

total royalty payments;

products covered;

licensors;

royalty calculation method;

whether royalties were included in customs value;

and whether any customs adjustments were made.

Map Royalties to Customs Declarations

This can be difficult where one annual royalty relates to thousands of import declarations.

A reasonable allocation methodology may need to be developed based on objective and quantifiable data.

Do Not Invent an Allocation After the Audit Begins

The methodology should be economically defensible and supported by existing business records.

What If Customs Says the Entire Royalty Must Be Added?

The company should examine whether the entire payment actually relates to imported goods.

A license may cover imported goods, Turkish-manufactured goods and services simultaneously.

A blanket 100% addition may therefore require challenge.

Challenge the Scope, Not Just the Principle

Even where some portion of the royalty belongs in customs value, the percentage allocated to imports may remain disputed.

This can materially reduce financial exposure.

What If Customs Says a Service Fee Is Really a Royalty?

The company should demonstrate the actual services.

Useful evidence may include reports, deliverables, technical records, employee time records, training materials and correspondence.

Substance Is More Important Than the Invoice Description

Renaming a royalty “consultancy” will not eliminate customs exposure if the payment actually buys intellectual-property rights.

Conversely, a payment described broadly as a license fee may contain genuine service components that require separate analysis.

Customs Audit Risk

Royalty issues frequently arise during post-clearance reviews because the payments may not appear directly on individual import invoices.

The financial accounts can reveal payments that customs declarations do not.

Customs May Compare Accounting and Import Data

A ledger showing millions of euros in “royalty expense” alongside substantial related-party imports can naturally trigger questions.

Bank Transfers Can Confirm the Payments

Authorities may seek to understand when, how and to whom royalties were paid.

Foreign Headquarters Should Be Involved Early

The Turkish subsidiary may not possess the complete licensing history.

Relevant agreements may be held by group legal, tax or intellectual-property departments abroad.

Preserve Original Agreements

Companies should retain:

original license agreements;

amendments;

supply agreements;

distribution agreements;

transfer-pricing documentation;

royalty calculations;

payment records;

and relevant correspondence.

Contract Amendments Matter

A royalty arrangement may have changed over time.

The company should determine which version applied to each customs period.

Do Not Backdate Agreements

Retrospective amendments designed to change the apparent nature of historical payments can severely damage credibility.

What Should Companies Do Before Signing a New License Agreement?

The customs consequences should be reviewed before the contract is finalized.

Tax, IP and commercial teams should not treat customs as an afterthought.

Ask Five Questions

The company should determine:

What imported goods are covered?

Who owns the IP?

Who sells the imported goods?

Could the importer buy the goods without paying the royalty?

How can any import-related portion be objectively calculated?

Those questions identify many of the principal customs risks.

What Should Companies Do After an Acquisition?

A newly acquired Turkish subsidiary may have inherited historical licensing arrangements.

The buyer should review royalty customs exposure during post-acquisition compliance.

Customs Risk in M&A Due Diligence

A target company may appear compliant because all commercial invoices were declared correctly.

But undeclared royalties paid separately to foreign group companies can create hidden customs liabilities.

Customs Indemnities in Share Purchase Agreements

Where historical customs exposure is material, transaction documents may need to allocate risk between buyer and seller.

First 24 Hours After Customs Questions Royalty Payments

The company should preserve all license, supply and distribution agreements, identify royalty recipients, secure royalty calculations and determine which imported products may be affected.

First 72 Hours

The company should map the corporate structure and payment flows, examine whether the royalty relates to imported goods, analyze whether payment appears to be a condition of sale and determine whether the entire royalty or only a portion is potentially relevant.

First Week

The company should calculate historical imports and royalty payments, identify potentially affected customs declarations, prepare an objective allocation methodology where appropriate, assess additional-duty and penalty exposure and protect procedural deadlines.

2026 Customs Compliance Strategy for International Companies

Turkey’s 2026 import environment continues to involve active changes in import policy, including amendments to the Import Regime and additional customs-duty framework published in July 2026. (https://ticaret.gov.tr) For multinational businesses, this reinforces the importance of reviewing customs valuation structures alongside changes in supply chains, licensing arrangements and intercompany pricing.

A royalty compliance review should therefore not be performed once and forgotten.

It should be revisited whenever the group changes its IP owner, manufacturer, seller, transfer-pricing policy, royalty percentage, distribution structure or Turkish supply chain.

2026 Legal Strategy for Royalty and License Fee Customs Disputes in Turkey

When Turkish customs authorities challenge royalty or license payments, the company should first identify every payment made under the relevant intellectual-property arrangements and determine which imported goods, if any, are connected with those payments. The legal analysis should then focus on the two core questions: whether the royalty relates to the imported goods and whether payment is required as a condition of sale of those goods. The company should review the license agreement together with the supply, distribution and manufacturing agreements rather than analyzing each document in isolation. The identity and relationship of the seller, manufacturer, licensor and Turkish importer should be mapped, and bank transfers should be reconciled with accounting records. Where a royalty covers both imported goods and domestic activities or services, the company should examine whether an objective and quantifiable allocation is possible. (https://ticaret.gov.tr) Historical customs declarations should then be reviewed to identify potential exposure. The practical strategy is therefore: identify all royalty and license payments → map the imported goods covered by the agreements → determine whether payments relate to those goods → analyze the condition-of-sale requirement → examine seller/licensor relationships → review trademark-specific rules → separate royalties from genuine services → identify post-importation activities → develop an objective allocation where necessary → reconcile royalties with bank and accounting records → review historical declarations → calculate potential additional duties and penalties → challenge excessive or unsupported customs adjustments → protect objection deadlines → pursue appropriate administrative and judicial remedies.

Frequently Asked Questions

1. Are all royalty payments subject to customs duties in Turkey?

No. A royalty or license payment is not automatically added to customs value merely because an importer makes it. Under the applicable framework, whether the payment relates to the imported goods and whether it is required as a condition of sale are central questions. (https://ticaret.gov.tr)

2. Can trademark royalties increase the customs value of imported products?

Yes, potentially. Turkish customs rules contain specific criteria concerning trademark royalties, including the relationship between the royalty, the branded imported goods and the buyer’s ability to obtain goods from unrelated suppliers. (https://ticaret.gov.tr)

3. What if the royalty is paid to a company other than the foreign seller?

Payment to another company does not by itself resolve the customs issue. The relationships among the seller, licensor and importer and the commercial conditions governing the sale must be analyzed.

4. Are royalties calculated as a percentage of Turkish sales excluded from customs value?

Not automatically. The method used to calculate the royalty is relevant, but the decisive analysis still concerns the relationship between the payment, imported goods and conditions of sale.

5. Can only part of a royalty be added to customs value?

Potentially, yes. Where a royalty relates partly to imported goods and partly to post-importation components, activities or services, Turkish customs guidance recognizes appropriate allocation based on objective and quantifiable data. (https://ticaret.gov.tr)

6. Are payments for reproduction rights in Turkey included?

The Ministry of Trade states that charges for the right to reproduce imported goods in Turkey are not added to the price actually paid or payable when determining customs value. (https://ticaret.gov.tr)

7. Are distribution or resale license fees always included?

No. Payments for distribution or resale rights are not added where they are not a condition of the sale for export of the imported goods to Turkey. (https://ticaret.gov.tr)

8. Can customs examine royalties paid in previous years?

Potentially, within the applicable legal framework. A customs audit identifying an undeclared royalty issue may lead authorities to examine historical import declarations using the same licensing structure.

9. Can undeclared royalties result in customs penalties?

Potentially. If authorities determine that royalties should have been included and customs value was consequently understated, additional duties and administrative penalties may arise depending on the applicable provisions and facts.

10. What should an international company do when customs begins investigating royalties?

The company should immediately preserve its license, supply and distribution agreements, identify all relevant royalty payments and imported products, map the seller/licensor relationship, reconcile bank and accounting records, analyze the condition-of-sale requirement and review historical customs declarations.

Legal Support for Royalty and License Fee Customs Disputes in Turkey

International companies can face significant financial exposure when Turkish customs authorities investigate trademark royalties, patent payments, know-how licenses, technology fees, IP holding companies, related-party licensing arrangements, transfer-pricing adjustments and historical customs declarations.

Fırat Fesih Kaya Law Office provides legal assistance to foreign investors, multinational companies, Turkish subsidiaries, importers and international corporate groups facing customs valuation and royalty disputes in Turkey.

Fırat Fesih Kaya can analyze licensing and supply agreements, determine whether royalty and license payments should affect customs value, review historical import declarations, challenge additional customs assessments and penalties, coordinate customs valuation issues with related-party transactions and represent companies in administrative and judicial proceedings.

Phone: +90 312 434 22 22
Mobile Phone: +90 532 769 22 22
Email: info@firatfesihkaya.av.tr
Address: Mevlana Boulevard No: 221, Yildirim Tower, Balgat, Cankaya / Ankara, Turkey