Are foreign research, engineering, design and development costs included in Turkish customs value? Learn when R&D payments, assists, royalties and intercompany development charges may increase customs duties in Turkey.

Turkish companies frequently import products developed by foreign parent companies, engineering centers, research laboratories or independent design firms. In addition to paying the foreign manufacturer for the goods, the Turkish importer may separately pay for research and development.

This creates an important customs valuation question:

Must R&D costs paid abroad be added to the customs value of imported goods?

There is no automatic rule that every foreign R&D payment must be included. The answer depends on what the payment actually covers, its relationship with the imported goods, who incurred the expense and whether the amount is already reflected in the import price.

For multinational companies, the issue can become particularly significant where millions of euros in group R&D costs are allocated annually to a Turkish subsidiary.

1. What Types of R&D Costs Can Create Customs Questions?

Relevant payments may include:

• Product development;
• Industrial design;
• Engineering;
• Technical drawings;
• Prototype development;
• Mould development;
• Testing;
• Product adaptation;
• Software development;
• Formula development;
• Laboratory work;
• Production-process development.

Each category should be examined separately.

2. The Accounting Label Is Not Decisive

A payment recorded as:

“R&D Expense”

does not automatically determine its customs treatment.

Customs may examine the underlying economic activity.

The important question is:

What did the Turkish importer receive in return for the payment?

3. Determine Whether the R&D Relates to Imported Goods

Suppose a Turkish company imports automotive components developed specifically for its Turkish operations.

The foreign parent charges the Turkish subsidiary separately for engineering and product-development work used to manufacture those components.

There may be a significant customs valuation issue.

By contrast, general research concerning future products that are never imported into Turkey may require a different analysis.

4. Foreign Design and Engineering Can Be Particularly Important

Customs valuation rules contain specific provisions concerning certain goods and services supplied by the buyer for use in producing imported goods.

These can include engineering, development work, artwork, design work, plans and sketches undertaken outside the importing country where the applicable statutory conditions are satisfied.

Accordingly, foreign R&D should be reviewed for potential assist treatment.

5. What Is an Assist?

An assist generally involves something supplied directly or indirectly by the buyer, free of charge or at reduced cost, for use in connection with the production and sale for export of imported goods.

Potential examples include:

• Moulds;
• Tooling;
• Components;
• Engineering;
• Designs;
• Technical drawings;
• Development work.

If qualifying value has not already been included in the import price, customs-value adjustment may become necessary.

6. Example: Turkish Importer Pays the Design Company

Assume:

Foreign manufacturer: produces specialized machinery.

Turkish importer: purchases the machinery.

Independent engineering company: designs a critical component.

The Turkish importer separately pays the engineering company EUR 300,000 and provides the resulting design to the manufacturer free of charge.

Customs may examine whether that EUR 300,000 constitutes an assist attributable to the imported machinery.

7. Example: Foreign Parent Performs the R&D

The structure becomes more complex where the foreign parent:

• Develops the product;
• Manufactures or arranges manufacturing;
• Sells the product to Turkey;
• Separately charges the Turkish subsidiary for development.

The company should determine whether the R&D charge is already reflected in the imported-goods price or represents additional consideration.

8. Avoid Double Counting

This is critical.

Suppose the manufacturer calculates the product price by including:

materials + labor + overhead + R&D recovery + profit.

If the customs transaction value already contains the relevant R&D cost, adding it again would create double counting.

The importer should obtain a clear pricing explanation.

9. Review the Product Pricing Formula

Determine whether the import price includes:

• Manufacturing cost;
• Engineering cost;
• Development cost;
• Intellectual-property recovery;
• Tooling;
• Profit margin.

A cost breakdown can be extremely useful during a customs audit.

10. R&D Paid Separately Requires Greater Attention

Separate payment can attract scrutiny because Customs may ask why a cost connected with production was excluded from the invoice price.

The importer should be able to explain the legal and commercial reason for the separation.

11. Location of the Development Work Can Matter

Where customs valuation rules concerning engineering, development, artwork, design work, plans and sketches are relevant, the place where the activity was undertaken can be important.

Therefore, document:

• Country of development;
• Engineering center;
• Personnel involved;
• Development location;
• Contracting entity.

Do not simply describe the activity as “global R&D.”

12. Research and Product-Specific Development Should Be Distinguished

Not every research expense has the same connection with imported goods.

Compare:

General scientific research into future battery technology

with

engineering drawings created specifically to manufacture a battery model imported into Turkey.

The second activity has a much clearer connection with the imported product.

13. General Group R&D Allocations Need Careful Review

A multinational may allocate global R&D costs among subsidiaries according to turnover.

For example:

Global R&D expenditure: EUR 100 million.

Turkish subsidiary allocation: EUR 4 million.

The existence of a EUR 4 million allocation does not automatically establish that EUR 4 million should be added to customs value.

The underlying activities must be identified.

14. Ask Which Imported Products Benefited

Break the R&D pool into:

• Imported products;
• Locally manufactured products;
• Future products;
• Failed projects;
• General research;
• Services;
• Intellectual-property development.

This can prevent an overbroad customs adjustment.

15. Failed R&D Projects Require Separate Treatment

A Turkish subsidiary may contribute to global R&D projects that never result in a commercially imported product.

Such expenditure should not automatically be allocated to unrelated imports.

Maintain project-level records.

16. Future Product Development Also Requires Separation

Research undertaken in 2026 may concern products to be launched in 2028.

Do not automatically allocate the cost against current imports merely because the same multinational group incurred it.

The causal relationship must be analyzed.

17. Prototype Costs Can Be Relevant

A foreign engineering center may develop prototypes before commercial production begins.

Determine:

• Who paid for the prototype?
• Who owns it?
• Was the cost recovered through the product price?
• Was it necessary for producing the imported goods?

These facts may affect customs valuation.

18. Moulds and Tooling Are Particularly Important

A Turkish importer may purchase a mould abroad and provide it free of charge to the foreign manufacturer.

If the mould is used to manufacture goods imported into Turkey, its value may require customs valuation analysis as an assist.

The cost may need to be appropriately allocated over the relevant production.

19. Allocation Methodology Matters

Suppose a EUR 500,000 mould is expected to manufacture:

500,000 units.

An allocation methodology may attribute the relevant portion of the mould’s value to imported production.

The methodology should be objective, documented and consistently applied.

20. Engineering Drawings Can Also Create Exposure

If the Turkish buyer separately purchases engineering drawings abroad and gives them to the foreign manufacturer for production of imported machinery, Customs may examine whether their value should be added.

The fact that the drawings are intangible does not automatically make them irrelevant.

21. Software Development May Overlap With R&D

Modern R&D frequently includes software.

Examples include:

• Machine-control software;
• Embedded firmware;
• Automotive software;
• Medical-device software;
• Production algorithms.

Determine whether the software is incorporated into, necessary for, or otherwise connected with the imported product.

22. Software Licence and Development Costs Should Be Separated

A company may pay one amount for:

development of software

and another for:

ongoing software licence rights.

These are different transactions and may require different customs valuation analyses.

23. Patent and Technology Payments Can Create Royalty Issues

R&D arrangements can ultimately generate intellectual-property rights.

The Turkish importer may later pay:

• Patent royalty;
• Technology licence;
• Know-how fee.

Such payments should be analyzed separately under the customs rules applicable to royalties and licence fees.

24. Do Not Automatically Treat Every R&D Payment as a Royalty

A payment for developing a new product is not necessarily the same thing as a royalty for using intellectual property.

Correct characterization is essential.

Possible categories include:

assist

royalty

purchase-price payment

independent service.

25. Independent Services Must Be Identified

Some foreign R&D-related services may be genuinely independent from imported goods.

Examples might include:

• General market research;
• Regulatory consulting;
• Employee training;
• Organizational research;
• Unrelated technology projects.

Maintain evidence demonstrating the actual service performed.

26. Research Performed After Importation Can Require Different Analysis

Suppose machinery is imported into Turkey and a foreign engineering company later develops an optimization system specifically for the Turkish factory.

That payment should not automatically be treated as part of the original machinery value.

Timing, purpose and contractual independence should be reviewed.

27. Related-Party R&D Charges Receive Greater Scrutiny

A common multinational structure is:

Foreign Parent

→ charges R&D allocation

→ Turkish Subsidiary

while another group company supplies the imported products.

Customs may examine whether these arrangements collectively reduce the declared import price.

28. Transfer Pricing Documentation Can Be Important

Review:

• Master file;
• Local file;
• Cost-sharing agreement;
• R&D agreement;
• Functional analysis;
• Transfer pricing methodology.

These documents may reveal how the group itself characterizes the R&D payment.

29. Customs and Transfer Pricing Positions Should Be Consistent

Avoid contradictory positions.

For example:

Tax position: The Turkish company pays R&D because the development directly creates the products it purchases.

while

Customs position: The R&D has absolutely no connection with imported products.

Such inconsistencies can weaken the company’s defense.

30. Cost Contribution Arrangements Require Detailed Analysis

Multinationals sometimes operate cost-sharing or cost-contribution arrangements.

The Turkish company may contribute a percentage of:

• Engineering salaries;
• Laboratories;
• Prototype costs;
• Testing;
• Patent development.

The customs treatment cannot safely be determined from the agreement title alone.

31. Identify the Benefit Received by the Turkish Company

Ask:

What does the Turkish subsidiary receive for its contribution?

Possibilities include:

• Ownership rights;
• Licence rights;
• Access to technology;
• Product-development benefits;
• Reduced purchase prices.

The answer can materially affect customs analysis.

32. Check Whether R&D Payments Reduce the Import Price

Suppose unrelated customers pay EUR 120 per unit.

The Turkish subsidiary pays EUR 80 per unit but separately funds the manufacturer’s product development.

Customs may investigate whether the EUR 80 invoice tells the complete economic story.

This structure requires particularly careful documentation.

33. Compare Independent Customer Pricing

Where possible, examine:

foreign manufacturer → Turkish subsidiary

against

foreign manufacturer → independent customers.

Adjust comparisons for:

• Quantity;
• Product;
• Commercial level;
• Market;
• Contractual responsibilities.

This may help explain whether separately funded R&D influenced the import price.

34. Prepare Project-Level Documentation

For each major R&D project, maintain:

• Project description;
• Development location;
• Participants;
• Cost;
• Product relationship;
• Intellectual-property ownership;
• Imported products benefiting;
• Allocation methodology.

Project-level evidence is far stronger than a single annual “R&D charge” entry.

35. Customs May Discover R&D Payments During Post-Clearance Audit

Customs may review accounting accounts such as:

R&D Charges

Engineering Services

Technical Development

Product Development

Intercompany Service Fees.

These payments may then be compared against historical imports.

36. Build a Historical R&D Matrix

Prepare:

R&D Project	Amount	Country	Imported Product Connection	Customs Review
Project A	EUR 500,000	Foreign	Direct	Required
Project B	EUR 250,000	Foreign	General research	Separate
Project C	EUR 400,000	Foreign	Future product	Separate

This helps prevent blanket treatment.

37. Calculate Customs Exposure Only After Allocation

Do not multiply the company’s total annual R&D expenditure by an average customs duty rate.

First identify:

which costs are potentially includable

→ which goods they relate to

→ which declarations are affected.

Only then calculate potential liability.

38. Product Classification and Origin Still Matter

If R&D value is added to customs value, the resulting duty impact depends on the imported product.

Review:

• Tariff classification;
• Origin;
• Ordinary customs duty;
• Additional customs duty;
• Other value-based import charges.

Different products can produce very different financial consequences.

39. Review Historical Periods Separately

If an R&D issue is discovered during a 2026 audit, do not assume that all prior years have identical consequences.

Review each period and declaration according to the applicable procedural and substantive framework.

40. Do Not Automatically Correct Historical Declarations

An accounting entry showing foreign R&D expense does not establish customs underpayment.

Before considering correction:

1. Identify the activity.
2. Determine its connection with imported goods.
3. Check whether the cost is already included.
4. Determine the correct legal characterization.
5. Establish allocation.
6. Calculate declaration-level exposure.

41. Penalty Exposure Requires Separate Analysis

Even where an R&D cost should affect customs value, the penalty question should be analyzed independently.

Relevant circumstances may include:

• Complexity of the arrangement;
• Information available at importation;
• Whether the amount was determinable;
• Disclosure to Customs;
• Genuine legal uncertainty.

Do not automatically treat additional duty and administrative penalty as the same issue.

42. Challenge Overbroad Customs Assessments

If Customs attempts to add the company’s entire global R&D allocation to customs value, examine whether the assessment improperly includes:

• General research;
• Failed projects;
• Future products;
• Domestic production;
• Independent services;
• Costs already included in product prices.

A detailed project-by-project analysis can be decisive.

43. Review R&D Agreements Before New Imports

Before a Turkish subsidiary enters a new:

• Cost-sharing agreement;
• Engineering agreement;
• Development agreement;
• Technology agreement;

the customs consequences should be analyzed.

Waiting until a post-clearance audit can create significant historical exposure.

44. Coordinate Engineering, Tax and Customs Teams

R&D valuation cannot be handled effectively by Customs personnel alone.

The company may need input from:

Engineers

Tax specialists

Finance

Procurement

Customs

Legal.

Technical understanding is often essential to determine whether a development cost relates to imported merchandise.

45. Immediate Action Plan

When a Turkish importer pays R&D costs abroad:

Identify each R&D project

→ determine where development occurred

→ identify imported goods benefiting from the project

→ review who paid the cost

→ review whether anything was provided to the manufacturer

→ test for assist treatment

→ check whether cost is already included in import price

→ review royalty implications

→ separate independent services

→ review transfer pricing documentation

→ develop an objective allocation

→ identify affected declarations

→ calculate potential customs exposure

→ analyze penalties separately

→ prepare an audit-ready R&D valuation file.

25-Point R&D Customs Valuation Checklist

1. R&D agreement.
2. Engineering agreement.
3. Cost-sharing agreement.
4. Project description.
5. Development location.
6. Foreign engineering center.
7. Product relationship.
8. Imported product list.
9. Research costs.
10. Development costs.
11. Engineering costs.
12. Technical drawings.
13. Designs.
14. Prototypes.
15. Moulds.
16. Tooling.
17. Software development.
18. Intellectual-property ownership.
19. Royalty payments.
20. Transfer pricing documentation.
21. Import-price calculation.
22. Allocation methodology.
23. Customs declarations.
24. Historical exposure calculation.
25. Assessment and penalty review.

Frequently Asked Questions

1. Are all foreign R&D costs included in Turkish customs value?

No. The nature of the activity, its relationship with imported goods, who supplied or paid for it and whether its value is already included in the import price must be examined.

2. Can foreign engineering and design costs increase customs value?

Potentially. Engineering, development work, designs, plans and similar work undertaken abroad may become relevant where the statutory requirements concerning buyer-supplied assists are satisfied.

3. What if the R&D cost is already included in the manufacturer’s price?

The same economic amount should not be added twice. The importer should document how the supplier calculated the product price.

4. Are general multinational R&D allocations automatically dutiable?

No. General R&D allocations should be analyzed to identify whether and to what extent they actually relate to goods imported into Turkey.

5. What about failed R&D projects?

Costs associated with projects that never resulted in the relevant imported goods should not automatically be allocated to unrelated imports.

6. Can mould and tooling costs affect customs value?

Potentially, particularly where the Turkish buyer provides qualifying moulds or tooling free of charge or at reduced cost for use in producing imported goods.

7. Are software development costs treated as R&D?

They may be, but software can create additional issues involving embedded technology, licence fees and intellectual-property rights. The actual arrangement should be examined.

8. Can Customs review historical imports after finding an R&D payment?

Yes. A post-clearance review may extend to historical declarations where Customs considers that foreign development costs were connected with imported goods, subject to the applicable procedural framework.

9. Should the company automatically correct declarations after discovering an R&D charge?

No. First determine whether the cost is legally relevant to customs value, whether it has already been included, how it should be allocated and which declarations are actually affected.

10. What is the safest approach for multinational companies?

Review foreign R&D arrangements before imports occur. Product-specific engineering, design, development, tooling and intellectual-property costs should be mapped against the imported goods and pricing structure so that potential customs-value additions are identified before substantial historical exposure develops.

Client-Focused Legal Support for R&D and Customs Valuation in Turkey

Foreign R&D customs matters can involve:

Research and development costs

Engineering and design expenses

Buyer-supplied assists

Moulds and tooling

Software development

Technology and royalties

Related-party imports

Transfer pricing

Post-clearance audits

and additional customs duties and penalties.

Fırat Fesih Kaya Law Office assists multinational companies, foreign manufacturers and Turkish importers where research, engineering, design or development costs paid abroad may affect the customs value of goods imported into Turkey.

Lawyer Fırat Fesih Kaya provides legal assistance in reviewing R&D and cost-sharing agreements, determining whether foreign development expenses constitute customs-value additions, analyzing assists and royalties, developing allocation methodologies, reviewing historical declarations and challenging additional customs assessments and penalties.

Phone: +90 312 434 22 22
Mobile: +90 532 769 22 22
Email: info@firatfesihkaya.av.tr
Address: Mevlana Boulevard No:221, Yıldırım Tower, Office No:148, 06520 Balgat, Çankaya, Ankara, Turkey