A Turkish importer pays royalties or licence fees after imported goods are cleared through Customs. Learn when royalties must be added to customs value, how post-import payments should be declared, and how companies can manage additional duty and penalty risks.

A Turkish importer may purchase goods from a foreign manufacturer, clear them through Customs and only months later calculate and pay a royalty or licence fee.

This frequently occurs where royalties are calculated as:

• A percentage of Turkish sales;
• A percentage of turnover;
• A fixed amount per unit sold;
• A trademark fee;
• A patent or technology licence;
• A know-how payment.

The fact that the royalty is calculated or paid after importation does not, by itself, exclude it from customs value.

Under Turkey’s customs valuation framework, a royalty or licence fee not already included in the price may need to be added where, in particular, it relates to the imported goods and is payable as a condition of sale of those goods.

Therefore, the central question is not:

“When was the royalty paid?”

It is:

“Why was the royalty paid, what goods does it relate to, and was payment a condition connected with the sale of those imported goods?”

1. Not Every Royalty Is Included in Customs Value

The existence of a licence agreement does not automatically create additional customs duty.

The royalty must be analyzed under the applicable customs valuation conditions.

The Ministry of Trade identifies two central requirements:

1. The royalty or licence fee must relate to the goods being valued.
2. The payment must be made as a condition of sale of those goods.

If those conditions are not satisfied, automatic inclusion would be inappropriate.

2. Payment After Importation Does Not Automatically Protect the Importer

This is one of the most important practical points.

Suppose goods are imported in January.

The importer sells them during the year.

The royalty is calculated in December and paid in February of the following year.

The importer cannot simply argue:

“The royalty did not exist when the goods entered Turkey.”

If the obligation arose from the commercial arrangement applicable to the imported goods, the later calculation or payment date does not necessarily prevent customs-value inclusion.

3. What Types of Payments Can Constitute Royalties?

The Ministry’s current guidance describes royalty and licence payments broadly in connection with rights such as:

• Patents;
• Designs;
• Know-how;
• Models;
• Trademarks;
• Registered designs;
• Copyright;
• Manufacturing processes.

The contractual label is therefore not decisive.

4. First Test: Does the Royalty Relate to the Imported Goods?

This requires a factual analysis.

For example:

Foreign parent owns Brand X

→ Turkish subsidiary imports Brand X products

→ products are sold in Turkey under Brand X

→ subsidiary pays 5% of sales as trademark royalty.

There may be a strong connection between the royalty and the imported merchandise.

But the result can be different where the payment concerns activities unrelated to the imported goods.

5. Second Test: Is the Royalty a Condition of Sale?

This is often the most contested issue.

Ask:

Could the Turkish importer purchase the goods without paying the royalty?

If the answer is genuinely yes, that may support exclusion.

If the commercial structure effectively requires the importer to enter into the licence arrangement to obtain the goods, Customs may argue that the royalty is a condition of sale.

6. Review the Supply Agreement and Licence Agreement Together

Never analyze the royalty agreement in isolation.

Compare:

Supply agreement

with

Trademark/licence agreement.

Look for:

• Cross-references;
• Common termination clauses;
• Exclusivity;
• Supplier control;
• Restrictions on sourcing;
• Group-company relationships.

Two formally separate agreements may still be commercially connected.

7. Who Receives the Royalty?

The royalty may be paid to:

• Foreign seller;
• Foreign parent;
• Intellectual-property owner;
• Sister company;
• Independent licensor.

The identity of the recipient matters, but it does not always resolve the analysis by itself.

8. Royalty Paid Directly to the Seller

This is a relatively straightforward risk scenario.

Suppose:

Foreign seller sells branded products to Turkish importer

and

the same seller receives a 5% trademark royalty.

The company should immediately analyze whether the royalty relates to the goods and constitutes a condition of sale.

9. Royalty Paid to a Related Group Company

Multinational structures are often more complicated.

For example:

Company A: manufacturer and seller.

Company B: intellectual-property owner.

Company C: Turkish importer.

Company C pays Company A for the goods and Company B a royalty.

The fact that the royalty is paid to Company B does not automatically make it irrelevant.

The relationships and contractual structure should be examined.

10. Royalty Paid to an Independent Third Party

Third-party royalty arrangements require separate analysis.

Current Ministry guidance specifically addresses payments to third parties and whether the seller or a person related to the seller requires the buyer to make the payment.

Therefore, a third-party payment should not automatically be treated in the same way as a royalty paid to the seller.

11. Trademark Royalties Require Particular Attention

Trademark arrangements can be especially significant.

The Ministry’s guidance provides specific conditions concerning trademark royalties, including whether the imported goods are marketed under the relevant trademark and whether the buyer is free to obtain such goods from suppliers unrelated to the seller.

Sourcing freedom can therefore become a critical factual issue.

12. Can the Turkish Importer Buy From Other Manufacturers?

Ask:

Can the Turkish company purchase equivalent licensed goods from unrelated suppliers?

If the licence arrangement effectively forces sourcing from the foreign seller or its group, Customs may examine the royalty more closely.

Preserve evidence of genuine alternative sourcing rights where they exist.

13. Patent Royalties Can Also Affect Customs Value

A royalty may be paid for patented technology embodied in imported machinery or products.

Relevant questions include:

• Is the patented technology contained in the imported goods?
• Is payment necessary to purchase or use those goods?
• Is the royalty already reflected in the invoice price?

Avoid double counting.

14. Know-How Payments Need Substance Analysis

A contract may call a payment:

“Technical know-how fee.”

But what does the fee actually cover?

It may concern:

• Manufacturing technology embodied in imported goods;
• Post-import production assistance;
• Employee training;
• Independent consulting.

Different components may require different customs treatment.

15. Mixed Royalty Agreements May Require Allocation

A royalty may relate partly to imported goods and partly to:

• Locally manufactured products;
• Post-import services;
• Domestic intellectual property use;
• Other business activities.

The Ministry expressly recognizes that where a royalty relates partly to imported goods and partly to other elements or post-import activities, an appropriate allocation may be made on the basis of objective and measurable data.

This can substantially reduce unnecessary customs exposure.

16. Do Not Add the Entire Royalty Automatically

Suppose a Turkish company pays EUR 1 million annually.

Only 40% relates to imported finished products.

The remainder concerns locally manufactured goods and independent services.

The entire EUR 1 million should not automatically be treated as an addition to imported-goods value.

A defensible allocation methodology should be developed.

17. Objective and Measurable Data Are Essential

Customs-value additions must be supported by objective and measurable information. The Ministry’s guidance expressly emphasizes this requirement.

Possible allocation bases include:

• Imported-product sales;
• Units sold;
• Product-specific turnover;
• Licence schedules;
• Audited accounting data.

18. Percentage-of-Sales Royalties Require Careful Review

A common arrangement is:

Royalty = 5% of net Turkish sales.

Because the amount cannot be calculated at importation, the importer may believe that no customs declaration is possible.

That conclusion is unsafe.

The customs rules provide mechanisms for valuation elements that become determinable after importation.

19. Exceptional Value Declaration May Be Relevant

Official Ministry materials specifically state that where the amount of a royalty or licence fee that must be included in customs value will only become known after importation, an exceptional value declaration mechanism may be available under the relevant Customs Regulation provisions.

This should be considered before recurring imports begin.

20. If the Royalty Is Known at Importation

Where the includable royalty amount is already determinable at the time of importation, official guidance states that it should be included in customs value at importation.

Deliberately postponing payment does not necessarily postpone the valuation obligation.

21. If the Royalty Becomes Known Later

Where the royalty is calculated later, the company should establish a compliance procedure for:

import declarations

→ royalty calculation

→ allocation

→ final customs valuation

→ additional declaration/payment where legally required.

The process should not depend on someone remembering the issue at year-end.

22. Reconcile Royalties With Customs Declarations

For high-volume importers, prepare a declaration-level reconciliation.

For example:

Declaration	Imported Value	Royalty Allocation	Revised Value
A	EUR 100,000	EUR 5,000	EUR 105,000
B	EUR 200,000	EUR 10,000	EUR 210,000
C	EUR 300,000	EUR 15,000	EUR 315,000

This allows accurate calculation of potential additional customs liability.

23. Different Products May Have Different Duty Rates

A royalty may cover hundreds of products.

Some may attract:

0% customs duty

while others may be subject to:

• Ordinary customs duty;
• Additional customs duty;
• Other value-dependent import charges.

Allocation should therefore be product-specific where necessary.

24. Additional Customs Duty Can Also Be Affected

Turkey’s current additional customs duty framework continues to impose additional duties on goods falling within specified tariff positions, subject to origin and other applicable conditions.

If an includable royalty increases customs value, value-based additional customs duty may also need to be recalculated where applicable.

25. Origin Still Matters

Do not calculate exposure solely by multiplying the royalty by one customs duty rate.

Review:

• GTIP;
• Origin;
• Preferential treatment;
• Additional customs duty;
• Relevant import regime.

The same royalty allocation may produce different consequences for different products.

26. Avoid Double Counting

A royalty may already be included in the supplier’s invoice price.

Before making any additional customs-value adjustment, determine whether the amount has already been captured.

Customs valuation should not include the same economic amount twice.

27. Separate Royalties From Management Fees

Multinational groups frequently make simultaneous payments for:

Trademark royalty

management services

IT services

technical support.

Each payment should be analyzed according to its actual substance.

Do not automatically combine all intercompany payments into the customs value.

28. Separate Post-Import Technical Services

The Ministry’s valuation guidance recognizes that certain separately identifiable post-import construction, installation, assembly, maintenance or technical-assistance expenses are not included in customs value.

Contracts should therefore distinguish genuine post-import services from royalty payments relating to the imported merchandise.

29. Reproduction Rights Can Receive Different Treatment

Official guidance distinguishes certain payments for rights to reproduce imported goods in Turkey from includable royalty payments.

The precise intellectual-property right being licensed therefore matters.

30. Distribution and Resale Rights Require Separate Analysis

Payments for distribution or resale rights are not automatically included merely because they exist.

Official guidance indicates that certain payments for distribution or resale rights are excluded where they are not a condition of the sale for export to Turkey.

The underlying contractual restrictions should therefore be reviewed.

31. Customs May Discover Royalties During a Post-Clearance Audit

Royalty risks frequently arise when Customs examines:

• General ledger;
• Transfer-pricing documentation;
• Intercompany agreements;
• Financial statements;
• Foreign-currency payments.

A payment appearing under:

“Trademark Licence Fee”

can lead Customs to review several years of import declarations.

32. Build a Historical Royalty Matrix

Prepare:

Year

Royalty recipient

Royalty amount

Calculation method

Relevant imported goods

Customs treatment

Declarations affected.

This allows management to understand potential exposure before responding to an audit.

33. Review Previous Years Before Making Admissions

If the company discovers that royalties were never analyzed for customs purposes, do not immediately assume every historical payment was dutiable.

First test:

1. Does it relate to imported goods?
2. Is it a condition of sale?
3. Who receives it?
4. Is the seller involved?
5. Is part attributable to non-import activities?
6. Was any amount already included?

34. Voluntary Correction Requires Strategic Analysis

If the legal review confirms an omitted customs-value element, the importer should examine available correction procedures and consequences.

Before acting, determine:

• Affected declarations;
• Applicable periods;
• Duty rates;
• Allocation methodology;
• Potential penalties;
• Payment consequences.

A blanket correction based on the entire royalty amount may be incorrect.

35. Penalties Should Be Analyzed Separately

Additional customs duty and administrative penalties are separate issues.

If Customs determines that an includable royalty was omitted, review:

• Applicable penalty provision;
• Information available when declarations were filed;
• Whether the amount was known;
• Whether exceptional value procedures were used;
• Whether the importer had disclosed the royalty arrangement.

Do not assume that additional tax automatically determines the penalty result.

36. Preserve Evidence That the Royalty Was Not a Condition of Sale

Where that is the company’s position, collect:

• Supply agreements;
• Licence agreements;
• Alternative supplier evidence;
• Termination provisions;
• Independent sourcing records;
• Correspondence.

The argument should be supported by actual commercial behavior.

37. Related Parties Require Additional Caution

Where the seller, importer and intellectual-property owner belong to the same multinational group, Customs may examine whether formally separate agreements are economically interconnected.

The group structure should therefore be mapped clearly.

38. Transfer Pricing Documentation Can Reveal Royalty Risks

Transfer-pricing reports may explain that the Turkish subsidiary pays the foreign parent for:

• Trademark use;
• Technology;
• Know-how;
• Product rights.

Tax teams and customs teams should therefore review transfer-pricing documentation together.

39. Review Royalty Clauses Before Signing

Customs analysis should begin before a licence agreement becomes effective.

Review:

• Royalty base;
• Relevant products;
• Recipient;
• Relationship with seller;
• Sourcing restrictions;
• Payment timing;
• Allocation methodology.

This allows the importer to design an administratively workable customs process.

40. Create a Royalty-to-Import Reconciliation System

For recurring imports:

Customs declaration data

• sales data
• royalty calculation

= royalty allocation by imported product.

Automating this process can substantially reduce year-end compliance problems.

41. Review the Royalty at Least Annually

Licensing arrangements evolve.

A payment that initially concerned only locally produced goods may later extend to imported products.

The customs analysis should therefore be updated when:

• New products are added;
• Supplier changes;
• Royalty percentage changes;
• Agreements are amended;
• Group ownership changes.

42. Challenge an Overbroad Customs Assessment

If Customs adds the entire royalty to customs value without analyzing whether part relates to:

• Local production;
• Services;
• Non-imported products;
• Reproduction rights;
• Independent activities;

the importer should examine whether the assessment is overbroad.

Objective allocation evidence can become central to the challenge.

43. Protect Objection Deadlines

If Customs issues an additional assessment or penalty, record the notification date immediately.

Do not delay formal action while waiting for:

• Foreign headquarters;
• Licensor;
• Transfer-pricing consultant;
• Auditor.

Prepare the technical evidence in parallel with protection of procedural rights.

44. Prepare One Integrated Royalty File

The file should contain:

• Supply agreement;
• Licence agreement;
• Group structure;
• Royalty invoices;
• Calculation schedules;
• Bank payments;
• Accounting records;
• Imported-product list;
• Customs declarations;
• Allocation methodology;
• Transfer-pricing documentation.

This allows the company to answer Customs coherently.

45. Immediate Action Plan

When a royalty is paid after importation:

Identify the licensed right

→ identify the goods concerned

→ review the supply and licence agreements together

→ determine whether the royalty relates to imported goods

→ determine whether payment is a condition of sale

→ identify the recipient and its relationship with the seller

→ review sourcing restrictions

→ separate imported goods from local products and services

→ develop an objective allocation

→ determine whether the amount was known at importation

→ review exceptional value procedures where applicable

→ allocate the royalty to declarations

→ calculate additional customs exposure

→ analyze penalties separately

→ protect objection or correction deadlines.

25-Point Royalty Customs Checklist

1. Supply agreement.
2. Licence agreement.
3. Royalty recipient.
4. Seller identity.
5. Group relationship.
6. Intellectual-property right.
7. Imported products covered.
8. Locally produced products covered.
9. Royalty percentage.
10. Calculation base.
11. Condition-of-sale analysis.
12. Alternative sourcing rights.
13. Trademark restrictions.
14. Royalty invoices.
15. Bank payments.
16. Accounting entries.
17. Transfer-pricing documentation.
18. Import declarations.
19. Product GTIPs.
20. Product origins.
21. Allocation methodology.
22. Exceptional value procedure.
23. Historical royalty payments.
24. Additional duty calculation.
25. Penalty and objection analysis.

Frequently Asked Questions

1. Is a royalty automatically included in customs value in Turkey?

No. The applicable conditions must be examined. In particular, the royalty generally needs to relate to the imported goods and be payable as a condition of their sale.

2. Does paying the royalty after importation prevent additional customs duty?

No. Payment timing alone does not determine the result. A royalty calculated or paid later may still affect customs value if the substantive requirements for inclusion are satisfied.

3. What if the royalty amount is unknown when the goods are imported?

Official Ministry guidance states that where an includable royalty amount becomes known only after importation, exceptional value declaration procedures may be available under the Customs Regulation.

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

The arrangement still requires analysis. The relationship among the seller, licensor and buyer, and whether the seller or a related person requires the payment, can be relevant.

5. Are trademark royalties always included?

No. Trademark royalties are subject to specific conditions. The way the goods are marketed and whether the buyer is free to source from unrelated suppliers can be particularly relevant.

6. What if the royalty covers both imported and locally manufactured goods?

An appropriate allocation may be possible where it is based on objective and measurable data.

7. Can Customs add the entire annual royalty to imported goods?

Not automatically. The company should determine which portion actually relates to the imported merchandise and whether the conditions for customs-value inclusion are satisfied.

8. Can additional customs duty also increase because of the royalty?

Potentially. Where an includable royalty increases the customs value of goods subject to value-based additional customs duty, the resulting liability should also be recalculated under the applicable regime.

9. Can Customs review previous years?

Yes. Discovery of previously unanalyzed royalty payments may lead to examination of historical imports, subject to the applicable procedural and limitation rules.

10. What should an importer do before paying a large royalty?

Review the royalty agreement together with the supply arrangement before payment. Determine whether the royalty relates to imported goods, whether it is a condition of sale, whether part should be allocated to other activities, and whether a customs declaration or adjustment procedure is required.

Client-Focused Legal Support for Royalty and Customs Valuation Disputes in Turkey

Royalty-related customs matters can involve:

Trademark royalties

Patent and technology licences

Know-how payments

Post-import royalty calculations

Customs valuation

Exceptional value declarations

Additional customs duties

Related-party transactions

Post-clearance audits

and customs penalties.

Fırat Fesih Kaya Law Office assists multinational companies, foreign licensors, manufacturers and Turkish importers where royalties or licence fees may affect the customs value of imported goods.

Lawyer Fırat Fesih Kaya provides legal assistance in reviewing royalty and supply agreements, determining whether licence payments must be included in customs value, developing objective allocation methodologies, analyzing historical declarations, calculating potential additional customs exposure, and challenging 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