A fee for the right to operate under a brand may depend on sales in Russia: the goods have already been imported, but the final amount is not yet known. This remuneration is called a royalty. For example, an importer pays a factory for clothing and, under a separate agreement, pays a percentage of the clothing sales to the trademark owner.
These payments may affect the customs value of the clothing even though they do not appear in the factory invoice. Under subparagraph 7 of paragraph 1 of Article 40 of the EAEU Customs Code, for commercial imports into the Eurasian Economic Union (EAEU), two conditions must be met at the same time: the payment must relate to the imported goods, and its payment must be, directly or indirectly, a condition of sale of those goods for export to the Union. Only an amount that has not already been included in the price is added.
| Connection | Payment relates to the imported goods |
|---|---|
| Sale | Payment is a condition of sale for export to the EAEU |
The licence shows what the importer is paying for: the right to sell products bearing a trademark, use technology or software, or exercise several such rights. The supply contract and the actual relationship with the seller help determine whether the purchase of the goods depends on this payment.
If stopping the royalty payments allows the right holder to stop supplies, this is significant when checking the condition-of-sale requirement. For example, the right holder may revoke the factory's authorisation to manufacture branded products. Different payment recipients and separate contracts do not eliminate that connection if it actually exists.
This approach was used in paragraph 7 of the Thematic Review of the Supreme Court No. 9/2026, approved on 17 June 2026. In the situation considered there, companies within the same group supplied branded goods, while the importer operated under a commercial concession agreement - an agreement under which the right holder granted a bundle of rights for conducting business under the brand. The contracts did not expressly state that the royalties were a condition of supply, but the Supreme Court assessed the overall organisation of trade within the group. The fact that the companies belong to the same group does not automatically include royalties in customs value: both conditions of Article 40 still have to be established.
There is also guidance from the Eurasian Economic Commission (EEC). Recommendation No. 20 of the Board of the EEC dated 15 November 2016 suggests taking into account the connection between the supply and the licence, the consequences of non-payment, and the degree of control exercised by the right holder over production and sales. It is a recommendation, not a binding legal act. It is useful as a framework for reviewing the documents. If the agreement states that royalties do not affect supplies, it is worth checking that the correspondence and the parties' actual dealings show the same thing.
Article 40 contains two important exceptions. Payments for the right to reproduce, meaning to make copies of, imported goods in the EAEU are not added to the price. Payments for the right to distribute or resell the goods are also not included when payment is not a condition of sale of the goods for export to the Union. A licence clause concerning sales of the goods on the Russian market therefore has to be examined together with the purchase terms.
The next question is whether the importer has already paid the same royalty as part of the price of the goods. If the seller has included the relevant remuneration in the price, adding it again is not permitted. This can be checked against the pricing formula, the supplier's calculations and payment documents. A mere match between total amounts is not enough: it must be clear which part of the licence payment is already included in the price of the goods.
A separate issue arises when components are imported. Suppose a Russian company imports parts, adds domestically produced components and assembles a finished product. The royalty is calculated on the value of the entire finished product. The full royalty for the finished product cannot simply be included in the customs value of the imported parts.
Paragraph 8 of Review No. 9/2026 requires the amount of royalty attributable specifically to the imported component to be determined. The composition of the product, purchase documents, information on Russian and foreign components, production data and licence reports may be used for this purpose.
If the exact share cannot be determined immediately, the Supreme Court allows a degree of flexibility in calculating it on the basis of available commercial and accounting data. The calculation must nevertheless remain substantiated. The Review does not establish a universal percentage for the imported component. If customs value cannot be determined under Method 1, the fall-back method is reached only in accordance with the prescribed sequence of methods.
Once the amount attributable to the imports has been determined, it must be allocated among the goods. Decision No. 83 of the Board of the Eurasian Economic Commission dated 22 May 2018, as amended on 2 December 2024 provides for allocation in proportion to the value of each item within the total value of the goods to which the addition relates. Goods to which a particular royalty does not relate are not included in that proportion.
Consider a hypothetical example. The licence covers two items valued at RUB 6 million and RUB 4 million. A separate payment is RUB 500,000. Assume that both conditions of Article 40 are met, the royalty has not yet been included in the price of the goods, and the entire payment relates specifically to these two items. No other additions or permitted deductions are taken into account in the example.
The first item accounts for 60% of the total value, so RUB 300,000 of the royalty is allocated to it. The second accounts for 40%, or RUB 200,000. After the additions, the amounts are RUB 6.3 million and RUB 4.2 million respectively.
If the same RUB 500,000 also relates to other goods, the part attributable to the imports under consideration must first be identified. In that case, the full RUB 500,000 cannot be allocated between the two items.
Decision No. 83 provides another option for royalties. At the declarant's choice - the declarant being the person who declares the goods or on whose behalf the declaration is lodged - the entire amount may be added to the price of one of the royalty-bearing goods for which import duty is calculated using the highest ad valorem rate or the highest ad valorem component of a combined rate. An ad valorem rate is expressed as a percentage of customs value.
If the goods arrive in several consignments, the amount is initially attributed to a qualifying item in the first consignment. If another royalty-bearing item subject to a higher rate is imported later, the amount is transferred to that item. After release, the customs value information for the goods imported earlier is amended and the previous addition is removed.
When only specific rates apply to all relevant goods, meaning rates per unit of quantity, Decision No. 83 allows the goods with the highest level of taxation to be selected. This method requires later consignments to be monitored: a rate in a later consignment may change the original calculation.
When paying a foreign right holder, a Russian company may withhold VAT - value added tax - as a tax agent, meaning it withholds and remits that tax on behalf of the income recipient. Paragraph 9 of Review No. 9/2026 does not allow the royalty included in customs value to be reduced by the VAT withheld. The Supreme Court distinguished the customs and tax bases and noted the possibility of a tax deduction in the situation it considered. The amount of the bank transfer after tax withholding may therefore be lower than the remuneration that must be taken into account in the customs calculation. That remuneration is determined by the accrued royalty and the licence terms.
For monthly and quarterly royalties, it is easier to keep the calculation by specific goods and consignments. The total amount in a quarterly licence report does not by itself show how much relates to each declaration. Stocks of goods imported earlier must be taken into account, and the same payment must not be added twice.
Paragraph 3 of Article 40 requires an additional amount to be based on reliable, quantifiable and documentary evidence. If the required amount cannot be determined on that basis, Method 1 for determining customs value does not apply.
When the exact royalty will become known only after future sales, it is possible to examine whether deferred determination of customs value is available under Decision No. 103 of the Board of the EEC dated 19 June 2018. In the cases covered by that Decision, a document-supported provisional amount is declared upon release and the exact amount is declared once the necessary information becomes available. This procedure applies to release for domestic consumption and subject to the conditions of Method 1. The contract must establish how a non-fixed royalty is to be calculated using data that are not yet available on the date the goods declaration is registered.
Andrey Bernev, customs lawyer