A royalty paid after importation, calculated on local sales or remitted to a foreign IP owner can easily be missed in customs valuation. The decisive issue is not the label of the payment, but the link between the intellectual-property right, the imported goods and the buyer’s ability to purchase those goods. If all conditions for an addition are met but the amount is omitted, the importer may need to amend declarations, pay additional duties and explain the difference during post-clearance review. Conversely, adding an entire franchise, advertising or distribution fee without analysis may unnecessarily inflate landed cost. This article provides a control matrix for branded consumer goods, pharmaceuticals, components, machinery and equipment incorporating technology or software.

Operational reference | Updated: 17 July 2026 | Scope: imported goods involving trademarks, technology, software or IP rights

QUICK FACTS

Not automatically added

The words royalty, licence fee, franchise fee or related-party payment do not determine the customs treatment.

Three cumulative conditions

The payment must relate to the imported goods, be a condition of sale, and not already be included in the price actually paid or payable.

Payee is not decisive

Payments to the seller, an IP owner or a third party must all be tested against the contracts and control structure.

Unknown amounts still require control

The reason for the missing amount should be declared and the final value updated when the fee is actually paid.

SCOPE

This article applies mainly where imported goods are valued under the transaction-value method, including branded consumer products, pharmaceuticals, components using patents or know-how, machinery with software and franchise or exclusive-distribution structures.

Limit: No conclusion should be made without reviewing the sales agreement, licence agreement, payment flow, group structure, IP scope and fee calculation.

KEY TERMS

Term	Operational meaning	Valuation relevance
Royalty	Payment for using or transferring trademarks, patents, copyrights, know-how or other IP.	May be an addition only if all legal conditions are met.
Licence fee	Payment for permission to use IP, technology, software or a commercial right.	The granted right and its link to the imported goods must be identified.
Condition of sale	Without paying the fee, the buyer could not purchase the goods or the seller would not supply them.	One of the three cumulative conditions.
Price actually paid or payable	All direct or indirect payments made or to be made by the buyer to the seller for the imported goods.	A fee already included in this price must not be added again.
Apportionment	Allocation of a mixed fee between imported goods and unrelated elements using objective, quantifiable data.	Only the related portion is added; failure to separate may prevent use of transaction value.

SUBSTANCE AND OPERATING MECHANISM

THE THREE CONDITIONS MUST BE TESTED TOGETHER

Condition	Control question	Typical evidence	Initial conclusion
Related to imported goods	Does the right concern a trademark, patent, formula, software or technology embodied in or used by the imported goods?	Licence scope, catalogue, labels, BOM, technical documents and SKU-based fee calculation.	No functional or quantifiable link means the first condition may not be met.
Condition of sale	Could the importer buy the goods if the licence were not signed or the fee were not paid?	Termination clauses, supplier approval rights, seller–licensor relationship and nomination letters.	A genuinely independent resale or distribution right may fail this condition.
Not included in the goods price	Has the invoice or transfer price already absorbed the IP charge?	Price lists, transfer-pricing policy, invoices, debit notes and price reconciliation.	Do not add twice; if not included, determine the amount to add.

Decision rule: the fee is added under transaction value only when all three conditions are satisfied and the amount is supported by objective and quantifiable data.

THE PAYEE NEED NOT BE THE SELLER

A payment to a parent company, trademark owner or separate IP company is not automatically excluded. Review whether the seller is related to, controlled by or appointed by the licensor, or may refuse supply when the licence obligation is not met.

COMMON-SCENARIO MATRIX

Scenario	Review indicators	Possible treatment	Evidence required
Royalty based on local sales of branded goods	Fee applies directly to imported SKUs and the mark remains on the goods at sale.	Potential addition if it is also a condition of purchase and is outside the import price.	Revenue base, SKU list, purchase condition and licensor–seller relationship.
Exclusive distribution fee	Payment is for territory or resale network, separate from purchasing rights.	May be excluded if it is not a condition of purchasing the imported goods.	Evidence that goods remain purchasable without the distribution right.
Payment for the right to reproduce in Vietnam	The buyer pays to copy, manufacture again or reproduce the goods after importation.	Excluded under the specific reproduction-right rule; distinguish it from trademark, patent or know-how rights embodied in the imported goods.	Scope of right, territory, reproduced product and fee formula.
Composite franchise fee	Includes brand, training, store design, marketing and system management.	Do not add the whole amount mechanically; separate the import-related portion.	Contract schedules, pricing breakdown and allocation method.
Technology/know-how fee	The patent or know-how is embodied in the imported product or needed to make it.	Higher addition risk where payment is required to obtain the goods.	Patent scope, process evidence and authorised supplier structure.
Control or operating software for imported machinery	Software is required to install and operate machinery or equipment.	Apply the machinery-and-software valuation rule in Article 6 first. Actual payment for software required to operate the machine may form part of the machine customs value and is not decided solely by the Article 14 royalty test.	Technical description, supply condition, carrier medium, licence key, software import timing and payment evidence.
Regional advertising/marketing fee	Payment funds campaigns or market operation after importation.	Potentially separable where it is not a condition of sale and is independently evidenced.	Statement of work, deliverables, service invoices and proof of performance.

DOCUMENTS AND DATA TO REVIEW

Document/data	Owner	Data to lock	Purpose
Sales agreement and pricing schedules	Procurement/supplier	Conditions of sale, termination and whether IP is included in price.	Test condition of sale and prevent double counting.
Licence/franchise agreement	Legal/IP owner	Licensed right, territory, goods, payer/payee and calculation formula.	Establish the link to imported goods.
Group chart and party relationships	Legal/tax	Seller–licensor–importer relationship and control rights.	Assess third-party payments.
SKU list and allocation base	Accounting/ERP	Revenue, quantity, import value, domestic products and services.	Allocate only the import-related portion.
Invoices, debit notes and payments	Accounting	Accrual date, period, currency, actual payment and booking.	Determine declaration timing and final amount.
Catalogues, labels, patents and software documents	Technical/marketing	How the right is embodied in or used by the goods.	Support or rebut the “related” condition.
Transfer-pricing policy	Tax/finance	Whether the goods price absorbs royalty or is subject to year-end true-up.	Avoid duplicate additions and support related-party pricing.

REVIEW AND DECLARATION PROCESS

Step	Input	Control activity	Output
1. Map payments	Contracts, GL, AP and intercompany invoices.	Identify royalty, licence, franchise, technology, software and marketing charges.	Payment register by payee and period.
2. Link to imports	SKU list and licence scope.	Identify rights embodied in or used by imported goods.	Fee–SKU–declaration map.
3. Test condition of sale	Sales and licence agreements.	Assess consequences of non-payment and licensor control over supply.	Condition-of-sale conclusion.
4. Test inclusion in price	Invoices and pricing policy.	Reconcile separate fees with transfer price and year-end true-ups.	Double-counting conclusion.
5. Allocate amount	Revenue, quantity, import value or another reasonable driver.	Separate the import-related portion using objective data.	Auditable allocation schedule.
6. Declare at registration	Fee determinable from objective and quantifiable data.	Declare on the import declaration/valuation declaration and retain the formula, data and evidence. Do not invent an estimate where the contract does not yet permit the fee to be determined.	Declared customs value and duties.
7. Amount not yet known	Fee calculated after year-end or based on later sales.	State the reason in valuation details and track actual payment.	Open-declaration register.
8. Finalise after payment	Debit note, payment advice and final calculation.	Within five working days from actual payment, file the final value through an amended/supplementary declaration, pay the duty difference and address late-payment interest where applicable.	Closed file and duty reconciliation.

ALLOCATION AND NON-SEPARABLE FEES

Where a payment covers imported goods and domestic products, services, marketing or other commercial rights, use a reasonable and consistent allocation driver supported by objective data.

Data status	Principled treatment	Risk
Import-related part is separable	Add only the separated portion.	Inconsistent allocation may be rejected.
Fee is already in the goods price	Do not add again; retain pricing evidence.	Without a pricing memorandum the fee may appear to sit outside the price.
Related and unrelated portions cannot be separated using objective and quantifiable data	The adjustment cannot be determined, so transaction value may be unavailable; review the next valuation method in sequence.	Do not automatically add or exclude the whole mixed fee.
Fee changes after annual true-up	Amend using actual data and map the adjustment to declarations.	Weak declaration mapping creates duty-reconciliation risk.

RISKS AND COMMON ERRORS

Error	Cause	Impact	Control
Reviewing only commercial invoices	Royalty is billed separately or by another group company.	Omitted addition.	Reconcile AP/GL and intercompany contracts with customs declarations.
Treating a post-import payment as irrelevant	Payment timing is confused with the nature of the fee.	Under-declared value and duty.	Track from the first import, not the payment date.
Adding the entire franchise fee	Brand, management, training and marketing are not separated.	Unsupported increase in landed cost.	Break down the fee and document allocation.
Assuming third-party payee means exclusion	Licensor control over the seller is not examined.	Incorrect condition-of-sale conclusion.	Review group relationships and supply restrictions.
No disclosure when amount is unknown	Year-end fee is not tracked at import.	Missed final-value declaration.	State the reason and maintain an open-item register.
Convenient but unsupported allocation	No SKU mapping or controlled source data.	Allocation may be rejected.	Maintain an allocation memorandum, source data and approval trail.

LEGAL BASIS AND OFFICIAL SOURCES

Instrument/source	Authority/effect	Role
Circular 39/2015/TT-BTC	Ministry of Finance; effective 1 April 2015.	Customs valuation framework and Article 14 rules on royalties and licence fees.
Circular 60/2019/TT-BTC	Ministry of Finance; effective 15 October 2019.	Amends transaction-value rules, control/operating software treatment and valuation evidence.
Circular 06/2021/TT-BTC	Ministry of Finance; effective 8 March 2021.	Tax-administration rules for later-paid amounts, royalties and licence fees, including the final-value declaration and settlement deadline.
Customs guidance on royalties and licence fees	Vietnam Customs.	Operational reading of relatedness, condition of sale and declaration.
Case-by-case Customs guidance	Vietnam Customs.	Confirms that the complete transaction file must be analysed.
Guidance on fees paid later	Vietnam Customs.	Reference for final-value declaration after actual payment.

Update status: Legal content reviewed through 17 July 2026. Vietnamese legal instruments prevail; this English version is an operational reference, not an official legal translation.

FAQ

Must a fee paid to the parent company be added?

Not automatically. Test its link to imported goods, whether it is a condition of purchase and whether it is already in the goods price.

What if royalty is calculated on Vietnamese sales?

The calculation base is not decisive. The fee may still be added where it applies to imported SKUs and is a condition of purchase.

Are distribution and reproduction rights added?

A resale/distribution fee may be excluded where the right is independent and not a condition of buying the goods. Payment for the right to reproduce imported goods in Vietnam is a specific exclusion; the agreement must separate that right from IP embodied in the imported goods.

How is software for imported machinery treated?

Apply Article 6 on machinery with control/operating software first. Where software is required to install and operate the machine, the actual payment may form part of the machine customs value under that separate mechanism, rather than being decided only as an Article 14 royalty.

What if the amount is unknown at declaration?

State the reason in valuation details and maintain a tracking register. Within five working days from actual payment, file the final value, pay the duty difference and address late-payment interest where applicable.

What if a fee covers imports and domestic products?

Add only the import-related portion if objectively separable; otherwise review whether transaction value remains available.

What if the royalty is already embedded in the import price?

Do not add it again, but retain documentary evidence of the pricing composition.

APPLICATION NOTE: Accounting labels and withholding-tax treatment do not replace customs-valuation analysis. Substance, contractual rights, imported goods and sale conditions must be reviewed together.

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