Verifies the correct inclusion of royalties in the value of imports.
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Pablo Lo Monaco
Companies that operate under trademark license agreements and engage in the importation of goods often overlook a critical issue: should royalties be included in the customs value of imported goods? In Order No. 32310/2024, the Italian Supreme Court (Civil Section) provides important clarification on when licensing fees must be considered part of the customs value, in accordance with the provisions of the EU Customs Code and its implementing regulations. This article examines the Guess Europe case and its practical implications for businesses, focusing on customs compliance and contractual strategy.
A trademark is more than a distinctive sign—it is a genuine economic asset. For many businesses, the brand’s value exceeds that of the physical goods themselves, serving as both a business lever and a revenue stream through royalties.
Royalties are payments made by the licensee to the trademark owner for the right to exploit the brand in connection with goods or services. These are fees paid for the use of an intangible asset that, due to its market recognition, is capable of generating substantial revenue.
(See also: “How royalties work and what rights authors hold” by A. Canella and “New recovery strategies for unpaid royalties” by G. Regolo).
Royalty structures vary: they may be calculated as a percentage of sales of branded products, a fixed amount per unit sold, or other contractually agreed formulas. In industries such as fashion, luxury goods, publishing, and merchandising, licensing one’s trademark to third parties is standard practice, allowing companies to expand market reach without incurring production costs directly.
However, the treatment of royalties raises fiscal and customs-related issues that are often overlooked in commercial practice. A recent decision by the Italian Supreme Court has brought such concerns into focus through a dispute involving Guess Europe Sagl.
The Italian Supreme Court was asked to resolve a dispute concerning the importation of Guess-branded goods, triggered by the Customs Agency’s challenge to the omission of royalty payments from the customs value of the merchandise (Order No. 32310/2024).
In 2011, Guess Europe Sagl imported goods into Italy bearing the Guess trademark. However, it failed to include in the declared customs value the royalties paid to its U.S.-based parent company, Guess Inc. The Customs Agency argued that these amounts had to be considered part of the customs value, as they were essential for obtaining the goods.
Payment of royalties was a necessary condition for purchasing the merchandise, yet it had not been declared. As a result, the Customs Agency issued a reassessment and imposed penalties on Movimoda S.p.A., the indirect representative of the importing company.
Movimoda contested the Customs Agency’s position, arguing that the royalties should not be included in the customs value. The Supreme Court rejected this claim, upholding the position of the Customs Administration.
At the heart of the case was the interpretation of the EU Customs Code and, in particular, the requirement to account for licensing fees in the valuation of imported goods. The Court clarified when such amounts must be declared at customs, offering a decisive interpretation for import operations.
In Order No. 32310/2024, the Italian Supreme Court based its ruling on the EU Customs Code (Community Customs Code, “CCC”), particularly Article 29, which defines the customs value as the price actually paid or payable for imported goods.
This general principle is complemented by Article 32(1)(c) of the CCC, which states that royalties must be added to the declared value if they are not already included in the price paid and are a condition of sale. In the case at hand, the royalties paid by Guess Europe met both criteria.
The Court held that the customs value cannot be limited to the commercial price of the goods; it must also reflect amounts paid for the use of the trademark, where such payments are essential to conclude the transaction.
The Court also cited Article 157 of the Customs Code Implementing Provisions (commonly referred to as “DAC”), which reinforces this interpretative approach: when the buyer is contractually tied to the seller with regard to the use of the trademark, the royalties paid become part of the dutiable value for customs purposes.
The decision thus reaffirmed a critical principle in import operations: if the trademark is a core element of the business model and payment of royalties is a condition for acquiring the goods, such payments must be included in the customs value.
Order No. 32310/2024 requires careful consideration by all companies importing goods under licensed trademarks. Where royalty payments are a precondition for acquiring the merchandise, those payments must be included in the customs value. This is not discretionary—it is a binding requirement under EU law.
The contractual relationship between licensor and licensee becomes central. If the importer cannot source goods from alternative suppliers and the trademark is an essential feature of the commercial arrangement, then the royalties must be taken into account for customs purposes. Failure to do so may expose the business to reassessments, penalties, and litigation with customs authorities.
Pablo Lo Monaco
