What Is a Royalty Interest?

Royalties are payments for the use of patent, trademark, copyright, or similar proprietary rights owned by other economic units. It is a payment as property income, not a payment for commodity operations. Payments for expenses incurred by using the proprietary assets of other units can only be made up by property income derived from the use of this asset. However, the expenses incurred in the manufacture of patented products, the use of patented methods, or the use of trademarks include technical or management services, so they should be registered as production costs of the products. The use of exclusive rights is restricted. Enterprises must use these economic rights to the extent permitted by the exclusive rights holders. If the scope and duration are exceeded, users will be punished. ^[1]

Royalties

(1) Meaning

Royalties are any payments made by people as a result of using rights or intangible property such as information or services. Such as: personal income from patents, trademarks, copyrights, non-patented technology and other royalties.

Non-right owners must obtain the owner's consent or pay a certain fee before using this right, otherwise they will be regarded as infringement and liable.

Royalties and license fees are not fundamentally different from each other. Therefore, the Agreement and these are used together.

Generally speaking, royalties are fees paid for the use of:

patents, designs, drawings, procedures and know-how related to the manufacture of the estimated goods;

trademarks, registered designs, etc. related to the export sales of the assessed goods;

Copyright, copyright, etc. related to the use of the estimated goods.

The objects of payment mentioned above can be grouped into three categories: rights, information and services. Some of these rights have been confirmed, regulated and protected by law (such as patents, copyrights, registered trademarks, etc.), and some have not been confirmed by law (such as information, services, know-how).

The above-mentioned "patent rights" are granted by patents

Special attention needs to be paid,

Whether a certain franchise fee constitutes a condition of sale of the assessed goods can also be judged based on whether the franchise fee is independent of the assessed goods. If it is not independent, the fee constitutes a condition of sale, which must be included in the tax-paid value.

Type of royalties: Medium

Trademark rights, patent rights, distribution rights, copyright know-how

Trademark rights: focus

Trademarks are trademarks used by manufacturers or distributors for the goods or services they produce, manufacture, process or distribute to distinguish them from other goods or services. They are a commitment on the quality of their goods or services.

Trademarks are approved and registered by relevant government departments and are called registered trademarks. The registrant obtains the exclusive right to use the trademark and is protected by law. Others who want to use the registered trademark must sign a trademark license agreement with the trademark owner (registered person) and pay a certain fee.

The trademarks involved in customs valuation refer to trademarks that have been registered in the importing country and are protected by law, and are trademarks purchased by importers to resell imported goods in the country of import.