A Selling Commission is a commission paid to an agent who represents the seller in connection with the sale of the imported merchandise. Under 19 U.S.C. § 1401a(b)(1)(B), selling commissions are a statutory addition to the price actually paid or payable when computing transaction value, to the extent not already included.
The key distinction is who the agent represents:
- Selling commission (dutiable) — paid to an agent acting on behalf of the seller (e.g., a foreign sales representative, export agent, or sales rep working on the manufacturer's behalf to find U.S. buyers)
- Buying commission (non-dutiable) — paid to an agent acting on behalf of the buyer (e.g., a sourcing agent, purchasing rep, or quality inspector working for the U.S. importer)
CBP analyzes the substance of the agency relationship, not the label on the invoice. The leading test is set out in Rosenthal-Netter, Inc. v. United States, 679 F. Supp. 21 (Ct. Int'l Trade 1988), and CBP rulings such as HQ 542141, considering:
- Who exercises control over the agent
- Who bears the agent's risk of loss
- Whose interests the agent represents in negotiation
- Who pays the agent and how the fee is calculated
- Whether the agent is an independent businessperson or merely an extension of one party
A commission that is labeled "buying commission" but where the agent actually negotiates price on behalf of the seller, controls the seller's manufacturing, or has its own profit margin on the goods, will be treated as either a selling commission or as part of the price actually paid or payable.