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Exporting Software: To file or not to file, Part 1

Posted By rosannatorres On November 18, 2010 @ 4:42 am In Foreign Trade Regulations | 6 Comments

By: Omari WoodenCD-Software [1]

The Foreign Trade Regulations (FTR) [2] mandates the filing of Electronic Export Information (EEI) in the Automated Export System (AES) for shipments of physical goods. The key word here is “physical.” In order for an item or product to be reported in the AES, you must be able to touch it. So what about exports of software, is this considered a physical good that requires an AES filing? The answer: it depends on whether you’re exporting mass market or customized software.

If you are exporting a shipment of mass market software, EEI must be reported in the AES. Mass market software is defined in the FTR as software that is “generally available to the public, and designed for installation by the user without further substantial technical support by the developer or supplier.” To easily determine if your software is considered mass market, ask yourself if you can purchase it at the local computer store. If your answer is yes, then you have mass market software and the shipment should be filed in the AES prior to export. When reporting the value for this software, report the selling price of the software or the cost of the goods if not sold (FTR 30.1).

Unlike mass market software, exports of customized software are typically exempt from reporting in the AES, unless there is a licensed required. Stay tuned for my next blog where I’ll cover this in more detail.

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6 Comments To "Exporting Software: To file or not to file, Part 1"

#1 Comment By Jessie McCarthy On May 10, 2011 @ 2:09 pm

If the mass marketed software is valued under $2500, could you claim the FTR Exemption 30.37(a)? Does all mass marketed software need to file an EEI, as stated above, or is there cases where another FTR exemption could be used, so an EEI won’t need to be filed?

#2 Comment By Global Reach Omari On May 20, 2011 @ 5:43 am

You are correct… Mass market software, that can be purchased over the counter, valued under $2,500, does not have to be reported in the AES, assuming the product is not licensable. The FTR exemption 30.37(a) would apply.

#3 Comment By John G On November 29, 2012 @ 7:11 pm

A twist on the above. What if I were to export a computer loaded with software? The computer has an ECCN but has a license exception The software is 5D992 c and is NLR. Assume the computer is $3000 and the software is $2700. How would I report this on the EEI?
1.Report simply the Computer at $3000 or $5700?
2. Which ECCN is reported? The one for the computer or the one for the software?

#4 Comment By Christopher C. On August 27, 2013 @ 2:10 pm

Good question…one I recently tackled myself. If the SW is loaded onto the HW that has an ECCN like 5D992, for example, this is the ECCN reported on your EEI. If the SW is encrypted, and was given a CCATS number, and is not a mass market kind, you should be submitting semi-annual reports to BIS with this information. I hope this helps. :->

#5 Comment By Dan On December 14, 2015 @ 12:54 pm

You stated “Unlike mass market software, exports of customized software are typically exempt from reporting in the AES, unless there is a licensed required. Stay tuned for my next blog where I’ll cover this in more detail.”

However, you did not address matter in the subsequent blog. Is there ever a situation where customized software downloaded or otherwise transmitted via the Internet that is licensed becuase of encryption or other issues would require a filing via AES?

#6 Comment By Global Reach Shannon On December 23, 2015 @ 7:00 am

@Dan: As Omari stated in his second blog, the Foreign Trade Regulations (FTR) requires reporting of physical goods. If the customized software is being transmitted electronically and not on a physical medium, then it is excluded from filing requirements per Section 30.2(d)(3).

Article printed from Global Reach Blog: http://globalreach.blogs.census.gov

URL to article: http://globalreach.blogs.census.gov/2010/11/18/exporting-software-to-file-or-not-to-file-part-1/

URLs in this post:

[1] Image: http://globalreach.blogs.census.gov/files/2012/04/6a0120a61b56ed970c0133f60e1a4e970b-320wi.jpg

[2] Foreign Trade Regulations (FTR): http://www.census.gov/foreign-trade/regulations/regs/regulations20080602-federalregister.pdf