In foreign trade, commission refers to the service remuneration paid by the seller or buyer to an intermediary, agent, or broker, usually calculated as a certain percentage of the transaction amount. Its usage scenarios include: facilitating transactions through commission agents, agents assisting in market development, or intermediaries introducing customers. Precautions: The commission rate must be clearly stated in the contract to avoid confusion with discount—discount is a direct price reduction, while commission is an additional payment; commission is usually calculated on FOB or CIF net price; if the invoice includes commission, the 'commission rate' and 'net price' must be indicated. Unlike 'rebate', commission is a legal and open remuneration, whereas rebate may involve commercial bribery. Additionally, commission can be 'open commission' and 'hidden commission'; open commission is listed on the invoice, while hidden commission is paid separately. Foreign trade practitioners should accurately calculate commission, ensure safe receipt of payment, and pay attention to tax handling.
📝 Examples
1. We agree to pay you a 3% commission, calculated on the basis of FOB net price. (Note: Clarifies the commission rate and calculation basis, commonly seen in agency agreements.)
2. The invoice amount for this order is USD 100,000 CIF New York, including 2% commission. Please remit the commission to our designated account. (Note: Demonstrates the handling and payment method of an invoice including commission.)
💡 Foreign Trade Tips
Foreign trade terms are the foundation of international business communication
Trade practices may vary slightly by country; pay attention when using them
When using terms in contracts, specify the applicable version (e.g., Incoterms 2020)
For unfamiliar terms, use GlobalSync's multilingual email helper to confirm with your partner