Legal Definitions - quoad valorem

Quoad valorem is a Latin phrase that historically means with regard to the value. It refers to situations where something, such as a tax, duty, or compensation, is determined or calculated based on the monetary worth or appraisal of an item or property.

Here are some examples illustrating this concept:

• Property Taxation: Imagine a historical system where a local government levied taxes on real estate. Instead of charging a fixed amount per acre, the tax assessor would determine the market value of each property—considering factors like its size, location, and any structures on it. The property owner would then pay a tax that was a percentage of that assessed value. A more valuable estate would therefore incur a higher tax burden.

  This illustrates "quoad valorem" because the tax amount is directly tied to, and proportional to, the monetary value of the property.

• Compensation for Lost Goods: Consider a scenario in an older legal framework where a merchant's valuable shipment of goods, such as rare spices or fine textiles, was lost or damaged due to another party's negligence. The compensation awarded to the merchant would not be a generic, fixed sum, but rather an amount calculated based on the actual market value of the specific goods that were lost or damaged at the time of the incident.

  This demonstrates "quoad valorem" because the compensation is determined by the intrinsic worth or value of the lost items.

• Customs Duties: In past centuries, many ports imposed duties on imported goods. If a duty was applied "quoad valorem," it meant that instead of a flat fee per container or weight unit, the duty charged on an imported item—like a shipment of precious jewels versus a shipment of raw timber—would be a percentage of the declared or assessed value of those goods as they entered the port. More valuable imports would generate higher duty payments.

  This example shows "quoad valorem" as the duty payable is directly proportional to the economic value of the imported merchandise.