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Import Duties and Taxes: What Your International Shipment Will Cost

Beyond shipping costs, international recipients often pay import duties and taxes. Learn how they're calculated, when they apply, and how to minimize surprise fees.

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How are duties and taxes calculated on international shipments?

Duties are calculated as: (Declared Value + Shipping Cost) × Duty Rate. Rates vary by product category (HS code) and destination country (0-30%+). VAT/GST is then added on top of (value + shipping + duty). Many countries have de minimis thresholds below which no duties apply: US $800, EU €150, Canada $20 CAD, Australia $1,000 AUD.

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Understanding De Minimis Thresholds

De minimis is the value threshold below which imports are duty-free. Every country sets their own:

  • United States: $800 - Very high threshold. Most personal imports enter duty-free. Items over $800 may owe duties based on product type.
  • Canada: $20 CAD (~$15 USD) - Very low. Almost every import triggers duties and GST/HST (13-15%). Budget for this on all Canada shipments.
  • European Union: €150 for duties, €0 for VAT - Since July 2021, VAT applies to all imports regardless of value (no exemption). Duties kick in at €150.
  • United Kingdom: £135 for duties, £0 for VAT - Similar to EU. VAT (20%) applies to everything. Duties apply to items over £135.
  • Australia: $1,000 AUD (~$650 USD) - Relatively high threshold. Items under this are generally duty and GST free (some exceptions apply).
  • Japan: ¥10,000 (~$70 USD) - Moderate threshold. Consumption tax (10%) applies above this level.

How Duty Rates Are Determined

Import duty rates depend on:

  • HS Code classification - Every product has a 6-10 digit Harmonized System code. The code determines the duty rate. A cotton t-shirt vs polyester t-shirt may have different rates.
  • Country of origin - Where the item was manufactured affects rates. Trade agreements (USMCA, CPTPP) may reduce or eliminate duties between member countries.
  • Product material and composition - Within categories, materials matter. Leather shoes face different duties than rubber shoes.
  • Declared value - Duties calculated on CIF (Cost + Insurance + Freight) value in most countries. Shipping cost is included in dutiable value.

Common duty rate ranges: Clothing 10-25%, electronics 0-5%, luxury goods 15-30%, books usually 0%, raw materials 0-10%.

DDP vs DDU: Who Pays Duties?

The shipping term determines who is responsible for duties and taxes:

  • DDU (Delivered Duty Unpaid) - Also called DAP (Delivered at Place). The shipper pays shipping only. The recipient pays any duties and taxes upon delivery. This is the default for most shipments. Recipients may be surprised by fees.
  • DDP (Delivered Duty Paid) - The shipper prepays all duties, taxes, and customs fees. Recipient receives package with no additional charges. Improves customer experience but costs more upfront.

For e-commerce, DDP is increasingly preferred. It eliminates surprise fees that cause delivery refusals and negative reviews. Carriers like DHL, FedEx, and UPS offer DDP options at checkout.

Pro Tips to Save More

1

Use accurate HS codes

Correct classification ensures proper duty rates. Wrong codes can mean overpaying duties or facing reassessment and penalties.

2

Consider DDP for e-commerce

Prepaying duties improves customer experience, reduces refusals, and avoids the negative reviews that come from surprise fees.

3

Don't undervalue to avoid duties

Customs agents know typical values. Undervaluation is fraud, causes delays, and can result in penalties. Declare actual transaction value.

4

Factor duties into pricing

When selling internationally, include estimated duties in product pricing or clearly communicate that recipient pays duties.

5

Check trade agreements

Products may qualify for reduced or zero duties under trade agreements like USMCA (US-Mexico-Canada), CPTPP (Pacific), or bilateral agreements.

6

Keep detailed records

Maintain commercial invoices and customs documentation. You may need them for disputes, duty refunds, or tax deductions.

Frequently Asked Questions

Formula: (Declared Value + Shipping Cost) × Duty Rate = Duty Owed. Then calculate VAT/GST: (Value + Shipping + Duty) × VAT Rate = Tax Owed. Duty rates vary by HS code and destination. Use destination country's tariff database for exact rates.
De minimis is the value below which imports are exempt from duties and/or taxes. It varies widely: US $800, Canada $20 CAD, EU €150 (but €0 for VAT), UK £135, Australia $1,000 AUD. Below threshold, items typically enter without customs charges.
Usually yes. "Gift" designation doesn't avoid duties in most countries. Gift exemptions have low thresholds ($60 CAD in Canada, €45 in EU) and apply only to genuine personal gifts. Commercial items marked as gifts is fraud.
Duties (tariffs) are taxes on imported goods, varying by product type and origin country. Taxes (VAT, GST) are consumption taxes applied to goods regardless of origin. Both may apply: first duties are assessed, then VAT on the total.
Yes, you can file for duty refunds if: items were incorrectly classified, qualifying trade agreement wasn't applied, or items are re-exported. The process varies by country and requires documentation. Time limits apply (usually 1-5 years).
Under DDU/DAP shipping (the default), the shipper pays only for transportation. Import duties and taxes are the importer's (recipient's) legal obligation. Choose DDP shipping if you want to prepay all charges.
IOSS (Import One-Stop Shop) is an EU system for collecting VAT on e-commerce shipments under €150. Sellers register for IOSS, collect VAT at checkout, and goods clear customs without VAT due at destination. Improves customer experience for EU shipments.
Returned goods can often re-enter duty-free under "returned goods relief" if you can prove they were originally exported from your country. Documentation required. Otherwise, you may owe duties on your own returned merchandise.

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