Customs and Duties: A Guide to International Shipping Fees

International shipping involves more than just postage costs. Customs duties, import taxes, and various fees can significantly impact the total cost of cross-border shipments. This guide explains everything sellers and buyers need to know about international shipping fees.

Understanding Customs and Duties

What Are Customs Duties?

Customs duties are taxes imposed on goods when they cross international borders. These fees:

• Generate revenue for importing countries
• Protect domestic industries
• Regulate trade

Types of International Fees

How Duties Are Calculated

Calculation Factors

Product Classification (HS Code)

• Harmonized System codes classify products
• Different codes = different duty rates
• 6+ digits for specificity

Declared Value

• The stated value of goods
• Usually commercial invoice value
• Affects duty amount

Country of Origin

• Where goods were manufactured
• Trade agreements affect rates
• Some origins have preferential treatment

Destination Country Rules

• Each country sets own rates
• De minimis thresholds vary
• Some goods are restricted

Basic Duty Calculation

Duty = (Declared Value × Duty Rate) + Fixed Fees

Example:

• Product value: $100
• Duty rate: 10%
• Duty owed: $10
• Plus applicable VAT/GST

De Minimis Thresholds

Many countries waive duties on low-value shipments:

*Canada: $20 for duties, $150 for taxes

Important: De minimis applies to duty-free entry, not tax-free. VAT/GST may still apply.

Duties by Region

Shipping to Canada

Duty rates: Vary by product (0-25% typical) GST: 5% federal PST/HST: Varies by province (0-10%) De minimis: $20 CAD duty-free, $150 CAD tax-free

Shipping to UK

Duty rates: Vary by product and origin VAT: 20% De minimis: £135 Note: Post-Brexit changes for EU goods

Shipping to EU

Duty rates: Common External Tariff VAT: Varies by country (17-27%) De minimis: €150 for duties IOSS: Simplified VAT for e-commerce

Shipping to Australia

Duty rates: Typically 0-10% GST: 10% De minimis: $1,000 AUD Relatively high threshold makes AU attractive

Who Pays Duties?

Delivery Duty Unpaid (DDU)

• Buyer pays duties at delivery
• Lower shipping cost for seller
• Risk: Buyer refuses delivery
• May delay delivery

Delivery Duty Paid (DDP)

• Seller pays duties upfront
• Better customer experience
• Higher shipping cost
• No surprises for buyer

Choosing DDU vs DDP

Use DDU when:

• Targeting price-sensitive markets
• Duties are unpredictable
• Testing new markets

Use DDP when:

• Customer experience is priority
• Duties are predictable
• Building brand trust

Required Documentation

Commercial Invoice

Must include:

• Sender and recipient details
• Detailed item descriptions
• HS codes (if known)
• Declared values
• Country of origin
• Reason for export

CN22/CN23 Forms

CN22: Items under $400 value CN23: Items over $400 value

Required information:

• Contents description
• Quantity
• Weight
• Value
• Sender declaration

Certificate of Origin

Sometimes required for:

• Trade agreement benefits
• Country-specific requirements
• Certain product categories

Avoiding Common Problems

1. Under-Declaring Value

Don't do this. Consequences:

• Customs delays
• Penalties and fines
• Seized shipments
• Account suspension

2. Vague Descriptions

Wrong: "Gift" or "Sample" Right: "Cotton T-shirt, men's, size L"

Specific descriptions clear customs faster.

3. Missing HS Codes

While not always required, accurate HS codes:

• Speed up clearance
• Ensure correct duty rates
• Prevent misclassification

4. Incorrect Country of Origin

Must reflect where goods were manufactured, not shipped from.

Calculating Total Landed Cost

For accurate international pricing, calculate:

Landed Cost = Product Cost + Shipping + Duties + Taxes + Fees

Example: $50 product to UK

• Product: $50
• Shipping: $15
• Duty (5%): $2.50
• VAT (20% on product+duty+shipping): $13.50
• Total landed cost: $81

Duty and Tax Collection Services

Carrier-Collected Duties

Most carriers offer duty collection:

• UPS, FedEx, DHL collect at delivery
• May add brokerage fees
• Convenient for buyers

Prepaid Duty Solutions

For DDP shipping:

• Calculate duties upfront
• Pay with shipping label
• Smoother customer experience

Tips for International Sellers

1. Know Your Markets

Research duty rates for top destination countries. High duties may make some markets unprofitable.

2. Price Transparently

Options:

• Include duties in product price
• Show duties separately at checkout
• Use landed cost calculators

3. Use Trade Agreements

Products may qualify for reduced duties under:

• USMCA (US-Mexico-Canada)
• Various bilateral agreements
• Generalized System of Preferences

4. Consider Fulfillment Location

Shipping from within destination country/region eliminates import duties for customers.

5. Document Everything

Keep records of:

• Commercial invoices
• Proof of origin
• HS code determinations
• Duty payments

Dealing with Customs Delays

Common Causes

• Missing documentation
• Value discrepancies
• Restricted items
• Random inspections

How to Respond

Check tracking for customs status

Contact carrier for details

Provide requested documents promptly

Be patient but proactive

Conclusion

Understanding customs duties and international fees is essential for successful cross-border e-commerce. While the complexity can seem daunting, proper preparation makes international shipping manageable:

• Research destination country requirements
• Complete documentation accurately
• Consider DDP for better customer experience
• Calculate landed costs for pricing decisions
• Keep records for compliance

AtoShip helps simplify international shipping by generating proper customs documentation and comparing international carrier rates—making global selling more accessible for businesses of all sizes.