Import duties and taxes can add 10–30% to the cost of your shipment. Ignoring them can turn a profitable product into a loss. Here is how to calculate them.
1. What you pay on import
- Import duty — a percentage of the product value
- VAT or sales tax — a percentage of (value + duty + freight)
- Customs processing fee — fixed or percentage
- Broker fee — if you use a customs broker
2. How duty is calculated
Duty rate depends on the HTS code of your product. Common rates:
- US — 0–25% for most consumer goods
- EU — 0–17%
- UK — 0–12%
- Australia — 0–10%
3. How VAT is calculated
VAT is charged on the customs value plus duty:
VAT = (Product value + Freight + Insurance + Duty) × VAT rate
- EU — 17–27% depending on country
- UK — 20%
- US — no VAT, but state sales tax applies on resale
4. Example calculation
A shipment to Germany of mosquito killer lamps:
- Product value (FOB) — $5,000
- Freight — $500
- Insurance — $25
- Customs value — $5,525
- Duty 3% — $166
- VAT 19% × ($5,525 + $166) = $1,081
- Total import cost — $1,247
5. How to reduce import cost
- Check the correct HTS code — wrong code can mean overpaying
- Use free trade agreements where applicable
- Consider DDP terms — the supplier may have better logistics rates
- Consolidate shipments to reduce broker fees per unit
6. What you need from the supplier
- Commercial invoice with accurate value and HTS code
- Packing list with carton count and weight
- Bill of lading or air waybill
- Certification as required for your product category
If you are unsure about duties for a specific product, contact us — we can share typical HTS codes and duty rates for our product lines.