How Do Customs, Duties, and Taxes Work When Buying Online? (Outside USA)

[Michael in ABQ]

As an American I've never had to deal with paying customs, duties, or other taxes when buying things online. 99% of the things I've ever bought have been from US merchants and the rare occasion I've bought something from Canada or the UK there hasn't been any additional cost that I've noticed.

Last year I bought an ecommerce business and we get some international customers. Mostly Canada, the UK, and Australia but we've had purchases from Austria, Finland, Qatar, Sri Lanka, Japan, and a few others. We sell religious products and I can understand that there may not be much of a selection locally - especially if it's a minority religion in those countries.


From a consumer perspective how does this work? If you buy $100 of stuff from a US company (plus shipping) do you have to go to the local post office to pickup a package and pay an additional amount to have your package released to you? Do most major carriers charge you and just deliver the package to your home? If there's a VAT (which I understand many countries have) do you pay that in addition to any customs or duties? I know VAT is often around 15-20% - how much are any other customs or duties?

I appreciate any insight from those who aren't in the US - or who have lived outside the US.

[Dave1442397]

It's pretty much the same procedure everywhere. Each country has its own rules about Customs duty and VAT/sales tax, but yes, if an item is over a certain amount, the shipper or local postal service will hold it until the duty/tax is paid.

I bought a watch from Japan a few weeks ago, and DHL contacted me once it was in the US asking for my personal info. I paid the Customs duty (sales tax had been paid at the time of purchase on Chrono24) and they sent a receipt. The watch got to me a few days later.

[reeshau]

Yes, this was my experience living in Ireland, too.

I would add, it doesn't have to be a sale.  Shortly after we settled in Ireland, a colleague asked his father, back in the US, to send home some nonprescription children's medicine in familiar brands.  Lo and behold, the package showed up with a customs charge before delivery.

It could be they could have declared it a gift and gotten exempted--it wasn't a large volume.  But he learned a lesson in international shipping.

[lemanfan]

From a consumer perspective how does this work? If you buy $100 of stuff from a US company (plus shipping) do you have to go to the local post office to pickup a package and pay an additional amount to have your package released to you? Do most major carriers charge you and just deliver the package to your home? If there's a VAT (which I understand many countries have) do you pay that in addition to any customs or duties? I know VAT is often around 15-20% - how much are any other customs or duties?

Sweden replying: Yes, this is bascially how it happens. The actual payment method varies a little by courier - if the parcel is imported by our national postal company (Postnord) I get a letter home with payment info and the parcel is held until the payment is made.  Private couriers like Fedex sometimes sent the parcel to me first and an invoice later.

The customs fee vary by product and countries involved and some products have extra taxes on top of that (e.g. an environmental tax on electronics)- the total of these fees are often 5% or less. Once that is calculated, 25% VAT is added to the total amount including shipping costs, and then the courier takes an administrative fee of around 10 USD for this handling. Sometimes parcels slip through the net, and some low value items pass below a threshold and one or more of the fees are skipped especially if marked as gifts. But generally, any non-EU parcel that I get will get these fees added and for small items the 10 USD handling fee is the main part.

I think our 25% VAT is the highest in the EU, many countries are slightly lower. Also, the customs handling normally trusts the documentation attached to the parcel regarding the value, but sometimes they open the package and double check. Some sellers regularly put a lower value on the parcel to make it cheaper for us, but this is not legal in my understanding. Seems to work, though. Gifts are taxable too, generally.

As a side note, for shipment to EU countries there seems to be a movement to having these fees added already by the seller or the platform (Ebay, Amazon, Aliexpress, Etsy) and you might want to look into that depending on your sales volumes to us. Since it makes life easier many consumers may appreciate this. This is now know as Internet One Stop Shop:

https://ec.europa.eu/taxation_customs/ioss_en

[lemanfan]

One more thing:  I don't know exactly what products you're selling but if anything is made from wood, leather or other natural materials you will want to check out the CITES rules too.  These are basically rules made to protect endangered or protected species and will require the right documentation and possibly permits for e.g. rosewood or alligator leather or other more "exotic" stuffs.  Normal wood and cow leather should not be a problem.

CITES might make products illegal even for sales within your own country in my understanding. I guess you might already know this, but I just wanted to mention it.  It's often at customs handling at nation borders that these violations are discovered.

https://cites.org/eng