A total landed cost includes the sum of the products and calculation of duties, taxes, and other export or import fees.
Taxes and duties alone typically do not constitute the total for a landed cost calculation. Other fees could be applied to the import cost from shipping carriers, brokers, customs, or other government agencies.
In this guide, we will break down the different types of import taxes, duty, and clearance fees.
The following amounts are needed in this example to calculate a landed cost shipment to the UK with a generic carrier.
|Line item||US dollar||British pounds|
|4.5% duty on product||8.10 USD||6.16 GBP|
|4.5% duty on shipping||1.35 USD||1.03 GBP|
|20% VAT on product||36.00 USD||27.36 GBP|
|20% VAT on shipping||6.00 USD||4.56 GBP|
|20% VAT on duty charge||1.89 USD||1.44 GBP|
|11 GBP destination country carrier fee||14.47 USD||11.00 GBP|
|20% VAT on destination country carrier fee||2.89 USD||2.20 GBP|
|15.00 USD carrier prepayment fee||15.00 USD||11.40 GBP|
|Total landed cost||85.70 USD||65.15 GBP|
Import taxes are not necessarily a one-to-one match with domestic taxes. Import taxes can vary by country, region, HS code, and de minimis value.
Every country has a unique country-level tax rate. Some countries have a general consumption tax, typically referred to as VAT (Value Added Tax) but also as GST (Goods and Services Tax).
Australia and Canada both have GST; Canada also has HST, PST or QST, depending on the province. Even VAT and GST can be calculated differently, depending on the destination.
In the EU, VAT is calculated on the entire order total, including VAT on shipping costs and duty costs. Some destinations, e.g. Hong Kong, do not have taxes applied to their imports.
A few examples of country import taxes are shown below.
|Country||Tax rate (% percentage)||Type of tax|
|India||28% (though often reduced)||IGST|
Tax calculations will include any region-level import tax. The tax rate may vary, depending on the final destination within the country. For example, Canada has differing tax rates (PST, HST) depending on the province, or Brazil has different tax rates, depending on the state.
Import taxes do not always apply local taxes the same way as a domestic tax in the country. De minimis and simplified tax regime considerations are taken into account on the import tax calculation.
When the good's value in a single import or shipment is below the de minimis tax amount, the item will clear without any tax collection or other import charges.
To help demonstrate the effect on a 20 USD t-shirt, see how some countries will tax the shirt, and others will not tax the same shirt based on the de minimis examples below.
|Destination||Tax rates||20 USD FX rounded||Tax de minimis||Tax due|
|United Kingdom||20% VAT||17 GBP||0 GBP||Taxable|
|France||20% VAT||19 EUR||0 EUR||Taxable|
|Canada||5% GST + PST||27 CAD||20 CAD||Taxable|
|Australia||10% GST||29 AUD||1,000 AUD||Nontaxable|
|Denmark||25%||133 DKK||0 DKK||Taxable|
Import duty can vary by the destination country, the country of origin, the item HS code, possible de minimis thresholds, and other laws that can affect the duty rate of an import. It's not always straightforward as a single harmonized code tariff.
When the good's value in a single import or shipment is below the de minimis duty amount, the item will clear without any duty collection; however, the tax may still be collected if the tax threshold is lower than the duty threshold. It's possible for the value of an item to exceed the tax threshold and not exceed the duty threshold. The opposite is not true, because countries don't set a lower threshold for duty and a higher threshold for tax.
To help demonstrate the effect of the on a 20 USD t-shirt, see how some countries will apply duty to the shirt, and others will not apply duty to the same shirt based on the de minimis examples below.
|Destination||MFN duty rates||20 USD||Duty de minimis||Duty due|
|United Kingdom||20% Duty||17 GBP||135 GBP||Duty free|
|France||20% Duty||19 EUR||150 EUR||Duty free|
|Canada||5% Duty||27 CAD||20 CAD||Duty applied|
|Australia||10% GST||29 AUD||1,000 AUD||Duty free|
|Denmark||25%||133 DKK||1150 DKK||Duty free|
Import fees can vary and be applied by brokers, government agencies, customs, and carriers. They can change based on many different factors like the type of good or even the shipping service level that was used on the import.
In small package shipping, the carrier prepayment fee is charged on shipments that are sent with the duties and taxes prepaid. This means that duties and taxes will not be charged to the recipient upon delivery, but are billed back to the shipper. Both DHL and UPS charge a prepayment fee for shipping packages with duties and taxes prepaid, but FedEx does not. UPS calls this type of shipment DDP (Delivery Duty Paid) and DHL calls it DTP (Duty and Taxes Paid).
In most cases, international mail and parcel providers, such as DHL eCommerce, RR Donnelley, APC Logistics, and Landmark Global, do not charge a prepayment fee.
UPS and FedEx both have brokerage fees on ground shipments into Canada. UPS Standard to Canada charges a brokerage fee called “Entry Preparation Fee”, and FedEx charges a “Clearance Entry Fee”.
|Carrier service||Shipment value (CAD)||Brokerage fee|
|UPS Standard to Canada||60.01 CAD - 100.00 CAD||19.95 CAD|
|FedEx Ground to Canada||60.01 CAD - 100.00 CAD||19.30 CAD|
UPS and FedEx do not charge brokerage fees on international air shipments into Canada, but as outlined, they will still charge advancement fees.
To see an example of how brokerage fees can impact a landed cost, refer to our Zonos UPS Brokerage Fee Calculator.
Many of the carriers’ customs brokers will pay the duty and tax in advance to local customs and charge a fee for fronting the cash. Shippers will use different terms for basically the same service, and in most cases, they will charge a percentage of the amount they fronted or a flat rate (in the destination currency), whichever is greater. These fees can be very frustrating to shoppers because they are not well disclosed by carriers or online retailers.
Just to make things even more interesting, each shipping carrier uses different terminology to define their advancement fee. To help you decode advancement fees, below you will find a cheat sheet for shippers and the jargon they use for an advancement fee. This information can be useful when asking for the right international fee waivers in a negotiation with a carrier like UPS, FedEx, or DHL.
|Carrier||Advancement term||Service level|
|UPS||Bond Fee||Shipments to Canada|
|UPS||Disbursement Fee||Express, Saver, Expedited|
|FedEx||Advancement Fee||All services|
|DHL||Payment Deferment||DHL Express|
The impact of advancement fees on your international customers’ imports can be very high. In some cases, it can be higher than the taxes, duty, or both combined. Also to compound the issue, these charges are also subject to VAT. In the UK, FedEx will charge 12.00 GBP (15.87 USD) plus VAT on the fee, so it can be very cost-prohibitive if you do not waive these fees. Below you will find some examples.
|Carrier and fees||Destination||Minimum amount or percentage|
|FedEx Advancement Fee||United Kingdom||2.5% of the advance or 12.00 GBP (whichever is greater)|
|UPS Disbursement Fee||France||2.5% of the advance or 14.00 EUR (whichever is greater)|
|DHL Payment Deferment||Japan||2% of the advance or 1,000.00 YEN (whichever is greater)|
If you are aware of a fee that could be charged on your import, please notify us to ensure the correct landed cost calculation.
If you are looking for a landed cost calculator, here are some questions to ask a potential solutions provider.
Does Landed Cost support different ship-from countries?
Yes, Landed Cost will support exports from the United States, Canada, Europe, Australia, and more. The Landed Cost API, Hello, and Quoter all support these varying regions. Checkout, which also includes payment solutions, is not supported in every region. If you are using a plugin on Shopify, BigCommerce, or Magento, read more on each platform's documentation page to determine supported ship-from countries.
Does Zonos offer shipping rates or logistical services?
No, Zonos is not a shipping service or reseller of shipping rates; however, Zonos closely partners with highly capable international shipping providers to produce a landed cost inclusive of their brokerage and other clearance fees.