VAT AND IMPORT DUTIES ON INTERNATIONAL SHIPMENTS
Are you planning to send an International shipment? Then you need to deal with VAT and import duties as well. These taxes have impact on the total costs of your shipment. Besides, incorrect handling will cause negative consequences for the delivery of your shipment. Therefore, it is important to understand what these terms mean and how these taxes are calculated. We explain it to you!
WHAT ARE VAT AND DUTIES?
VAT and import duties are applicable to almost all International shipments by the customs authorities. These taxes ensure that the cost of the imported goods is equal to the costs of the goods that are locally produced. This prevents unfair competition.
HOW ARE THE COSTS CALCULATED?
The amount of VAT and import duties is based on the information below. You can find this information on the commercial invoice and any other relevant documents.
- Product value
- Description of the product
- The HS code of the product
- Trade Agreements
- Country of manufacture
- Country-Specific Rules
The amount of import duties is calculated by multiplying the product value by the import duty percentage of the HS code of the product. The amount of VAT (which is also called BTW, GST, TVA and USt) is determined by multiplying the product value (incl. import duties) by the VAT rate of the product (0%, 5% or 20%). Since both calculations include the product value on the commercial invoice, we explain how to calculate this value.
PRODUCT VALUE CALCULATION
The product value on the commercial invoice is based on the amount that is paid before the product was imported. It concerns the actual price, which can be proved by adding a copy of the invoice. If it is not already included, the following costs will be added to this value.
- Mediation costs
- Packaging costs
- Transport costs and insurance costs
- Commissions (buying commissions excluded)
- Royalties and license fees that a buyer must pay
- Any profit if goods are resold
CONSEQUENCES OF AN INCORRECT VALUE
It is highly important to ensure that the product value is accurate. You want to prevent that customs suspects that the products are undervalued and starts an investigation. This causes delays and additional costs. Worst case scenario, this can lead to fines or even to confiscation of the shipment. Do you need help with calculating the product value? Feel free to contact us.
WHO PAYS THE IMPORT DUTIES?
Import duties and VAT can be paid in the following two ways:
- The recipient pays the taxes directly to customs. In general, this happens at the time of import, with the exception of specific pro-approved procedures. Once the payment has been received, the shipment will be released and the shipping process will be resumed.
- Parcel International pays on behalf of the recipient. In this way, the shipment can be released as soon as possible. This amount, including a fee for this service, will be billed to the sender or recipient later.
No rules without exceptions. On the following goods, no VAT and import duties have to be paid:
- Gifts: Gifts are transported tax-free in many countries if strict conditions are met.
- Temporary import: Goods that are temporarily imported or exported are also exempted in many countries. You can think of imports for exhibitions and imports for repairs or training.
- Samples: If the conditions are met, it is allowed to import samples to any country without taxes and duties.
Do you need more information about these taxes or do you need help with calculating the product value? Feel free to contact us via chat or email. Our support team is available every working day. Rather prefer contact by telephone? Then make an appointment for a call.