Customs duties, VAT, and other import charges are mandatory payments that are paid by the buyer when goods are imported into their country; the seller should inform the buyer accurately about these costs, but usually does not pay them on the buyer’s behalf.
How tariffs, VAT and customs limits work
Duty – a mandatory payment charged by the customs authorities of any country in connection with the movement of goods across the customs border. Paying duty is a mandatory condition for importing or exporting any goods. In each country there are its own features of customs clearance, own duty rates, and even duty-free limits for importing goods and postal shipments.
When sending a parcel to any country, it is necessary to study which valuation method the customs authorities use and what the duty-free import limit is in that country. It should also be noted that, in addition to customs duties, the goods may be subject to sales tax.
In most countries, parcels whose value does not exceed the duty-free threshold are not subject to customs duty and sales tax. Carefully study up-to-date information about customs limits and conditions of customs clearance on the Internet.
Customs authorities in their work use two main methods:
- CIF valuation method (cost + insurance + shipping) – the amount of the customs duty is calculated not only from the cost of the goods, but also from the cost of shipping and insurance.
- FOB valuation method (declared value, excluding shipping and insurance) – the amount of the customs duty is calculated only from the value of the goods being imported.
For our clients this means that:
- When processing shipments to countries under the CIF valuation method, include the cost of shipping in the invoice (tick the corresponding box “include the cost of shipment in the invoice” on the last page).
- It is recommended to inform the buyer about the duty-free import limits in their country; such notification significantly reduces the likelihood of the buyer refusing to pay the customs duties in their country and the return of the parcel.
To protect yourself, we recommend the following disclaimer for your customers regarding import tax and duties, i.e., what you can write to the customer:
Hello, Import duties, taxes and charges are not included in the item price or shipping charges. These charges are the buyer’s responsibility. Please check with your country’s customs office to determine what these additional costs will be prior to bidding / buying. These charges are normally collected by the delivering freight (shipping) company or when you pick the item up – do not confuse them for additional shipping charges. We do not mark merchandise values below value or mark items as “gifts” – International government regulations prohibit such behavior.English translation:
Import duties, taxes and charges are not included in the item price or the shipping charges. This is the buyer’s responsibility. Please contact your country’s customs office to determine what additional costs may apply prior to purchase. These charges are normally collected by the delivering freight (shipping) company or when you pick up the item – do not confuse them for additional shipping charges. We do not mark merchandise values below value or mark items as “gifts” – International government regulations prohibit such behavior.
From 1 January 2021 the United Kingdom introduces a new import regime. Specifically, the rule exempting VAT on imports to the United Kingdom of small lots of goods valued up to £15 is repealed.
As a result of this change, eBay, from 1 January 2021, will collect and remit VAT on goods and shipments with a total value up to £135 that are imported into the United Kingdom and sold to customers.
If you do not have a UK VAT number, you do not need to do anything. In this case eBay will automatically, if the buyer is from the United Kingdom, add VAT to the price. More detailed information can be found here.
If you are a UK VAT payer you need to:
- In the country selection field, choose United Kingdom
- Enter your VAT number
This information needs to be added to all existing listings you have on ebay.co.uk. On the ebay.com, ebay.de marketplaces in your account you can set a tax number for each country or its absence. For the United Kingdom in your store settings you also need:
- In the country selection field, choose United Kingdom
- Click the “I am not VAT registered” button.
Will the new changes also affect sellers who have shops on Etsy? Yes, from January 1, 2021 Etsy will charge VAT to buyers in the United Kingdom for orders that meet the following criteria:
- The item is shipped from outside the United Kingdom.
- The total value of the shipment (excluding delivery) does not exceed £135.
- For items valued at less than £135, buyers in the United Kingdom will see prices including VAT when viewing search results and listings, as well as on the listing page. The VAT amount shown before purchase is indicative. The final VAT amount will be calculated at checkout.
If your customer’s purchase meets Etsy’s VAT payment requirements, be sure to include a packing slip in the shipment. The packing slip indicates the final VAT amount charged by Etsy. More details – in the marketplace rules.
Also ask your customer to provide their VAT number and enter it in the address line when shipping the item.
Note: due to changes implemented on Etsy, the registration of new shops from CIS countries on this marketplace is temporarily suspended. Western Bid is working on resolving this issue, and in the very near future we will offer several options for selling your goods on Etsy.
When arranging delivery to the United Kingdom, you must attach an order from eBay or Etsy.
Delivery to the United Kingdom is recommended to be arranged via an external item. Please specify:
- the price of the item (as listed on the marketplace);
- the cost of delivery (mandatory for express delivery).
In this case the invoice will reflect the price of the item, the VAT payable, and separately the delivery cost.
Brokerage services, duties and VAT will be charged on the CIF amount (cost + insurance + freight).
Learn how to avoid double taxation by reading the article.
Basic concepts of customs duties in simple terms
| Term | What it means | What sellers need to know |
|---|---|---|
| Customs duties | A mandatory payment when importing/exporting goods across the border. | Rates and rules vary by country; buyers usually pay at import if the shipment value exceeds the duty-free limit. |
| Sales tax / VAT | Consumption tax charged by the government on the sale of goods and services. | May be collected at import separately from duties; in the UK since 2021 VAT is often collected by marketplaces (e.g., eBay, Etsy) for small shipments. |
| Duty-free import limit | Maximum value of a shipment for which duties and sales tax are not charged. | Needs to be checked per country; limits change, so refer to up-to-date information from official sources. |
| CIF (cost + insurance + freight) | A basis on which customs charges are calculated taking into account the value of the goods, insurance, and delivery. | In the UK broker charges, duties, and VAT are assessed on the CIF amount, so it is important to fill the invoice correctly. |
| Disclaimer about import duties and taxes | Standard listing text explaining that duties and taxes are not included in the price of the item. | Helps avoid misunderstandings; a recommended English sample and Ukrainian translation are provided in the article. |
Please note: in the United Kingdom, broker services, duties and VAT are charged on the CIF value (cost of goods + insurance + shipping), so incorrect invoicing can lead to inflated customs charges for the buyer.
Frequently Asked Questions about Customs Duties and VAT
Who pays customs duties, VAT, and other import taxes?
Who pays customs duties, VAT, and other import taxes?
Usually all import duties, VAT, and other charges are paid by the buyer in their country upon import of the goods. The recommended disclaimer text explicitly states that these costs are not included in the price of the goods or shipping and are the buyer’s responsibility.
Why can't you undervalue the price of the goods or label it as "gift"?
Why can't you undervalue the price of the goods or label it as "gift"?
This is prohibited by international government regulations. Such actions may be considered violations of customs regulations and may lead to fines.
What has changed with VAT in the United Kingdom since 1 January 2021?
What has changed with VAT in the United Kingdom since 1 January 2021?
As of 1 January 2021, the VAT exemption for small consignments up to £15 has been abolished, and new rules have been introduced: eBay collects and remits VAT on goods and consignments up to £135, and Etsy charges VAT to buyers on orders that meet the requirements, and displays the VAT amount on packing slips.
What amount are customs duties, VAT, and broker services charged for in the United Kingdom?
What amount are customs duties, VAT, and broker services charged for in the United Kingdom?
Customs duties, VAT, and brokerage services in the United Kingdom are charged on the CIF amount (cost of goods + insurance + freight), so it is important that the invoice accurately reflects these components.