international custom fees for online orders
January 6, 2009 7:49 AM Subscribe
I have a small online company in the US. Am I responsible for the custom fees other countries charge my buyers?
I've sold many shirts to the UK and never had anyone say anything before but now one my customers is asking to be refunded for the custom fees - which seems ridiculously expensive. (If I refund him he'd basically be getting the product at my cost.) I would assume that is the responsible of the customer and part of the extra expense they would get from ordering a shirt from the US - like shipping. Am I wrong? Is there a way to avoid my customers being charged this fee?
I don't want to risk getting myself in trouble by lying on forms. Currently I go through USPS and list the item as an online sale and list the value as the cost the customer pays. Should I instead be listing the value as what I pay for the product? I don't bother with the Tariff numbers on small orders - would doing that help?
If I go through UPS or FED EX would my customers be less likely to get this extra fees?
Has anyone else had this problem? I'd love some advice.
I've sold many shirts to the UK and never had anyone say anything before but now one my customers is asking to be refunded for the custom fees - which seems ridiculously expensive. (If I refund him he'd basically be getting the product at my cost.) I would assume that is the responsible of the customer and part of the extra expense they would get from ordering a shirt from the US - like shipping. Am I wrong? Is there a way to avoid my customers being charged this fee?
I don't want to risk getting myself in trouble by lying on forms. Currently I go through USPS and list the item as an online sale and list the value as the cost the customer pays. Should I instead be listing the value as what I pay for the product? I don't bother with the Tariff numbers on small orders - would doing that help?
If I go through UPS or FED EX would my customers be less likely to get this extra fees?
Has anyone else had this problem? I'd love some advice.
The best solution is to warn people that there are customs fees for importing which can be quite substantial. I wouldn't refund the person's money; if he had done much cross-border ordering before he would have known about this already.
Don't lie on the customs forms.
If I go through UPS or FED EX would my customers be less likely to get this extra fees?
Going through UPS pretty much ensures that there will be extra customs fees, and if I remember correctly UPS charges more for dealing with customs than Royal Mail does. Sending through USPS is the best option in my opinion.
Also, the cost of the shipping is included in the value of the item, so the cheaper the shipping you use, the less expensive the customs fees are.
posted by grouse at 8:03 AM on January 6, 2009
Don't lie on the customs forms.
If I go through UPS or FED EX would my customers be less likely to get this extra fees?
Going through UPS pretty much ensures that there will be extra customs fees, and if I remember correctly UPS charges more for dealing with customs than Royal Mail does. Sending through USPS is the best option in my opinion.
Also, the cost of the shipping is included in the value of the item, so the cheaper the shipping you use, the less expensive the customs fees are.
posted by grouse at 8:03 AM on January 6, 2009
They are the ones importing the product, they are responsible.
Exactly. I have bought clothing, etc. online from the U.K. and have always been charged for the import custom fee by the U.S. government, as it is not the responsibility of the online vendor.
You might want to make it clear to prospective customers that the importer is responsible for the fee -- and they should check what their country's requirements are before placing an order.
posted by ericb at 8:06 AM on January 6, 2009
Exactly. I have bought clothing, etc. online from the U.K. and have always been charged for the import custom fee by the U.S. government, as it is not the responsibility of the online vendor.
You might want to make it clear to prospective customers that the importer is responsible for the fee -- and they should check what their country's requirements are before placing an order.
posted by ericb at 8:06 AM on January 6, 2009
This issue has arisen many times between eBay sellers and buyers. eBay's FAQs about custom fees are as follows:
"Generally, buyers pay additional costs such as duties, taxes, and customs clearance fees. For example, international rates may or may not include pickup and door-to-door delivery with customs clearance.
"Some carriers will offer customs and brokerage services to assist you with what you should tell your buyers about additional charges, duties, and taxes. An 'extended area surcharge' may apply to your buyers depending on their international locations...
"Shipping to Canada
...An easier way to ship to Canada
UPS offers U.S. sellers a Non-Resident Importer (NRI) Account. The U.S. seller can then bill the customer up front for duties and taxes, as well as shipping and handling.
"The advantages of having an NRI account:
No cash on delivery (C.O.D.) or power of attorney (POA) to worry the buyer.
Quicker shipment of goods as UPS does not have to wait for the release from customs.
Delivered as prepaid.
For more information on setting up a Non-Resident Importer account, call 1-800-PICK-UPS."
posted by terranova at 8:10 AM on January 6, 2009
"Generally, buyers pay additional costs such as duties, taxes, and customs clearance fees. For example, international rates may or may not include pickup and door-to-door delivery with customs clearance.
"Some carriers will offer customs and brokerage services to assist you with what you should tell your buyers about additional charges, duties, and taxes. An 'extended area surcharge' may apply to your buyers depending on their international locations...
"Shipping to Canada
...An easier way to ship to Canada
UPS offers U.S. sellers a Non-Resident Importer (NRI) Account. The U.S. seller can then bill the customer up front for duties and taxes, as well as shipping and handling.
"The advantages of having an NRI account:
No cash on delivery (C.O.D.) or power of attorney (POA) to worry the buyer.
Quicker shipment of goods as UPS does not have to wait for the release from customs.
Delivered as prepaid.
For more information on setting up a Non-Resident Importer account, call 1-800-PICK-UPS."
posted by terranova at 8:10 AM on January 6, 2009
Your customer is wrong. I've ordered many a item from the US to the EU and never thought that the sender would know or care about the customs issue... The buyer pays the import duty, as made clear by HM Revenue & Customs here.
I've seen ridiculously high charges on small items before, mostly because the import duty on stuff that arrives without prior declaration is handled by some kind of agent which then charges a ridiculously commission on top of what the state actually needs.
As stated on the HMRC, many sellers will lie on the customs forms, which is mostly nice for private customers, but can cause a mess when trying to book such transactions in a business setting.
posted by themel at 8:11 AM on January 6, 2009
I've seen ridiculously high charges on small items before, mostly because the import duty on stuff that arrives without prior declaration is handled by some kind of agent which then charges a ridiculously commission on top of what the state actually needs.
As stated on the HMRC, many sellers will lie on the customs forms, which is mostly nice for private customers, but can cause a mess when trying to book such transactions in a business setting.
posted by themel at 8:11 AM on January 6, 2009
n-thing that the purchaser is definitely responsible for any customs fees. You may want to make sure that that is clearly stated on your website somewhere, such as where you locate the various disclaimers.
Shipping stuff to customers from around the world will be FAR more likely to incur customs charges if you ship via UPS, DHL, or FedEx. Your customers will in those cases not only have customs charges to deal with, but brokerage fees as well. The brokerage fees start at $35 per package, and that does not include whatever the customs charges are determined to be.
posted by modernpoverty at 8:12 AM on January 6, 2009
Shipping stuff to customers from around the world will be FAR more likely to incur customs charges if you ship via UPS, DHL, or FedEx. Your customers will in those cases not only have customs charges to deal with, but brokerage fees as well. The brokerage fees start at $35 per package, and that does not include whatever the customs charges are determined to be.
posted by modernpoverty at 8:12 AM on January 6, 2009
With regards to your first question, Amazon says the following on their page about International Shipping:
Amazon.com gladly accepts orders from all around the globe.posted by RichardP at 8:14 AM on January 6, 2009
...
Customs, Duties, and Taxes
Orders that are shipped to countries outside of the U.S. may be subject to import taxes, customs duties and fees levied by the destination country ("Import Fees"). The recipient of an international shipment may be subject to such Import Fees, which are levied once a shipment reaches your country. Additional charges for customs clearance must be borne by the recipient; we have no control over these charges and cannot predict what they may be. Customs policies vary widely from country to country; you should contact your local customs office for further information. When customs clearance procedures are required, it can cause delays beyond our original delivery estimates.
Going through UPS pretty much ensures that there will be extra customs fees, and if I remember correctly UPS charges more for dealing with customs than Royal Mail does. Sending through USPS is the best option in my opinion.
Just seconding this for emphasis. It's the same deal with both FedEx and UPS. Your customers will be charged whatever customs/taxes/fees they normally would, plus a brokerage fee for getting the shipment through customs. Speaking as a Canadian buyer, USPS is slower, but financially preferable for non-critical purchases.
And to echo everyone else, yes the buyer is responsible for the fees. And no, don't like on the customs form; it's not worth it.
posted by ODiV at 8:32 AM on January 6, 2009
Just seconding this for emphasis. It's the same deal with both FedEx and UPS. Your customers will be charged whatever customs/taxes/fees they normally would, plus a brokerage fee for getting the shipment through customs. Speaking as a Canadian buyer, USPS is slower, but financially preferable for non-critical purchases.
And to echo everyone else, yes the buyer is responsible for the fees. And no, don't like on the customs form; it's not worth it.
posted by ODiV at 8:32 AM on January 6, 2009
While you should not be responsible for the fees unless you say that you are, you should be customer friendly and always spell out that there may be additional costs for importing. If you want to go the extra mile find out what the extra fees will be and let the customer know that at the time of purchase. then they can decide whether or not they really want to spend that extra amount.
posted by JJ86 at 9:00 AM on January 6, 2009
posted by JJ86 at 9:00 AM on January 6, 2009
As others have stated, it is entirely the responsibility of the buyer to ensure that relevent import VAT, custom duties and excise duties are paid - unless you specifically state as part of the transaction that you will pay the duties+VAT in advance (it is possible for sellers to be pre-registered for such purposes).
It is even the buyer's responsibility to ensure that the declared value (cost to the importer+shipping) that you put on the item is correct, as an incorrect declaration can get the importer fined or even prosecuted - themel's link is one I was going to post. Note, the UK customs site doesn't work that well with browsers other than internet explorer.
The customs duty threshold for the value of the shipment from outside the EU to the UK (i.e. from the US) has recently gone up, from £18 to £105, as of 1st december 2008, i.e. a shipment including delivery priced under £105 will not attract duty. It is however still subject to import VAT if the total value is over £18 (which is also charged on the duty), and excise duties if relevent (tobacco and alcohol)
Import VAT is set the same as local VAT, so for most classes of goods will attract 15% (down from 17.5%), though is waived for gifts under the value of £36. Some internet sellers will lie and mark a package as a gift in order to take advantage of this, but the buyer is then effectively make a false declaration to customs, and that is not a good idea.
Generally, shipping companies will pay the duty and VAT on the importer's behalf, and add their own fat fee for doing so. DHL charges £10, or 2% of the shipment value, whichever is greater, for example. This sum often needs to be paid to the shipping company before they release the goods. If the shipping company doesn't pay the duty+VAT, they are liable to be seized by customs - and the importer than has to deal with customs directly to get their goods, which is terribly messy, and often not worth the cost.
The purpose of excise duty and import VAT is because these charges are already levied on the high-street; goods bought on the internet obviously don't include them in the list price, which is one reason they appear much cheaper, thus leading to the nasty shock your customer got. Them's the breaks when trying to dodge the taxman, alas.
posted by ArkhanJG at 9:01 AM on January 6, 2009 [1 favorite]
It is even the buyer's responsibility to ensure that the declared value (cost to the importer+shipping) that you put on the item is correct, as an incorrect declaration can get the importer fined or even prosecuted - themel's link is one I was going to post. Note, the UK customs site doesn't work that well with browsers other than internet explorer.
The customs duty threshold for the value of the shipment from outside the EU to the UK (i.e. from the US) has recently gone up, from £18 to £105, as of 1st december 2008, i.e. a shipment including delivery priced under £105 will not attract duty. It is however still subject to import VAT if the total value is over £18 (which is also charged on the duty), and excise duties if relevent (tobacco and alcohol)
Import VAT is set the same as local VAT, so for most classes of goods will attract 15% (down from 17.5%), though is waived for gifts under the value of £36. Some internet sellers will lie and mark a package as a gift in order to take advantage of this, but the buyer is then effectively make a false declaration to customs, and that is not a good idea.
Generally, shipping companies will pay the duty and VAT on the importer's behalf, and add their own fat fee for doing so. DHL charges £10, or 2% of the shipment value, whichever is greater, for example. This sum often needs to be paid to the shipping company before they release the goods. If the shipping company doesn't pay the duty+VAT, they are liable to be seized by customs - and the importer than has to deal with customs directly to get their goods, which is terribly messy, and often not worth the cost.
The purpose of excise duty and import VAT is because these charges are already levied on the high-street; goods bought on the internet obviously don't include them in the list price, which is one reason they appear much cheaper, thus leading to the nasty shock your customer got. Them's the breaks when trying to dodge the taxman, alas.
posted by ArkhanJG at 9:01 AM on January 6, 2009 [1 favorite]
For reference, the duty on clothing depends upon it's tarriff entry. Customs duties are 12% for "fabric" clothing made from cotton, silk, nylon, polyester etc. If the clothes are leather the duty charge is 4%. (waived if the value of the shipment including shipping and insurance is under £105, or the value of the duty is under £7)
Customs duties are 17% for footwear made from "fabric" or plastic. If the shoes or boots are leather the duty charge is 8%.
Import VAT is charged at 15% on goods valued over £18, (which is then charged on the duty too) but children's clothes are generally VAT exempt.
USPS doesn't have a handling fee for paying the duty+VAT on the importers behalf, but FedEx and DHL definitely do.
posted by ArkhanJG at 9:11 AM on January 6, 2009
Customs duties are 17% for footwear made from "fabric" or plastic. If the shoes or boots are leather the duty charge is 8%.
Import VAT is charged at 15% on goods valued over £18, (which is then charged on the duty too) but children's clothes are generally VAT exempt.
USPS doesn't have a handling fee for paying the duty+VAT on the importers behalf, but FedEx and DHL definitely do.
posted by ArkhanJG at 9:11 AM on January 6, 2009
Response by poster: Thank you everyone for the advice! Very helpful.
The one thing I am still wondering. If I sell a teddy bear for $28 but it cost me $14 to make the teddy bear. Should I declare the value on the Postal form as $28 or $14?
posted by ChloeMills at 9:32 PM on January 6, 2009
The one thing I am still wondering. If I sell a teddy bear for $28 but it cost me $14 to make the teddy bear. Should I declare the value on the Postal form as $28 or $14?
posted by ChloeMills at 9:32 PM on January 6, 2009
The declared value of the item is what the buyer paid for the item.
posted by Jacqueline at 10:54 PM on January 6, 2009
posted by Jacqueline at 10:54 PM on January 6, 2009
The declared value should be the amount you sold the teddy for ($28) + shipping and insurance, if they're not listed separately. Anything less, and the importer is making a false declaration to UK customs. Whether they'd actually get caught is another matter. Note, if you put a copy of the sales invoice inside the package, you definitely want to put the same sum in both places.
posted by ArkhanJG at 11:57 AM on January 7, 2009
posted by ArkhanJG at 11:57 AM on January 7, 2009
The declared value should be the amount you sold the teddy for ($28) + shipping and insurance,
Don't declare the total cost of shipping plus item, declare them separately! While the UK might charge taxes on the total, many other countries only charge tax on the price of the goods and not on the shipping. It will be easier if you don't have to figure that out every time.
Also, it might be a good idea to consider tax thresholds when you price your items. It is certainly a good idea when you decide whether an order should be broken up into multiple shipments. For example, I regularly buy cables from monoprice, and I'm always careful to keep my order just under the $20 CAD threshold if possible -- even though they offer volume discounts, it ends up cheaper that way.
posted by Chuckles at 6:54 PM on January 7, 2009
Don't declare the total cost of shipping plus item, declare them separately! While the UK might charge taxes on the total, many other countries only charge tax on the price of the goods and not on the shipping. It will be easier if you don't have to figure that out every time.
Also, it might be a good idea to consider tax thresholds when you price your items. It is certainly a good idea when you decide whether an order should be broken up into multiple shipments. For example, I regularly buy cables from monoprice, and I'm always careful to keep my order just under the $20 CAD threshold if possible -- even though they offer volume discounts, it ends up cheaper that way.
posted by Chuckles at 6:54 PM on January 7, 2009
This thread is closed to new comments.
posted by gjc at 8:01 AM on January 6, 2009 [1 favorite]