Going Global: What You Need to Know About Customs and Duties
Is your business ready to take on the world? Reaching international customers can take your business to the next level, but it’s important to know what to expect ahead of time.
Customs and duties are part and parcel of selling internationally, and they can be incredibly complex. Educating yourself on the intricacies of global ecommerce helps ensure your success in the long run.
Did you know that there are over 14,000 unique sales tax jurisdictions just within the United States, and with country-specific EU VAT reforms taking place every year, navigating customs and duties can be a headache – but it doesn’t have to be!
Our international shipping experts at ShipStation are here to provide tips to make expanding your operations a breeze.
Post-Brexit Cross-Border EU Ecommerce
Brexit has made operating an ecommerce business across EU borders cloudy. Crucial changes to tax obligations has forced many online retailers to rethink their cross-border sales strategy. Here are a few things to consider when selling to customers in the EU:
Harmonised System (HS Code)
As a UK retailer, you already use HMRC’s Trade Tariff online tool to match your products to their correct codes. When shipping products to customers in the EU, each member state has its own individual online tool.
It’s important to keep in mind that where the UK’s HS Code is traditionally six digits, EU HS Codes is a minimum eight-digit code (with some requiring up to 14 digits).
Assigning the required codes to each product available in your inventory can be both time-consuming and expensive. Working with an experienced ecommerce expert like ShipStation can help. ShipStation automates all of this, removing the possibility of human error and giving you peace of mind.
DDP vs DUP
As discussed in our previous blog, there are two ways duties can be paid on international shipments, Delivery Duty Unpaid (DDU) and Delivery Duty Paid (DDP).
DDU adds the risk of non-delivery and negative customer experience since it requires customers to pay duties and customs upon receipt whilst DDP is paid at the time of purchase.
DDP and DDU have only been introduced to European shipments since Brexit. To increase customer satisfaction and provide a positive buying experience, we recommend working with an experienced logistics partner like ShipStation. Our easy-to-use fulfilment software can integrate your chosen Duty payment method and clearly outline the charges for customers at the point of sale.
EU VAT – One-Stop-Shop (OSS) Scheme
Introduced as part of the EU VAT Package in July 2021, the voluntary OSS scheme increases transparency and provides the ability to pay any VAT owed with a single declaration and EU VAT number.
If you import goods to the EU with a value under £150, OSS could be a good idea for you. For more in-depth information on OSS, visit the GOV.UK website or speak to your accounting people.
Positive Customer Experience
Customers don’t want any nasty surprises after they order. Being entirely transparent during checkout with clearly calculated customs and duties charges will prevent failed deliveries and significantly reduce the chance of upset customers.
To ensure the correct fees are applied at the point of sale, consider a few options:
- Make your website dynamic, so prices are set based on IP or delivery address
- Opt for micro websites based on the regions you do business in
- Sell on the local versions of large marketplaces
- Develop a pricing strategy based on the countries you’re selling to, so you can maximise margins whilst staying competitive
ShipStation Can Help
Although navigating the intricacies of EU VAT taxes, duties and customs can be daunting; technology is here to smooth your path to world domination.
ShipStation’s software was designed to streamline ecommerce post-Brexit before Brexit was even a thing. You can ensure the correct tax is applied, duties are paid with your chosen delivery method and weed out mistakes caused by human error.
Contact the ShipStation team today and begin your worldwide takeover!
