Customs duties and import VAT: what actually adds to landed cost

Landed cost is the price the buyer ends up paying after the parcel clears customs. For cross-border B2C shipments the gap between the cart total and the landed cost is usually duties plus import VAT plus a customs broker fee — and the buyer is the one who finds out, often at delivery, with a customs invoice the size of the original order. This article covers the duty and VAT half of the picture; the main guide maps all the moving parts, and the companion reads cover dim weight and freight class and Incoterm selection.

Three numbers that change the landed cost

Duty rate at the destination. Every country charges duty based on the Harmonized System (HS) six-digit code of the product, extended to 8-10 digits at the national level. The EU uses the Combined Nomenclature (CN); the US uses the Harmonized Tariff Schedule (HTSUS); the UK uses the Online Tariff. Rates range from 0% (most electronics into the EU) to 16.5% (US MFN on cotton t-shirts, HTSUS 6109.10, verified 2026-06-11 against hts.usitc.gov) to anti-dumping territory — bicycles originating in China carry a 48.5% residual anti-dumping rate into the EU under Implementing Regulation (EU) 2019/1379, on top of the base rate. A bad HS code means a wrong rate — either over-paying duty you don't owe, or under-paying and triggering a CBP/HMRC/AEAT audit.

Import VAT or sales tax. Above the relevant threshold, the destination charges import VAT on (item value + shipping + duty). EU standard rates run 17-27% depending on member state — and they move: Estonia went from 22% to 24% on 2025-07-01 and Romania from 19% to 21% on 2025-08-01 (all 27 rates re-verified 2026-06-11 against the Commission's TEDB). UK is 20%, collected at point of sale for consignments ≤ £135 and at the border above. The US has no federal import VAT; state sales tax applies if the seller has nexus. The IOSS scheme (Import One-Stop Shop, Art. 369l of Directive 2006/112/EC) lets non-EU sellers collect EU VAT at checkout for consignments ≤ €150 — when used, the parcel clears customs without a broker fee or buyer-facing invoice.

The de-minimis threshold — which is disappearing. This is where most pre-2026 guides are now wrong, in both directions:

• US: the $800 de-minimis is suspended. Executive Order 14324 suspended the Section 321 exemption for shipments from all countries effective 2025-08-29, and the suspension was continued in February 2026 (Federal Register 2025-16802 and 2026-03829, verified 2026-06-11). Every US-bound parcel now clears with duty — including the Section 301 forced-labor tariff of 10% or 12.5% by origin, in force since 2026-07-24 — regardless of value.
• EU: the €150 duty relief ended on 2026-07-01. Until 2026-06-30, IOSS consignments ≤ €150 paid import VAT only, with no duty. Since 2026-07-01 Council Regulation (EU) 2026/382 charges a flat €3 per item on consignments of €150 or less sold online to EU consumers, with or without IOSS (without it, goods that claim a preferential rate pay that rate instead), until 1 July 2028; other commercial imports of €150 or less pay the normal duty rate, and a non-commercial gift from one private individual to another still enters duty-free up to €45 under Regulation (EC) No 1186/2009, Art. 25-26 (Official Journal, checked 2026-10-01).
• UK: £135 still holds. Below it, VAT is collected at sale; above it, duty and import VAT clear at customs (confirmed current 2026-06-11).

Order-splitting around a threshold is legal only when the orders are genuinely separate; splitting one order into two consignments to evade duty is fraud in every jurisdiction listed.

The US duty stack in 2026

A US-bound shipment can owe several layers at once, and they add: the HTSUS Column 1 base rate, Section 301 China tariffs (25% for List 1-3 codes), Section 232 on steel/aluminum derivatives (50% since Proclamation 10947 took effect 2025-06-04, assessed on the full entered value since 2026-04-06), the Section 301 forced-labor tariff (since 2026-07-24: 10% or 12.5% by origin; the EU and Taiwan topped up to 10% and Japan, South Korea and Switzerland to 12.5% including the MFN rate; not charged on Section 232 goods), which replaced the 10% Section 122 surcharge of 2026-02-24 to 2026-07-24, and the FY2027 Merchandise Processing Fee (0.3464%, min $34.58 / max $670.86 per formal entry, Federal Register 2026-15530). What no longer applies: the IEEPA "reciprocal" tariffs, vacated by the Supreme Court on 2026-02-20 in Learning Resources, Inc. v. Trump — with roughly $175B in refunds in progress. The US Section 232 tariff stack checker computes the full stack per HTS line and entry date, and the duty + import VAT calculator covers the EU/UK/US comparison.

Why HS code matters more than people think

Classification disputes are the most common customs problem for small sellers. The HTSUS has 17,000+ codes; the EU CN has 9,500+; the UK Online Tariff inherits the EU's structure. Slight misclassification (e.g., 6209.20.10 vs 6209.20.30 for cotton baby garments) can swing duty from 11.8% to 0% — and in 2026 the stakes compound, because trade-remedy layers attach to specific lines: declare a line that is on Section 301 List 3 and the entry owes 25% more than its neighbor heading. The classification you declare is what the carrier puts on the customs declaration; customs reviews it on a random sample basis and assesses penalties for negligent misclassification ($100-$10,000+ per violation in the US).

The HS code finder walks product descriptions through the WCO HS nomenclature down to the six-digit level. The duty calculator extends to the national 8-10 digit code and pulls the current duty rate plus import VAT for EU / US / UK. The IOSS vs OSS decision tool decides between IOSS, OSS, and standard import VAT for your seller-establishment + buyer-location combination. And before any rate applies, the dutiable base itself has to be right: the customs value builder assembles it under WTO Article VII rules — the EU includes freight and insurance to the border (CIF basis), the US does not (FOB basis), so the same invoice produces different dutiable values on each side of the Atlantic.

Getting the duty back when goods return

Duty is not always a sunk cost. If the buyer returns the goods, the US refunds 99% of the duty within a 5-year window under 19 USC §1313 drawback; the EU refunds 100% within 3 years under UCC Art. 203 returned-goods relief; the UK matches via HMRC Notice 236 RGR. Filing has overhead (typically a few hundred dollars through a broker), so drawback pays off above a value floor — the cross-border returns calculator computes the break-even.