Import duties and VAT: When do you pay them and when not?

Breaking down the basics of import duties and VAT for your shipments

When engaging in international trade, you’ll likely encounter import duties and VAT. But what exactly are these charges, why do you need to pay them, and how are they calculated? This guide explains everything you need to know about import duties and VAT, so you can navigate your shipping process with confidence.

What are import duties and when do you pay them?

Import duties are taxes levied on goods imported from countries outside the EU, such as China, India, or the United States. These taxes are calculated based on:

The purchase value of the goods.
Shipping costs.
Any insurance costs.

The applicable percentage for import duties is determined by the HS code (Harmonized System code) and the country of origin.

HS Codes and import duties

The HS code is a unique classification system that determines the type of goods you are importing. Customs use this code to calculate the applicable import duty rate.

HS codes generally consist of 10 digits.
The first six digits are standardized globally.
The remaining digits are region-specific (e.g., within the EU).

You can check the correct HS code for your products on the Dutch Customs website or use the Access2Markets tool.

How to calculate import duties

To estimate your import costs, use the following formula:

(Purchase Value + Shipping Costs + Insurance Costs) × Import Duty Percentage = Import Duties

What is VAT and why do you pay it?

VAT, or Value Added Tax, is a tax applied to the total value of imported goods. Similar to import duties, VAT applies to goods imported from non-EU countries. The standard VAT rate in the Netherlands is 21%.

How is VAT calculated?

VAT is calculated over:

The value of the goods.
Transport and insurance costs.
Import duties.

For example:

(Goods Value + Shipping Costs + Insurance Costs + Import Duties) × 21% = VAT Amount

How to pay VAT

Direct Payment at Customs: You can pay VAT during the customs declaration process. This amount can later be reclaimed as input tax in your VAT return.
Using an Article 23 Permit: This permit allows you to defer VAT payment until your regular VAT return, improving your cash flow. Learn more and apply for the permit here.

Our advice

When requesting a quote from Cargoplot, you’ll receive a clear breakdown of all logistics costs. However, import duties and VAT are calculated separately by customs. To avoid surprises, we recommend the following:

Do Your Research: Use tools like the Customs and Access2Markets websites to check HS codes and duty rates.
Choose the Right Incoterm: Select an incoterm that provides proof of VAT and import duty payments. This ensures compliance and prevents issues during tax audits.
Consider an Article 23 Permit: This can simplify administrative processes and improve your cash flow.

Calculate your full landed costs before shipping

Understanding import duties and VAT is crucial to avoiding unexpected costs and ensuring a smooth shipping process. Need more details or personalized advice? Our team is ready to assist you with all your transport and logistics needs. Get a real-time quote and calculate your full landed costs—including duties and VAT—before shipping.