Table of contents
- 1. Key takeaways
- 2. Duties, import VAT and customs in plain English
- 3. What changed in global customs
- 4. Not sure whether to charge duties at checkout? Tell us your markets and we will outline the setup.
- 5. DDP vs DAP
- 6. Set it up in Shopify
- 7. Add HS codes and country of origin
- 8. Turn on duties and taxes for each market
- 9. Show landed cost at checkout
- 10. Carriers and customs paperwork
- 11. Returns across borders
- 12. Mistakes to avoid
- 13. What to do next
- Global customs regimes have tightened significantly in 2025–2026 with the rollback of traditional duty-free de minimis thresholds.
- The United States suspended its $800 duty-free threshold in August 2025 for specific trade categories, while the European Union ended its €150 duty exemption on July 1, 2026 with a flat €3 duty on small parcels alongside mandatory VAT.
- Delivered Duty Paid (DDP) eliminates surprise customs bills at the door, drastically reducing international package refusals.
- Configuring accurate 6-digit Harmonized System (HS) codes and country of origin on every product is mandatory for automated duty calculations.
Duties and import taxes apply when goods cross borders. The US suspended its $800 duty-free threshold in August 2025. The EU ended its €150 duty exemption on July 1, 2026 and applies a flat €3 duty to small parcels, with VAT still due. The UK’s £135 duty relief remains for now, and the UK has announced it will end it in 2028 or 2029. Verify dates on official sites.
Statutory Notice: This article is general information, not customs or tax advice. Customs regulations, trade agreements, and tariff schedules fluctuate rapidly. Verify rules with certified customs brokers and official government authorities.
Duties, import VAT and customs in plain English
When an online customer orders a product from another country, two separate government levies typically apply upon arrival at the border:
- Import Duties: A tariff tax levied by the importing country’s customs authority based on the product’s classification code, material, and origin.
- Import VAT / GST: Domestic consumption tax (e.g., 20% in the UK, 19% to 25% across the EU, 10% in Australia).
Historically, low-value parcels benefited from de minimis exemptions that allowed packages below a certain monetary threshold to enter duty-free. However, international governments have rewritten these regulations to protect domestic manufacturing and close trade loopholes.
What changed in global customs
| Territory | Effective Date | Regulatory Change | Impact on Ecommerce Parcels |
|---|---|---|---|
| United States | August 2025 | Section 321 ($800) De Minimis Suspended for specific categories | Increased customs scrutiny, mandatory electronic commercial declarations, duty assessments on covered consumer imports. |
| European Union | July 1, 2026 | €150 Customs Duty Exemption Abolished | All commercial parcels entering the EU now pay customs duty (simplified flat rate of €3 for small parcels) plus standard import VAT. |
| United Kingdom | Current (£135 relief) | Targeted for Phase-Out (2028–2029) | Parcels under £135 remain duty-free but must have UK VAT collected at checkout by the merchant. Review our Shopify UK VAT guide. |
Not sure whether to charge duties at checkout? Tell us your markets and we will outline the setup.
Our technical architecture team configures Harmonized System codes, landed cost calculators, and DDP shipping workflows across your Shopify store.
Talk to Us ↗DDP vs DAP
Not sure which platform fits your store?
Tell us about your products and goals. We suggest a platform and share a clear quote.
When shipping internationally, your store must operate under one of two primary Incoterms:
- DAP (Delivered at Place): The customer pays only for the product and shipping at checkout. When the courier delivers the parcel, the customer receives an unexpected bill for customs duties, taxes, and courier disbursement fees. Customers frequently refuse the parcel in fration, leaving the merchant to pay round-trip shipping costs.
- DDP (Delivered Duty Paid): Shopify calculates and collects the exact duties and taxes directly inside your checkout. The courier delivers the package seamlessly with zero fees requested at the doorstep. DDP increases international checkout t and reduces package refusal rates by over 80%.
Set it up in Shopify
Add HS codes and country of origin
Every physical product in your catalog must have a standardized 6-digit Harmonized System (HS) code and an accurate Country of Origin. Navigate to the product page in Shopify Admin under Shipping > Customs information to populate these values.
Turn on duties and taxes for each market
Navigate to Settings > Taxes and duties. Under Duties and import taxes, select your target international markets and toggle on "Collect duties and import taxes at checkout". Ensure your store is configured within Shopify Markets.
Show landed cost at checkout
Shopify automatically estimates the exact duty rate based on the destination country, HS code, and parcel value. The checkout displays a single transparent "Duties and taxes included" line item. Note that Shopify assesses a small calculation fee (typically 1.5% of duty calculations) on standard plans, while Shopify Plus development unlocks enterprise customs integrations.
Carriers and customs paperwork
To fulfill DDP orders, you must partner with international couriers that support electronic customs clearance (such as DHL Express, FedEx, UPS, or specialized cross-border logistics aggregators). The commercial invoice and electronic customs declarations (CN22/CN23) must clearly state that duties are billed to the shipper.
Returns across borders
Handling international returns is complex because duty payments made to foreign customs authorities are difficult to reclaim. Ensure your UK and international returns policy specifies how customs refunds are handled.
Mistakes to avoid
- Missing HS Codes: Leaving HS codes blank causes couriers to assign default penalty tariff categories, overcharging your customers.
- Misdeclaring Country of Origin: Sourcing in China while claiming US origin triggers customs fines and package confiscation.
- Neglecting Multi-Currency Display: Pair landed cost transparency with localized pricing using our Shopify multi-currency pricing guide.
What to do next
Transform cross-border commerce into a frictionless growth channel. Connect with our dedicated Shopify store design and development architects to implement automated DDP checkout today.
Notice: This article is general information, not legal or customs advice. Verify specific tariff classifications with licensed customs brokers.
