Logistics Glossary

Import Duty

What Are Import Duties?

Import duties are also referred to as import taxes, custom duties, or tariffs. They are taxes charged on imported products. This tax mostly depends on the amount of money charged on the product.

The customs authorities collect custom duties. If you are located in a country that belongs to the EU, you will be charged for buying from a country not part of it.

Why Are Import Duties Being Charged?

There are several reasons why import duties are charged on foreign products. Here is a list of some, if not all, of those reasons:

  • They help generate income for the government
  • They also ensure that foreign goods are not dominant over local goods
  • Some countries use custom duties to penalize other countries by charging more tax on their products

How Are Import Duties Being Calculated?

Customs duties are calculated as a percentage of the customs value of imported goods. The customs value of a product is made up of the initial cost of the product, the transport cost and insurance.

However, percentages can vary depending on the type of product imported. This may be due to additional taxation charged because of the country in which the product is manufactured. Below is information on how custom duties are calculated based on the flat-rate and tariff-based methods.

Flat-Rate Calculation

The flat-rate method is mostly used on products that are sent between people. For instance:

  • If someone located outside of the EU occasionally sends you products
  • The product has been sent to you free of charge
  • The imported goods are for personal use only
  • Also, if they do not exceed €700

If one of the above points is the case, customs authorities will charge 17,5% of the customs value. However, in cases where preferences have been granted, the rate will be 15%.

Tariff-Based Calculation

The tariff-based calculation method depends on the imported goods' value, nature, and characteristics. Therefore, this calculation method equals the total of all import charges, which are:

  • Custom duties
  • Excise duties
  • Import value-added taxes

Who Pays the Import Duties?

Import duties can be paid by either the seller or the buyer. This depends on the terms of the sale, but most of the time, they require the buyer to pay. If the terms indicate that the shipment is DDU (Delivery Duty Unpaid), the buyer must pay. However, the seller pays if it is DDP (Delivery Duty Paid).

Did Import Duty Change after Brexit?

The United Kingdom and Northern Ireland's withdrawal from the European Union have impacted custom duties. Imported items from these two countries are no longer seen as from the EU, and therefore custom duties are charged accordingly. This is because they are taken as goods from across the border of the EU customs territory.