Landed cost explained: duties, taxes and fees

Your customer in Toronto sees a $60 jacket at checkout. By the time it reaches their door, shipping, duty, sales tax and fees can add a lot to that price. Landed cost is the full amount: everything it takes to get a product from your shelf to your customer’s hands, including the charges collected at the border.

It affects two things: whether you make money on international orders, and whether your customer gets a surprise bill on delivery and refuses the parcel.

What goes into landed cost#

1. The goods#

The transaction value: what the buyer paid, or will pay, for the goods. It is the starting point for almost every other number, so it should be the real price on the invoice, not a rounded or “gift” value.

2. Shipping and insurance#

What it costs to move the parcel. Shipping matters twice: as a cost in its own right, and because some countries include it in the value that duty is charged on (see customs value below).

3. Customs duty#

The tax on importing goods, set by the destination’s tariff for the product’s code and often its country of origin. Duty comes in a few forms:

• Ad valorem: a percentage of the customs value. This is the most common form.
• Specific: a fixed amount per unit, kilogram, litre or pair.
• Compound or mixed: a combination, sometimes with a minimum or maximum.

Many products are duty-free under the general rate; others carry substantial duty. Trade agreements can reduce the rate for goods that qualify as originating in a partner country.

4. Additional duties#

On top of the ordinary rate, some goods attract trade remedy duties (anti-dumping, countervailing or safeguard duties) or other measures aimed at particular products or origins. They change more often than ordinary tariffs and depend heavily on origin, which is why origin has to be right. Read Country of origin: shipped from isn’t made in for how origin is decided.

5. Import taxes#

Most countries charge their consumption tax on imports: VAT in the EU and the UK, GST (and HST) in Canada, Australia and elsewhere. Some goods, such as alcohol, tobacco and certain fuels, also carry excise duties.

Import VAT and GST are usually charged on the customs value plus the duty, so duty raises the tax too. The US has no federal import VAT; US state sales tax is collected domestically and is not a border charge.

6. Fees#

Two very different kinds:

• Government fees, such as customs processing fees charged on imports in some countries.
• Carrier and broker fees for clearing the parcel and advancing duty and tax on the customer’s behalf, often called brokerage, disbursement or handling fees. They vary by carrier and contract and can be a large share of the cost on low-value parcels.

7. Currency conversion#

Customs converts your invoice value into its own currency at an official rate, and the customer may pay in yet another currency. Small exchange differences add up on margins.

Customs value: what duty is charged on#

Duty is a percentage of the customs value, and countries don’t agree on what that includes:

• The EU and the UK generally use a value that includes the cost of transport and insurance up to the border, often described as a CIF basis.
• The United States and Canada generally exclude international freight and insurance, which is closer to an FOB basis.

So the same parcel with the same duty rate can pay different duty in different markets simply because the base is different.

A worked example#

This hypothetical example uses a 10% duty and a 20% import VAT, with no fees, for a destination that charges duty on a CIF basis:

Notice two things: duty was charged on shipping as well as the goods, and VAT was charged on the duty. Ignoring either makes the estimate too low. Real rates, bases and thresholds differ by country and product and change over time, so use a calculator with current rules rather than fixed percentages.

De minimis: when nothing is charged#

Many countries waive duty, tax or both on shipments below a de minimis value. The thresholds vary widely, can differ for duty and for tax, and change. Two of the largest markets have changed theirs recently:

• United States: the $800 duty-free de minimis exemption has been suspended for goods from every country since 29 August 2025, and a 2025 law ends it on 1 July 2027. Low-value parcels now need a customs entry and pay the duty owed. See US de minimis suspension: what changed for parcels.
• European Union: import VAT has applied to ecommerce imports of any value since 1 July 2021, often collected at checkout through the Import One-Stop Shop (IOSS). Since 1 July 2026, parcels worth up to €150 also pay a temporary €3 customs duty for each tariff classification they contain. See The EU's €3 customs duty on parcels under €150.

Never hard-code a threshold you read once; check the current rule for each destination.

Who pays: DDP or DAP#

Landed cost has to be paid by someone. Under DDP (delivered duty paid) you collect it at checkout and pay it at the border, so the customer pays nothing on delivery. Under DAP (delivered at place) the customer pays duty, taxes and carrier fees on arrival. We compare the two in DDP vs DAP for ecommerce parcels.

Putting landed cost to work#

• Show it at checkout. Customers abandon fewer international orders when the total is clear up front.
• Price by market. If duty and tax are high in a market, decide whether to absorb, pass on or split them.
• Check margins by lane. The same product can be profitable to one country and loss-making to another.
• Re-run it when things change. New tariffs, thresholds and exchange rates all move the total.

Calculate it for your product#

Our free landed cost calculator takes an HS code (or a product description), origin, destination, total goods value, shipping and quantity, and returns every duty, fee and tax line with the rate used, the de minimis check, any conditional measures and the total landed cost. It covers the US, UK, Canada, the EU-27 and more.