Duties & Taxes
Duties & Taxes
Quick Summary: How duties and taxes work for international shipments — trade terms, HS codes, IOSS, and what you see in the portal.
Overview
When you ship goods internationally, the destination country's customs authority may charge import duties, taxes, and clearance fees. These charges — collectively called the landed cost — are determined by the importing country based on the shipping label, commercial invoice, and supporting documents.
Understanding how duties and taxes work helps you set customer expectations, configure your shipping settings correctly, and avoid unexpected charges.
Trade Terms (Incoterms)
Trade terms define who is responsible for paying duties and taxes on an international shipment.
| Term | Full Name | Who Pays |
|---|---|---|
| DDP | Delivered Duty Paid | You (the shipper) pay duties and taxes upfront. The recipient receives the package with no additional charges. |
| DDU / DAP | Delivered Duty Unpaid / Delivered at Place | The recipient pays duties and taxes on delivery. |
Note: Trade terms appear as badges on courier results in the Shipping Calculator. Choose the term that matches your checkout and pricing strategy.
Choosing DDP
DDP is available only when a supported courier and destination, together with your account and order configuration, offer that option. When DDP is shown in the Shipping Calculator or order shipping options, select it to have duties and taxes paid by the shipper. If it is not shown, choose an available term or contact your Account Manager to check the available options.
DDP — Duties Paid by Shipper
When you ship DDP, the courier pays duties and taxes to customs on your behalf, then bills you through Floship. The charges appear on your invoice under Duties, Taxes, and D&T Fees columns.
You have two ways to handle DDP charges: - Absorb the cost as a business expense - Pass the cost to your customer at checkout (requires integration setup)
DDU / DAP — Duties Paid by Recipient
When you ship DDU/DAP, the recipient pays duties and taxes directly to the courier or customs before receiving the package. The charges do not appear on your Floship invoice.
Make sure your checkout page clearly informs customers that duties and taxes may be due on delivery. Unexpected charges at delivery are a common cause of refused shipments and customer complaints.
How Duties and Taxes Are Calculated
Duties and taxes are determined by the importing country and depend on several factors:
| Factor | Description |
|---|---|
| HS Code | The Harmonized System code classifies the product. Different codes have different duty rates. |
| Value of Goods | The declared customs value of the shipment. |
| Country of Manufacture | Where the product was made — trade agreements may reduce or eliminate duties. |
| Destination Country | Each country sets its own duty rates, tax rates, and de minimis thresholds. |
| Shipping & Insurance Cost | Some countries calculate duty on the total landed cost (goods + freight + insurance). |
HS Codes
The Harmonized System (HS) code is a 6-12 digit international standard for classifying traded products. You assign an HS code to each product in your inventory.
- Why it matters: Customs uses the HS code to determine the duty rate for your product. An incorrect HS code can result in overpaid duties, fines, or shipment delays.
- Where to set it: In Inventory → Products, enter the HS code for each product. The code is included on the commercial invoice for customs.
Tip: HS codes are country-specific at the 7+ digit level. Work with your Account Manager or a customs broker to verify the correct codes for your products.
De Minimis Thresholds
Some countries have a de minimis threshold — shipments valued below this amount are exempt from duties and/or taxes. Thresholds vary by country and courier, and are subject to change.
Contact your Account Manager for threshold information relevant to your shipping destinations.
Guaranteed Duties & Taxes
Floship offers a Guaranteed Duties & Taxes feature that calculates duty and tax charges at the time of shipment using authorized sources of information. When this feature is active:
- The estimated duties and taxes shown on the order are the final charges (no reconciliation surprises)
- Duties and taxes charges appear on your invoices alongside shipping charges
- Charges are drawn from your account balance if your account uses pre-paid billing
Note: This feature must be enabled on your account. Contact your Account Manager to check availability.
Zonos Integration
Zonos is a third-party service that provides real-time duty and tax calculations at checkout. If your store uses Zonos (typically through the Shopify App Store):
- Duties and taxes are calculated by Zonos and displayed at checkout
- The Zonos-calculated values sync to Floship with the order
- Charges appear in the portal under the order's Duties, Taxes, and D&T Fees fields
To verify if Zonos is active on your account: 1. Click your profile icon → Account Management 2. Go to the Integrations tab 3. Look for the Zonos integration status
Shopify Checkout Setup
If you use Shopify with Floship courier rates, you can display duties and taxes on the checkout page:
- Go to Account Management → Integrations → Shopify
- Enable the courier rates option for checkout
- Enable Show T&D from Couriers' Rate on Checkout
If you use Zonos instead, enable Sync Zonos Duties and Taxes in the same settings page.
Note: Shopify plugins for syncing duties and taxes back to the cart are deployed separately. Contact your Account Manager for availability.
IOSS and VAT Numbers
If you ship to the EU, you may need to register for IOSS (Import One-Stop Shop) to simplify VAT collection.
What is IOSS?
IOSS is an EU scheme that lets sellers collect VAT at the point of sale for goods valued under EUR 150 . Instead of the customer paying VAT and handling fees at delivery, the seller collects the VAT and remits it through the IOSS system.
Setting Your IOSS Number
Add your IOSS or OSS numbers in Account Management → Preferences → Taxes & Duties.
| Field | Purpose |
|---|---|
| IOSS | Import One-Stop Shop number for EU imports (see IOSS definition in the Glossary) |
| OSS | One-Stop Shop number for EU VAT reporting |
| IOSS/OSS Issuer Country | The EU country where your IOSS/OSS number was issued |
Your IOSS number appears on commercial invoices for eligible shipments. This tells customs that VAT was already collected, so the customer is not charged again at delivery.
Note: These fields are only visible if your account is configured for duties and taxes handling. Contact your Account Manager if you need them enabled.
Viewing Duties and Taxes in the Portal
On Orders
Before fulfillment, open the order detail page to see: - Estimated Duties — the projected duty amount - Estimated Taxes — the projected tax amount - D&T Handling Fee — the fee for duties and taxes processing
After fulfillment, the actual amounts replace the estimates.
On Invoices
Invoices show duties and taxes as separate columns on each shipment line: - Duties — import duties charged - Taxes — taxes charged - D&T Fees — duties and taxes processing fees
See Invoices for details on the invoice view.
Commercial Invoices
The Commercial Invoice button on the order detail page generates a customs document that includes the declared value, HS codes, country of manufacture, and applicable duties and taxes. Download this document from each order.
What to Do If Your Customer Is Charged Duties Incorrectly
If your customer (recipient) receives a duties or tax bill directly from the courier on a DDP shipment:
- Do not pay the bill or share it with the customer
- Contact your Account Manager immediately
- Keep all courier correspondence for reference
The courier may have used the wrong billing method. Your Account Manager will investigate and determine whether the charge is valid.
Troubleshooting
| Issue | Cause | Solution |
|---|---|---|
| Customer charged duties on a DDP shipment | Courier used wrong billing method | Contact your Account Manager — do not pay the bill yourself or forward it to the customer |
| Estimated duties differ from final charges | Actual package weight or dimensions changed at warehouse | Final charges based on carrier-measured values; estimates may vary |
| IOSS number not appearing on commercial invoice | IOSS field not filled in preferences | Add your IOSS number in Preferences → Taxes & Duties |
Related Documentation
- Billing Overview — account balance and charges
- Invoices — viewing duties and taxes on invoices
- Understanding Rates — how shipping rates and trade terms work
- Account Preferences — IOSS and tax settings
- Integrations Overview — Shopify and Zonos setup
- Shipping Policy — operational shipping policies
FAQs
What is the difference between DDP and DDU/DAP? DDP means you (the shipper) pay duties and taxes. DDU/DAP means the recipient pays. Choose DDP if you want to give customers a total-price-at-checkout experience. Choose DDU/DAP if you want the recipient to handle import costs.
How do I know if my account has duties and taxes enabled? Check your Integrations settings. If you see Zonos active, or if you see DDP couriers in the Shipping Calculator, duties and taxes are enabled.
Why did my customer get a separate duties bill on a DDP shipment? The courier may have used the wrong billing method. Contact your Account Manager — do not pay the bill yourself.
Can I display duties and taxes at checkout? Yes, if your integration supports it. For Shopify with Floship rates, enable the relevant toggles in your integration settings. For Zonos, the duty and tax display is handled by the Zonos plugin.
Do I need an IOSS number? If you sell to EU customers and want to collect VAT at checkout, you may need an IOSS number (see the Glossary for the IOSS threshold). Contact your Account Manager or a tax advisor for registration assistance.
What if I do not have a VAT, IOSS, or EORI number? Floship can support third-party duty and tax accounts where available. Contact your Account Manager to discuss options.