7 minute read
Foreign governments add additional taxes and duties to foreign shipments. This is often done in an effort to protect domestic businesses from foreign competition, but sometimes is utilized simply to boost government revenues. Either way, it is your responsibility to ensure that proper duties and taxes are paid prior to your overseas shipment reaching customs.
The more complex part of this process is knowing when duties do not apply to your international shipment. In many cases, a taxing threshold divides shipments that require duties and those that do not. If your shipment fails to reach the specified dollar threshold—which varies by country—it can enter the country without any additional payment. The key is understanding how your package will be treated when it first arrives in its destination country. For example, all parcels sent to France worth €20 or more are subject to a 3% duty and a 20% value-added tax, or VAT. In the United States, however, the threshold is set at $800, making it a lot more affordable for international ecommerce companies to break into the US marketplace.
Something you have to know when expanding to the international market is that there could be high exchange rates for foreign currencies. For example, when you sell internationally using Amazon’s marketplace in Canada, or Amazon Europe and Amazon UK, you need to shop for the best exchange rates to convert the revenue back to your currency at home.