How to calculate import duty on a package (worked example)

Customs math feels arbitrary until you see the formula once. It is three lines, every time: figure out the taxable value, multiply by the duty rate, then add VAT. Here is the recipe with a worked example you can copy for your own parcel.

Step 1: Get the taxable value

Customs does not tax just the product price. The taxable base is usually the CIF value: cost of goods, plus insurance, plus freight.

If you paid $80 for shoes and $20 for shipping, the taxable value is $100. "Free shipping" from the seller still gets counted at an estimated freight cost in many countries, so zero shipping on your invoice does not always mean zero added.

Step 2: Apply the duty rate

The duty rate comes from the product's classification. Every product maps to an HS code, and each code has a rate in each country. Examples of the spread: books often 0%, electronics low single digits, clothing commonly 10% to 17%, leather shoes and textiles at the upper end.

Continuing the example: shoes at a 16% rate on $100 is $16 of duty.

Step 3: VAT goes on top of everything, including the duty

This is the part that surprises people: VAT (or GST) is calculated on the value plus the duty. In most of the EU the rate runs from 17% to 27%; in the UK it is 20%.

For the shoes at a 20% VAT: 20% of $116 (the $100 base plus $16 duty) is another $23.20. Total import charges so far: $39.20.

Step 4: Add the courier's fee

Express couriers advance the money to customs for you and charge a handling or disbursement fee, typically a flat amount or a percentage of the charges with a minimum. That is a separate, per-parcel fee, and the details are in customs disbursement fees. Add roughly $10 to $15 for the majors, or less with national postal services.

Final landing price for the $100 shoes: roughly $50 in border costs before the carrier's margin on exchange rates.

What changed in the US in 2025

The math above applies at every price point now. The US used to exempt parcels under $800 entirely; that exemption was suspended in 2025, so even small American-bound parcels pay duty. The full picture is in what happened to the US de minimis rule.

The EU never had that generous threshold for VAT (gone since 2021), and is phasing out the €150 duty-free band the same way. See EU import taxes today for the current rules.

Frequently asked questions

I paid VAT at checkout. Do I owe anything more?

If the seller charged destination-country VAT through a system like IOSS, the VAT part is settled. Anything above it, like duty on higher-value parcels or courier processing where it applies, can still be billed at the border.

The bill seems higher than my rough calculation. Why?

Three usual suspects: the courier used a less favorable exchange rate than the market rate, a minimum fee applied instead of the percentage, or the parcel was classified under a different (higher-rate) HS code than you assumed. Ask the courier for the full breakdown; you are entitled to it.

Can I refuse to pay and get the parcel sent back?

You can refuse, but the seller is not obliged to refund everything or anything, and many marketplaces treat refused-duties parcels as buyer's-choice returns. Read what happens if you do not pay before deciding.