Landed Cost & Customs Duty

How to use it

Enter the shipment as the supplier quotes it, the freight and insurance to get it to your country, the duty and VAT rates for the product, and the fees to clear and deliver it. The result is what each unit really costs in your warehouse, how far that sits above the supplier price, and how much cash the border takes before you can collect the goods.

Where the number comes from

• Goods value is units times the supplier’s FOB price.
• Customs value is the goods value on an FOB basis, or goods plus freight plus insurance on a CIF basis.
• Duty is the customs value times the duty rate.
• Import VAT is charged on the customs value plus the duty — the common, duty-inclusive rule.
• Landed cost adds goods, freight, insurance, duty, brokerage, inland delivery and other fees, plus import VAT only when you cannot reclaim it.
• Cash due at clearance is duty, import VAT, brokerage and other fees: everything the border collects before release, including VAT you reclaim later.

What goes wrong

The part most calculators leave out.

• The tariff code decides the duty rate, and a near-miss classification can double or zero it. A rate guessed from a similar product is the commonest error in this calculation.
• Low-value shipments can fall under a de minimis threshold where no duty or VAT is charged, and those thresholds differ by country and are changing. This treats every shipment as dutiable.
• Anti-dumping, countervailing and retaliatory duties sit on top of the normal rate for some products and origins. Leave them out and the landed cost can be badly understated.
• Customs converts a foreign-currency invoice at an official rate on a set date, which may not match the rate you pay the supplier at, so duty and VAT can move without the price changing.
• VAT base rules differ: some countries add local delivery costs to the VAT base, and some charge VAT on a value that excludes duty. The duty-inclusive base here is the common case, not the only one.

Questions

What is the difference between CIF and FOB for customs?

They are two ways of setting the value duty is charged on. FOB is the goods alone, as loaded at the origin port. CIF adds the cost of freight and insurance to the destination. On CIF you pay duty on the shipping too, so the same product at the same rate costs more to clear.

Is import VAT part of landed cost?

Only if you cannot reclaim it. A VAT-registered business usually recovers import VAT on its next return, so it is a cash-flow cost rather than a cost of the goods. It still has to be paid at the border, which is why the cash due at clearance is shown separately.

Why does landed cost matter for pricing?

Margin worked out on the supplier price ignores everything between the factory and your shelf. On a cheap, bulky product freight and duty can add a quarter or more to the cost, and a margin that looked healthy on the supplier price can be thin on the landed figure.

Does anything I type get sent anywhere?

No. The whole calculation runs in your browser. Nothing is sent to us or logged, and there is no account to create. Your browser keeps the figures with this tab’s history so that Back and Reload bring them back, and Reset clears them.