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      International Shipping: Understanding Duties and Taxes

      When shipping internationally, duties and taxes are often applied by the destination country. How these charges are handled varies by carrier and can significantly impact both merchants and their customers.

      How Different Carriers Handle Duties and Taxes

      USPS

      • Payment Timing: Duties and taxes are typically collected upfront at the time of shipping or from the recipient upon delivery.
      • Billing Method: Generally does not bill retroactively.
      • What This Means: When you ship with USPS, you're less likely to receive unexpected bills later.

      UPS, FedEx, and Other Commercial Carriers

      • Payment Timing: Often bill duties and taxes retroactively after the shipment has been delivered.
      • Billing Method: The carrier pays the import fees to customs authorities and then bills the shipper (you) afterward.
      • What This Means: You may receive invoices from these carriers weeks or even months after a shipment has been delivered.

      Duty Billing Options for FedEx and UPS (USA to Canada)

      When shipping from the USA to Canada with FedEx or UPS, there are three primary duty billing options to choose from:

      Deliver Duty Paid (DDP) – Sender Pays

      • Who pays? Shipper (you)
      • How it works: Duties and taxes are billed to your account, so the recipient doesn't have to pay anything on delivery.
      • Best for: E-commerce businesses wanting a smooth customer experience with no surprise fees.
      • FedEx Term: Bill Sender (DDP)
      • UPS Term: Bill Sender (DDP)

      Deliver Duty Unpaid (DDU) – Receiver Pays

      • Who pays? Recipient (customer)
      • How it works: The recipient is responsible for paying duties and taxes upon delivery. If they don't pay, the package may be returned.
      • Best for: Businesses that want to avoid prepaying duties but risk abandoned shipments if customers refuse to pay.
      • FedEx Term: Bill Recipient (DDU)
      • UPS Term: Bill Receiver (DDU)

      Third-Party Billing – A Different Account Pays

      • Who pays? A third party (e.g., a customs broker or another designated account)
      • How it works: Duties and taxes are charged to a separate account that's neither the sender's nor the recipient's.
      • Best for: Companies working with fulfillment partners or logistics providers who handle duty payments.
      • FedEx Term: Bill Third Party
      • UPS Term: Bill Third Party

      Key Considerations:

      • DDP leads to a better customer experience but increases your costs upfront.
      • DDU can cause delivery delays if the recipient isn't prepared to pay duties.
      • Brokerage fees may apply, and FedEx/UPS often have their own customs clearance fees.

      Who Pays These Fees?

      Option 1: Bill Your Customer at Checkout

      • You can set up your store to calculate and collect duties and taxes from customers during checkout.
      • Many e-commerce platforms offer plugins or settings to enable this feature.
      • This proactively addresses the issue by making customers aware of all costs upfront.

      Option 2: Absorb the Costs

      • If you choose not to bill customers for duties and taxes at checkout, be prepared that:
        • You (the merchant) will be responsible for these charges when carriers bill you.
        • We will pass these costs on to you if we receive the bill.

      Best Practices

      1. Review Classification Guides: Ensure your products are correctly classified for international shipping to avoid incorrect duty assessments.

      2. Be Transparent with Customers: Clearly communicate your policy regarding duties and taxes in your shipping terms.

      3. Consider DDP Shipping (Delivered Duty Paid): This shipping option includes all duties and taxes in the shipping cost, preventing surprise charges for both you and your customers.

      4. Keep Records: Maintain detailed records of all international shipments for at least one year, as some duty invoices can arrive months after delivery.

      What to Expect from Us

      If we receive retroactive billing for duties and taxes on your shipments:

      1. We will collect all invoices related to your account.
      2. We will notify you of the total amount due, providing copies of all carrier invoices.
      3. We will charge the payment method on file with the appropriate processing fees.
      4. We will provide an invoice and supporting documentation for your records.

      Questions?

      If you have questions about international duties and taxes or need assistance setting up your store to collect these fees at checkout, please contact our support team.