Duty and Taxes When Ordering Goods Online
By Alexander Maasik
Have you ever bought something from Wish? What about eBay? Or just had something cool delivered from an online store in another country? While you were doing that, you probably gave little mind to the duties and taxes and customs procedures involved in getting your products across the border to where you live.
And that is fine. The eCommerce world should work so that consumers don’t have to worry about how the goods are moved. This is a job for logistic companies, marketplaces, and customs agents. However, with new regulations coming up, the entire system on how goods are moved from a non-EU country (like the US, China, or the UK) to the EU, will change. And if companies don’t automate their systems now, consumers will be the ones spending time trying to figure out how to get their goods past customs.
And what’s worse, you might find out that you need to pay a lot more for the item than you thought, when you clicked “add to cart”.
That is why Eurora has developed a Duty and taxes calculation engine. If added to an online store, it enables full visibility of the VAT and duty taxes one needs to pay in any currency for the destination country in the shopping cart of a marketplace. Eurora’s database covers VAT and duty rates, de minimis thresholds, and active free trade agreements of most countries in the world.
Implementing this system is easy for marketplaces. The calculator can be easily added to any shopping cart with our API integration. Not only can the API calculate tax and duty costs but Eurora’s AI is able to assign the right HS codes for packages, check the prohibited item lists, and fill out an electronic declaration for the customs office.
Why should marketplaces care?
If you’re a marketplace that wants to ship goods to the EU, you should know that starting July 1st, 2021, you’ll be responsible for calculating and paying VAT. Based on the VAT rates of the country you are shipping to.
Meaning, if you want to show your customers the final cost in your shopping cart, you need to know the VAT for all countries you’re sending your goods to. If you do not show the VAT or duty costs on your site nor collect them yourself, your customers will need to pay them once the goods reach their destination. So, for example, if a customer thinks they’re buying a €100 sweater from you, they might end up paying €140 for it (depending on the tax rates of where they are living).
These (half)hidden costs will obviously anger your customers. And the most likely target for their anger is the marketplace. From past experiences, we know that in these situations customers will start looking for new places to shop. Or, worse, refuse to accept the goods upon arrival. Therefore forcing marketplaces to pay for shipping them back. After Brexit went into effect and the rules of trade changed, almost ⅓ of the goods ordered by the British were declined upon delivery. And companies discovered that it’s cheaper to destroy the goods than to send them back to their warehouses.
Luckily, if you implement Eurora’s API with our Duty and Tax calculator to your website, the API will take care of everything. And your customers will have a clear overview of the costs.
Expand your business with duty and taxes calculation.
Not knowing the right tax rates and regulations is also one of the barriers stopping online marketplaces from offering their services in a specific country.
Having an API that already knows the rules of a specific market, means that online stores will have an easier time sending goods to more countries and expanding their business. So don’t be held back by regulations and make your future customers happy.