If you are shipping internationally, your packages will always pass through customs. As a shipper, you want to ensure you declare what is being shipped so your package makes it to the recipient without any issues.
To make this process as easy as possible, Shippo will automatically create a Customs Declaration for orders with international addresses using the item information for the order!
Please check out our article on Carriers Supported by Shippo to see which Shippo-supported carriers you can use to ship internationally from your country.
What are Customs Declarations?
A Customs Declaration is the process of declaring the items you ship across international borders. Items shipped across international borders are generally subject to import/export taxes, customs duties, and fees.
When declaring items, it is critical that you are not vague in describing your item.
If the Custom Agency cannot determine what is in your package, they reserve the right to hold it for clarification, return the package, and/or discard the package.
Examples of vagueness include descriptions such as: "gift," "bottle," "box", and "supplies."
To ensure your package successfully makes its way through customs, please be descriptive as possible and do not leave your description open to interpretation.
Exceptions to Customs Declaration Requirements
Sometimes, the Customs Declaration is not required, and shippers can opt out of including one. It is the shipper's responsibility to include customs documentation when it is needed.
Two examples of exceptions are:
- Shipping between certain European Union countries
- Shipping from the United States to U.S. Territories with some carriers
- i.e., US > Puerto Rico, through USPS
What is a Commercial Invoice?
A Commercial Invoice is a physical document used to declare your items for customs purposes.
It is provided through Shippo in several ways:
- Included as part of the actual shipping label
- Included on a separate page(s) as part of the shipping label download
- Available to print by clicking Download Commercial Invoice on the Shipments Page.
- Sent electronically through a process called Paperless Trade, where a physical copy is not required
What are customs fees?
Customs agencies use the commodity, quantity, value, country of manufacture, and other factors to determine duties and taxes charges for international shipments.
Customs fees (duties and taxes) are not included in the Shippo rate and will be added on after the package has been sent by the customs agencies of the sending and receiving countries.
Custom fees have many dependent factors, to get an idea of how much your shipment's customs fees will amount to, check out this article!
Should I select DDU, DDP, or FCA?
The customs fees must be paid either by the sender or the recipient. This is determined by the incoterm that you select when you do your customs declaration.
Shippo supports three options:
- DDU (Delivery Duties Unpaid)
- DDP (Delivery Duties Paid)
- FCA (Free Carrier)
If you have an IOSS number, select DDU as the Incoterm to ensure the customs fees are billed properly.
DDU is the default option in Shippo and means that your customer, the recipient, will be responsible for paying the customs charges before receiving the package.
- The carrier will contact the customer for payment instructions once the charges are calculated and the package is ready for final delivery.
Choose DDP if you would like to pay all customs fees on behalf of your customer. This is common when sending a gift internationally.
- USPS does not enable DDP for their shipments. All USPS international shipments will be sent DDU.
- Customs charges will be calculated and charged to you, the sender, approximately three weeks after shipment. Charges will be billed through your carrier account or through Shippo if a Shippo carrier account was used.
DHL Express and UPS charge an additional processing fee for DDP.
Free Carrier (FCA) shipments are supported only FedEx and DHL Express. With FCA, you deliver the goods, cleared for export, at a named place and the shipment can be delivered to a carrier nominated by the buyer. Your buyer must nominate a carrier.
this field would only be required if the item is shipped from the US to China, Russia, or Venezuela. If you are shipping to any other country, you do not need to have this number.
ECCN codes are five-character alpha-numeric designations used on the Commerce Control List (CCL) in the United States to identify dual-use items for export control purposes. An ECCN categorizes items based on the nature of the product, i.e. type of commodity, software, or technology and its respective technical parameters.
If the item is in the jurisdiction of the Bureau of Industry and Security (BIS) and is not listed on the CCL, it is designated as Ear99 instead:
- ECCN is commonly described as a 5-digit code, but in practice, it can be up to 12. Format: #A###.a.##.a https://www.bis.doc.gov/index.php/documents/regulations-docs/2329-commerce-control-list-index-3/file.
Shipping to the European Union
As part of the ICS2 (Import Control System 2) for the European Union, merchants shipping into or between EU Member States are asked to provide item descriptions in plain language that is precise enough for customs authorities to be able to identify the goods.
For example, you should choose ‘Men’s Shirt’ as your description instead of ‘Apparel’.
This information will be displayed on the label for all shipments that include customs documentation. You can find a list of generic, unacceptable terms and the suggested alternatives provided by the European Commission here
Additionally, an EORI, TaxID, VAT number or IOSS number may be required. Filing the correct tax information will ensure the package passes through customs smoothly.
Any merchant moving goods into or out of the EU requires an EORI (Economic Operators Registration and Identification number) to assess customs duties properly. Although each EU Member State can provide EORI numbers, Merchants only need one EORI for the entire EU, no matter how many EU Countries/Member States it services. Shippers should use their EORI number in all communications with any EU Customs where a customs identifier is required. For more information on EORI, visit the European Commission website.
Starting in 2021, merchants moving goods into or out of the UK will need GB EORI number. VAT-registered businesses were automatically issued an EORI number in September 2019. Businesses without a GB EORI can apply for free.
Tax ID/VAT codes determine how a merchant will be assessed for tax purposes. One seller may have multiple numbers, depending on the countries they are shipping from/to, so this may vary by shipment.
The Tax ID used in the United States is called the EIN or Employer Identification Number. U.S. Customs Border Protection (CBP) guidelines require that import/export filings include the shipper's Employer Identification Number (EIN).
VAT stands for Value Added Tax. VAT numbers are widely used rather than EIN in Europe, the UK, and elsewhere worldwide.
IOSS (FedEx, UPS, DHL Express, DHL eCommerce, and USPS only)
The EU is launching an Import One Stop Shop (IOSS) platform to simplify the declaration and the
payment of VAT for B2C imports up to a value of €150—if the value of the shipment is over €150, it is considered DDU and the VAT tax is decided at customs. This optional platform only requires you to register with a single EU Member State to manage your sales VAT throughout the EU, removing the need to register for VAT in every country you sell goods to.
If you are a non-EU-based supplier or marketplace selling goods to consumers in the EU, registering with the IOSS means you can collect accurate VAT for the purchase from the consumer at the point of sale, which can then be declared and paid in a periodic VAT return. If you are a merchant that collects VAT tax on your site, your IOSS ID should be passed. If the marketplace (i.e., eBay Canada) collects VAT tax at the point of sale, the marketplace's IOSS ID should be passed.
Shipments containing a valid IOSS can be validated by the carriers and customs authorities which may help the package move through customs more quickly.
If your company does not have an EU-based establishment and you wish to register for the IOSS, you must appoint an intermediary to settle VAT through this platform.
Registering for the IOSS platform is not obligatory, and you can continue to declare and pay VAT on EU imports as you do today.
IOSS will only be passed for UPS, FedEx, DHL Express, DHL eCommerce, USPS Priority Mail International, and USPS Priority Mail Express International shipments to Europe.
You can add your TaxID/VAT, EORI, or IOSS to the customs declaration data in Shippo for any international order by editing the Customs Declaration.
VAT changes for the UK, effective January 2021 (Brexit)
VAT de minimus has been eliminated for the UK. Translation: orders up to $135 GBP used to be VAT free. Now, VAT is due on all purchases of any amount.
Merchants must charge & collect VAT at the time of purchase before shipment. This affects B2C (Business to customer), B2B (Business to business), and C2C (Customer to customer) sales.
For B2C, shipments up to $135 GBP, which used to have tax/VAT waived, must now be taxed.
Furthermore, that VAT must be collected from the shopper and paid before shipment. This means that merchants must send their shipments DDP (Shippo default to DDU, please see Customs Declarations in Shippo); merchants will have to collect that tax amount (20%) from their shoppers upfront.
Merchants need to register for a GB VAT if they haven't already. Merchants will need to pay their VAT due periodically. More info here: https://www.gov.uk/vat-returns
- For B2B sales, merchants should follow the same rules they do now for shipments over $135 GBP.
- Up to $39 GBP exempted from Duties & VAT.
- Between $39 GBP and $135 GBP: exempted from Duty, and VAT paid by the shopper.
- Above $135 GBP: Duty & VAT applies, paid by the shopper.
VAT changes for the EU, effective July 2021
- VAT de minimus will be eliminated for the EU in July 2021. Translation: orders up to 150 EUR used to be VAT free. Now, VAT is due on all purchases of any amount.