If your store is located in the United States or Canada and you use the Shopify Fulfillment Network (SFN) to ship internationally, then there are certain requirements that you need to meet to make sure that the correct import and taxes are assessed.
If your business is in the United States or Canada and you ship an order to a customer in another country or region, then that customer is the Importer of Record for the order. The customer might have to pay import duties and taxes on their order depending on the destination country or region, the value of the shipment, trade agreements, and treaties. If you ship a package internationally from Canada, then duties and taxes aren't collected consistently by Canada Post.
International shipments that have a value of $2500 USD or more require additional documentation, including Power of Attorney, an International Transaction number, and carrier specific documentation.
SFN doesn't provide additional insurance on domestic or international shipments, but some shipping carriers might. You can contact the SFN Support team by email for more information about insurance from shipping carriers.
Import duties and taxes
The amount of import duties and taxes for a package that's shipped internationally is determined by a number of different factors. The value of a shipment can be determined by assessing information like the cost of goods sold, shipping costs, and the cost of shipping insurance. In some countries and regions, import duties are taxable.
Another contributor to the cost of import duties and taxes is the de minimis value threshold. This term refers to the minimum value of a shipment before it can be charged import duties and taxes. The de minimis value is set by the destination country or region of a shipment.
Other details that can affect the amount of import duties can include the following:
- Country of Origin (COO), which means the country or region where a product is made
- the category of goods
- product materials
- gender, which is applicable to apparel
- the shipping carrier and service
Delivered Duties Unpaid
SFN supports Delivered Duties Unpaid (DDU), which is also sometimes referred to as Delivered at Place (DAP). DDU means that the customer is responsible for the payment of applicable import duty fees and taxes when their order is delivered. The shipping carrier collects these fees from the customer and remits payment to the local governing authorities. Depending on the shipping carrier, fees are either collected at the time of delivery or the shipping carrier contacts the customer to have the fees paid in advance, before the delivery. The shipment isn't released to the customer without payment of these fees. Most shipping carriers charge a small additional fee to cover the administrative costs of collection and remittance of collected fees.
Using the Import One-Stop Shop (IOSS) scheme when you ship to EU countries
Starting July 1st, 2021, One Stop Shop schemes are available that allow merchants to simplify charging and remitting VAT for sales to EU countries. Merchants outside of the EU states can register for the Import One-Stop Shop (IOSS) scheme, which is also called the Non-Union OSS. When you use the IOSS, you can choose to collect VAT on orders equal to or less than 150 EUR at checkout so that your EU customers don't pay taxes upon delivery.
If you ship packages to EU countries from Canada and you want to use IOSS, then you can contact the SFN Support team by email for information about your options.
After you receive your IOSS number, you need to add it to your tax registration in your Shopify admin.
Add your IOSS number in your Shopify admin
Before you add your IOSS number to your tax registration, make sure that you've set up a shipping profile for the European Union.
- From the Shopify admin, go to Settings > Taxes.
- In the Tax regions section, beside European Union, click Manage.
- In the Shipping to the EU section, next to VAT on sales to the EU, click Collect VAT.
- From Registration country, select the country where you registered for IOSS.
- In IOSS VAT number, type your IOSS number.
- Click Collect VAT.
In accordance with compliance regulations, SFN doesn't label packages as Gifts and is therefore unable to guarantee that a shipment is exempt from import duties and taxes.
If you're shipping an item such as trial size products or marketing inserts, then you should label the package as Promotional products on all import and export documentation to comply with domestic and international shipping regulations. Even if these items have zero monetary value, you need to assign them a price greater than $0 USD, otherwise the shipment might violate international custom laws.
Best practices for shipping internationally
To ensure that your products don't encounter any issues when you ship internationally, make sure that you follow these guidelines.
- Make sure to use complete and accurate descriptions are used for your products. The description should describe the product, what the product is used for, and what the product is made of.
- Add HS codes to products in your Shopify admin. Adding an HS code helps to make sure that the correct import duties and taxes are applied to your shipments. In addition, make sure that the HS codes are accurate for any promotional materials, kits, or bundles that you sell in your store.
- Assign a price greater than $0 USD to all items in a shipment, even if the items are a gift with purchase (GWP). However, if you ship GWPs to an international destination, then the customer will probably be charged import duties and taxes on the GWP.
- Make sure that customers add their email address and phone number at checkout so that local shipping carriers can contact the customers about fees and delivery.
- Publish clear information in your online store that international customers need to pay import duties and taxes. Providing this information helps to inform your customers and to build their trust in your services.