Must-Read for Global Cross-Border E-Commerce! Decoding Tariffs in Six Countries

U.S. Tariffs

Overview

In the U.S., whether you’re an individual or a business entity, if you are importing goods, you are required to pay import duties and other related taxes. This means that both companies and individuals must follow the same tax policies when importing products into the U.S.

Import duties are calculated based on the customs value of the goods, which typically refers to the FOB (Free on Board) price. Simply put, the FOB price is the cost of the goods when they leave the port in the exporting country, including the product value, shipping, and insurance costs. For example, if you’re importing goods from China, the FOB price is the actual purchase price of the products plus the costs of transportation and insurance.

While most import duties are calculated based on the customs value, some goods may have taxes calculated based on their quantity, not just their value. For example, products such as food, alcohol, or tobacco may have import duties based on weight, number of items, or volume, rather than just their value.

Tariffs
The tariff rate in the U.S. ranges from 0% to 37.5%, with the average rate being 5.63%. Certain products are exempt from tariffs, such as some electronics, original paintings over 100 years old, and antiques.
For tariff rates, you can check the website: HTS Tariff Lookup, where you can enter the first four digits of the Harmonized Tariff Schedule (HTS) code to find the corresponding product details.

If the value of the goods is below $800, it is typically exempt from tariffs. However, there are exceptions, and in some cases, tariffs may still apply even if the value is under $800. Here are some of these exceptions:

1. Goods Imported by the Same Person on the Same Day
Only goods imported by the same individual on the same day can qualify for the tariff exemption. If you’re a business (company), even if the value of the goods is under $800, you will still need to pay tariffs. This means that companies cannot avoid tariffs by splitting shipments into multiple entries. Individuals can benefit from the exemption, but businesses are not eligible.

2.Merged Shipments Treated as One
If the same recipient receives multiple shipments on the same day, and the total value exceeds $800, those shipments will be treated as a single shipment for tax purposes. This applies even if the value of each individual shipment is under $800. Therefore, if you import goods in separate shipments but the total combined value exceeds $800, you will still be required to pay tariffs.

3.Specific Goods Not Exempt
Certain items, like alcoholic beverages, alcoholic perfumes (if the retail value exceeds $5), cigars, and cigarettes, do not qualify for the $800 exemption. Even if their value is below $800, tariffs will still apply.

4.Intentional Splitting of Shipments
If Customs suspects that shipments were intentionally split in order to evade taxes or fail to comply with regulations (such as not declaring the correct value), Customs has the right to treat those shipments as a single entry and impose tariffs, even if the value of each shipment is under $800.

5.Tariff-Quota Goods Are Not Exempt
Certain goods, like agricultural products, fall under tariff quotas and are subject to special import restrictions and tariff rules. These items will not qualify for the $800 exemption, even if the value is below that threshold.

Brazil Tariffs

Overview
Brazil, the largest country in South America, is also one of the world’s major markets. As a large economy, Brazil imposes relatively high import tariffs, especially on certain product categories. The country’s tariff system is managed by the Federal Revenue of Brazil (Receita Federal). Brazil’s tariff policies are influenced not only by national laws but also by international trade agreements, such as the World Trade Organization (WTO) and the Mercosur trade bloc.

Tariffs
Brazil imposes import tariffs that generally range from 0% to 35%, depending on the type of goods. Industrial goods typically face lower tariffs, while agricultural products, luxury items, and electronics may attract higher rates. Most tariffs are calculated based on the CIF price (Cost, Insurance, and Freight), which includes the cost of the product, insurance, and shipping fees.

Preferential Tariffs
Brazil offers preferential tariffs for goods from certain countries or regions through trade agreements. For example, Mercosur member countries benefit from preferential treatment, meaning goods from these nations may enjoy lower or even zero tariffs. Brazil also has bilateral or multilateral trade agreements with other countries, offering tax reductions or exemptions on certain exports.

Sales Tax (ICMS)
In addition to import duties, Brazil imposes a sales tax known as ICMS, which is similar to VAT in other countries. The tax rate typically ranges from 17% to 20%, though it varies by state. This means that the sales tax on imported goods can differ depending on the state they are sold in. For cross-border e-commerce businesses, understanding the specific tax rates of different states is crucial as it impacts the final cost of goods.

Minimum Threshold for Tax Exemption
Brazil also has a threshold for tax exemption, where small-value shipments (below a certain value) may be exempt from tariffs. However, even these items may be subject to ICMS sales tax depending on the state and the nature of the product.

Germany  Tariffs

Overview
Germany’s import tariff system is managed by the European Union (EU), as Germany is an EU member. Through a common customs and trade policy, the EU ensures consistency in external trade among all member states. EU import tariff rates are determined based on the type of goods and the customs classification code (HS code), typically ranging from 0% to 20%. In addition to import duties, Value Added Tax (VAT) is a common tax on imported goods. The standard VAT rate in Germany is 19%, which applies to most goods and services. Some items may be subject to a lower VAT rate, such as food and books.

Types of Import Duties and Taxes
Germany imposes several types of import duties and taxes on imported goods. The most common types include:

1. Customs Duties: These are taxes imposed on imported goods based on their classification in the Harmonized System (HS). The HS is an international product classification standard, and each product is assigned a specific code, which determines the applicable customs duty rate.

2. Value Added Tax (VAT): VAT is a consumption tax imposed on the value added at each stage of production and distribution of goods or services. In Germany, the standard VAT rate is 19%, but certain goods and services may qualify for a reduced rate or exemption.

3. Excise Taxes: Excise taxes are specific taxes imposed on certain goods, such as alcoholic beverages, tobacco, and energy products. These taxes are designed to regulate consumption, protect public health, and generate government revenue.

Calculating Import Duties and Taxes
Calculating import duties and taxes can be a complex process as it involves various factors, such as the customs value of the goods, the applicable duty rates, and any exemptions or special treatments.

To calculate import duties, you need to determine the customs value of the goods, which includes the cost of the goods, shipping fees, and insurance. Once the customs value is determined, you can apply the relevant duty rate based on the product’s HS code.

Similarly, to calculate VAT, you apply the applicable tax rate to the customs value plus any import duties.

It’s important to note that some goods may qualify for duty reductions or exemptions under trade agreements or special programs.

Customs Duty Exemption Threshold
In Germany, the current customs duty exemption threshold is set at 150 euros. If the customs value of the imported goods is below this threshold, no import duties will be charged. However, VAT will still apply, regardless of the customs value.

Understanding this threshold is crucial when importing low-value goods to Germany to avoid unexpected costs and delays.

France Tariffs

Overview
As a member of the European Union (EU), France follows the EU’s unified customs and trade policies. This means goods from other EU member states are generally exempt from customs duties or subject to lower rates. The EU internal market allows for the free flow of goods between member countries without tariffs.

Goods imported from non-EU countries are subject to customs duties based on the EU’s Common Customs Tariff. Each product has a specific HS code, and the duty rate varies depending on the product’s category and the applicable tariff regulations.

When importing goods into France, importers must ensure the correct classification of products using the French customs code. This classification determines the applicable duties and taxes. To ensure compliance, businesses often consult French customs or hire a customs broker to handle the import process.

Import Process and Customs Procedures in France

France has an efficient customs process, supported by advanced infrastructure and modern customs management systems, which makes the import process relatively simple. These systems enable France to quickly process imported goods and ensure that taxes are applied correctly.

France’s customs policies are open to international trade, making it an ideal gateway for foreign exporters to enter the EU market. The efficiency of France’s customs operations helps both importers and exporters reduce the complexities often encountered in international trade.

Import Tax Handling for Goods Above Certain Value

For a declared value above €5,000: If the declared value of imported goods exceeds €5,000 and the customer does not have a customs and tax account, French customs will contact the customer to confirm the payment of duties and taxes. The customer must ensure their customs and tax account details are accurate.

For a declared value above €1,000: Since March 2014, France requires customers to pay duties and taxes for goods valued above €1,000 after delivery. If the goods are imported under DAP (Delivered at Place) terms, the customer may be asked to pay a cash advance fee upon delivery. This fee is 2% of the duties and taxes, with a minimum charge of €14.55 (excluding VAT) or €17.50 (including VAT). This means that if goods are imported under DAP terms, customers will need to pay the cash advance fee until the duties and taxes are fully settled.