International shipping can feel like a barrier for many businesses, especially when it comes to determining how to pay duties and taxes. If duties and taxes aren’t paid in advance, your customers will be responsible for the cost when their shipment arrives. Additionally, packages with unpaid taxes and duties can be delayed in customs or returned for lack of payment or being left with the carrier for too long. However, we have a solution for you! Stamps.com provides your business with a way to pay Canadian taxes and duties with Canada DDP.
What is DDP?
DDP stands for Delivered Duty Paid. All DDP means is that your business pays the duties and taxes for a shipment, so customers don’t have to pay when their package arrives.
The Benefits of Canada DDP
Canada DDP can be used with USPS First Class Mail International®, Priority Mail International®*, and Priority Mail Express International®* shipments. The flat fee for using Canada DDP is $7.95 for USPS First Class Mail International® and $9.95 for Priority Mail International® and Priority Mail Express International®. This fee will be included with the cost of your label, so there’s no need to worry about adjusting your shipping process. Also, shipments using Canada DDP don’t need printed customs forms, as all of the information needed is included with your label.
*Priority Mail International Medium and Large Flat Rate Boxes aren’t eligible for Canada DDP, so other types of packaging will need to be used.
Value Limits for Canada DDP
One thing to note is shipments using Canada DDP have a value limit, meaning the total cost of the items in your shipment can’t pass a certain monetary amount. The value limits for each service can be found below.
First-Class Mail International® – value up to $400
Priority Mail International® – value up to $2,500
Priority Mail Express International® – value up to $2,500
How to use Canada DDP
Once you’ve filled out the customs information for a Canadian shipment, select the Duties/Taxes drop-down menu. Click Prepay Duties and Taxes and print your label.
Note: This is how the screen will appear for First Class Mail International® shipments.
Note: This is how the screen will appear for Priority Mail International® and Priority Mail Express International® shipments.
Conclusion
It takes a split second to take the responsibility of paying taxes and duties from your customers. The flat fee for Canada DDP is included with the cost of your shipping label, so you won’t be taken to another payment screen. Canada DDP is available to all Stamps.com customers, so you can start using this feature on your next Canadian shipment. Adding Canada DDP is only a couple of clicks away!
Simplify international shipping with a 30-day free trial to Stamps.com.
How can you reach a wider audience and increase sales? Try shipping internationally! Your products are amazing, and more customers should see what your business has to offer. International shipping may require a slightly different shipping process than domestic shipping. However, international shipping is a way to boost sales, and we’ll show you the steps needed to create an international shipping process.
1) Check for international shipping restrictions
Much like domestic shipping, international shipping comes with a set of restrictions and guidelines. International shipping restrictions may vary from carrier to carrier and by whether your shipment will be traveling by air or ground-based carrier services. Each carrier’s shipping restrictions can be found on their website. For more information about international shipping restrictions, contact your carrier directly.
Once you’ve reviewed the international shipping restrictions applicable to the products your business ships, communicate these guidelines with customers. Explaining international shipping limitations to your customers during the checkout process will create a more pleasant shipping experience. Also, knowing international shipping restrictions keeps shipments from being returned and/or your business from receiving penalties.
2) Decide how taxes and duties will be paid
Before we talk about paying taxes and duties, let’s discuss the difference between the two. Duties are additional costs given to specific products as they enter specific countries. Duties are imposed on items that can compete with items created within the country. For example, if you’re shipping coffee to a country known for selling coffee, especially at a higher price, the duties added will be greater for this product. Taxes are given to a product based on its overall cost and the amount of taxes on a product will vary from country to country.
If you’re shipping to the UK or the EU, customs forms will need VAT (Value Added Tax) and IOSS (Import One-Stop-Shop) numbers. VAT is determined by a product’s cost, minus any components of the product that have already been taxed. IOSS is a business-specific number given by your store of marketplace and choice. IOSS gives your business the opportunity to pay VAT instead of having the financial responsibility fall on your customers when their package is delivered. VAT and IOSS numbers are tax ID numbers and help determine:
How the taxes and duties will be calculated
When the taxes and duties will be paid in the shipping process
Who will pay or has paid the taxes and duties
Note: The screens pictured may change as international shipping requirements are updated.
3) Familiarize yourself with customs forms
Customs forms are additional pieces of documentation attached to your shipments. These forms can be physically or electronically submitted, depending on the carrier used. Customs forms include information about the content of your package and help your shipment move through customs offices faster.
As we mentioned earlier, packages headed to the UK or the EU will need VAT (Value Added Tax) and IOSS (Import One-Stop-Shop) numbers on the customs forms. Additionally, shipments passing through or going directly to most countries in the EU will be required to have Harmonized or HS codes. HS codes are six-digit codes used to represent a product and its attributes. HS codes are also universal, so assigning them to products helps to bypass potential language barriers.
Note: Shipments to Puerto Rico and military addresses are considered domestic shipments but will need customs forms.
4) Utilize international carriers like GlobalPost
Our partner carrier, GlobalPost, provides merchants with an efficient international carrier service. GlobalPost works with carriers across the globe to decrease shipping delays and get packages to your customers safely. When using their GlobalPost Standard International service, you can expect:
Door-to-door tracking
Up to $100 in parcel coverage for loss and damages, including the shipping cost
Free HS Code Fulfillment Service that allocates the right tariff code to your parcels
No customs forms to print
5) Create an international shipping label with Stamps.com Online
Click the Mail tab on your dashboard.
Select your label/paper size from the Print On drop-down menu.
Use the Mail To drop-down menu to choose the destination.
Enter the recipient’s address manually or from your Stamps.com Contacts list.
Weigh your shipping materials. If using your connected Stamps.com Postal Scale, the package’s weight will show automatically.* Then weigh each individual item within your box. You’ll need these weights for the customs forms later on.
*Note: Confirm the Auto box next to your item’s displayed weight is checked.
Pick a USPS international service option from the Service drop-down menu. Only options available to the destination country will be shown.
Purchase additional insurance, especially for high-value packages.
Click Edit Form in the Customs section.
Select the best description for the items you’re shipping from the Package Contents menu.
Click the Non-Delivery Options menu and select your preference.
Enter an International Transaction # if applicable.
Select the Add Item option.
Here, you’ll add your product’s description, the quantity of the item, as well as the item’s weight and value. You’ll repeat this process for each item in the package. If you need to add a description, remember to be specific for shipments traveling through or to the EU. Avoid general descriptions like “clothing” or “electronics.” Shipments through and to the EU will also need HS codes added. A complete list of customs requirements for each USPS mail class can be found in our Learning Center.
Agree to the USPS Privacy Act Statement and Restrictions and Prohibitions and click Save.
Edit your international shipment’s mail date if the package will not be shipped on the same day the label is created.
Leave the Hide Postage Value box checked.
Select Print Receipt if you’d like a printed copy of your receipt when your label is printed.
Create a Reference Number for the Stamps.com Print History files.
Select or create a cost code as needed.
For new merchants, we recommend printing a sample first. Once you’ve confirmed the test print is correct, hit Print Postage.
If you notice incorrect information on your label after printing, click the Reprint button on your screen. One big thing to note is you’ll have one opportunity to reprint.
For instructions on creating an international label through Stamps.com’s PC Software, visit our Learning Center.
Conclusion
You’ve learned how to evade negative shopping experiences for your customers by communicating shipping restrictions. You understand how to complete customs forms and decrease the chance of shipping delays. You’ve found international shipping options with carriers like GlobalPost and walked through creating international labels on Stamps.com. Now, you’re officially ready to open your store to global customers!
Starting July 1, 2021, all commercial goods destined for the European Union (EU) are subject to Value Added Tax (VAT). This applies to deliveries of any value, including those below 22 euros (estimated $26). To help online retailers manage this tax collecting process, the EU member countries created the Import One-Stop Shop (IOSS), an electronic portal for online retailers to comply with the new VAT rules. After registering for an IOSS account, you will receive an IOSS tax identification number which should be inputted on all Customs Forms for your packages.
First 90 Days – How is the IOSS Working? Stamps.com Customer Care has been monitoring the deliveries to the EU very closely since July 1, 2021. Overall, most packages have included the new IOSS information and packages are being delivered. We have discovered some shippers are inputting VAT/IOSS information incorrectly in the Stamps.com software interface, which is creating unnecessary duty and tax bills for shipments.
Customer Care has also noticed many shippers are NOT inputting IOSS numbers on low value orders, which is now required. This action pushes the responsibility of delivery fees, duties and taxes to the package recipient. If the recipient does not want to pay these extra charges, the package will be returned to sender.
INSTRUCTIONS FOR INPUTTING VAT/IOSS NUMBERS INTO CUSTOMS FORMS USING STAMPS.COM
Stamps.com Software
1) From the “International” tab, input the delivery address and package details. 2) In the “Customs” section, please click on the “Edit Form”. 3) Input your IOSS tax identification number in the designated field. Finish by clicking “Add Item” (on far right side) and then “OK”
Stamps.com Website
#1 Input the international delivery address and select the carrier info for the label. #2 In the “Contents” section, click on “Customs Form” button. #3 Input your IOSS tax identification number in the designated field. Finish inputting the item description and click “Add item”.
Important information to remember:
For orders being delivered to the United Kingdom, “IOSS #” field will be labeled “VAT #” in the Customs Form.
If you are selling through a marketplace, such as eBay or Amazon, be sure to include that marketplace’s IOSS number in the Customs Form. If you do not, the receiving EU country will assume VAT has not been collected.
Only July 1, 2021, the European Union (EU) introduced new Value-Added Tax (VAT) requirements for all parcels entering EU-member countries. One big change is that products valued at 22 euros (approximately $26) or less now have VAT applied in order for the buyer to take receipt of the product.
What is VAT? VAT is a consumer tax that European governments use to collect revenue on all goods and services consumed by their residents, including products that were made outside of the EU. VAT is used somewhat to even the playing field for European manufacturers as well as increase tax revenues. Generally speaking, VAT is paid by the buyer to the seller and then the seller gives either all the fees, or a large portion of the fees collected to the EU government where the product was imported.
EU countries are responsible for creating their own VAT rate, but they need to have a standard VAT of at least 15%.
Listed below are the current EU standard rates as of July 1, 2021:
The European Union (EU), a group of 27 countries including Germany and France, will be implementing new trade rules for U.S. sellers beginning July 1, 2021. The EU has modified the Value-Added Tax (VAT) – a tax on goods and services bought and delivered to the EU countries. Sellers in the U.S. will need to understand how to comply with these new laws and prepare for the changes.
What changes to the EU VAT will take place on July 1, 2021? Prior to July 1, 2021, no VAT fees were required for commercial goods valued up to 22 euros (approximately $26). Goods valued at 22 euros or less were able to be shipped into EU countries with no additional fees required for buyers.
After July 1, 2021, all goods imported to the EU valued at up to 150 euros (approximately $178) will be subject to VAT and items valued at more than 150 euros will be subject to VAT and duties. VAT rates are different for each EU country based on the service and type of product being delivered, with most VAT fees ranging around 20% of the total cost (sales price plus shipping).
Product Price
Until June 30, 2021
Starting July 1, 2021
€0 – €22
Exempt – No VAT required
VAT applied (with IOSS for B2C, or upon import for B2C/B2B)
€23 – €150
VAT applied upon import
VAT applied (with IOSS for B2C, or upon import for B2C/B2B)
Above €150
VAT applied upon import
VAT applied with duties (Upon import, Standard VAT Payment)
What are my options for collecting VAT for EU countries? The new rules give sellers two options:
#1 Preferred Method: Import One-Stop Shop (IOSS): The EU member countries have created a new electronic portal for B2C transactions, known as the IOSS, which makes it easier for online retailers to comply with the new VAT rules. This program is intended to help expedite the Customs and VAT collection process and allow the EU buyer to see the full landed cost including the VAT fees at the point of sale (i.e. inside the shopping cart). Businesses will need to register on the IOSS portal, provide an IOSS tax identification number during Customs creation and provide the recipient’s email and/or phone number along with a Harmonized System (HS) Code for the product being shipped. Online retailers only need to be registered with a single EU member country via the IOSS system to access trading within all 27 EU countries.
Additionally, retailers will need to establish an “intermediary,” a representative located in any one of the 27 EU countries who, representing the online retailer, will submit the VAT payments each quarter as well as process any returns.
Important Note: The IOSS portal is NOT required for U.S. sellers. It is an optional program intended to expedite e-commerce order delivery to EU countries, while collecting VAT efficiently. U.S. sellers who do not register for IOSS will have their packages delivered Delivery Duty Unpaid, meaning the buyer must pay VAT and potential additional customs clearance fees before the shipping carrier will release their package.
#2 Delivery Duty Unpaid (DDU): This option only requires the recipient’s email or phone number, an accurate product description and a HS Code. The downsides to shipping orders using DDU are that if the VAT is not paid at the shopping cart, the buyer in the EU country becomes responsible for paying the fees before they can receive their product. Buyers could get “buyer’s remorse” due to high extra fees required to receive their product and abandon the order, asking for a full refund.
Additionally, not using the IOSS system can cause items to be held up in customs for lengthy periods of time until the VAT is paid. Overall, this option will lead to a poor customer experience and reflect badly on your business.
Selling to International Buyers using a Marketplace? Online retailers using marketplaces such as Amazon, eBay and Etsy will have a separate set of VAT rules. Marketplaces are considered to be involved in the sale and supply of goods, and thus the EU is requiring the marketplace to be liable for collecting and paying the VAT fees. Starting July 1, 2021, Marketplaces will collect VAT from the buyer based on the country of delivery and remit it to the responsible tax authorities. Note: VAT will be collected on the full value of the transaction including shipping costs, as the shipping costs are considered part of the total purchase.
What about Customs Forms? Your formal customs declaration will now require more information about the items you are sending. Pro forma and commercial invoices must provide clear and accurate data including a description of goods, the quantity of items, itemized values and custom tariff codes. It is also recommended that you provide an accurate product description and HS Code. GlobalPost Logistics has a free tool that generates HS codes for any product using the World Customs Organization schedule.
What steps should I take now? Merchants need to register with the IOSS portal before July 1, as well as find a VAT intermediary like Hellotax, Simply VAT, Taxually or Avalara. Next you will need to make sure your shopping cart has the capabilities to collect VAT at the point of purchase. Most shopping cart vendors are preparing for the July 1, 2021 deadline and have set up special tax rules inside the cart settings page. If you use Shopify, check out the information under “Setting up EU taxes” in the help center section on their website.
Final thoughts. Registering with the IOSS portal and selecting an intermediary can help your business generate brand loyalty and customer retention by creating a hassle-free VAT collection. July 1 is right around the corner, so make sure you set yourself up for success by complying with these new tax rules.
LEGAL DISCLAIMER
The content on this blog is "as is" and carries no warranties. Stamps.com does not warrant or guarantee the accuracy, reliability, completeness, usefulness, or quality of any content on the blogs, regardless of who originates that content.
