Managing duties and taxes in cross-border shipping

International expansion is a significant opportunity for SMBs to win new customers and diversify revenue as markets fluctuate. However, the complexities of customs can often feel like a barrier to entry.

Understanding the fundamentals of duties and taxes is essential for reducing cross-border uncertainty and ensuring your international operations are financially sustainable. This guide provides practical strategies to prevent delays and unexpected fees – helping you build a more resilient global supply chain.

Customs duties and taxes are imposed by governments to generate revenue and protect local industries, making them an unavoidable part of international shipping. For SMBs, the complexity often stems from the variety of factors that influence the final amount due:

• Product value: The total declared value on your commercial invoice.
• Harmonised system (HS) codes: The global classification system used to determine the specific duty rate for your goods. Incorrect codes are a primary cause of overpayment and delays.
• Country of origin: Where your product was manufactured, which dictates eligibility for trade agreements.
• Trade agreements (if applicable): Specific deals between nations that may reduce or eliminate duties on certain goods.

Manual processes are prone to error. Digital tools can assist in calculating costs, finding the correct HS codes and estimating rates for hundreds of countries, ensuring your documentation is audit-ready from the start.

A critical factor in anticipating costs is the de minimis threshold – the value below which imported goods can enter a country duty-free. Historically, this allowed small parcels to move with minimal friction, but the landscape is shifting rapidly¹:

• United States: The $800 de minimis exemption has been suspended as of August 2025, requiring formal customs entry and duty payments for almost all shipments regardless of value.
• European Union: The €150 customs duty exemption is set to end on July 1, 2026. In the interim, several member states are introducing flat €3 fees plus local handling charges.
• United Kingdom: The government plans to remove the tax break on imports under £135 by March 2029 at the latest, signalling a global move toward total cost transparency.

One of the most common customs mistakes businesses make is providing incomplete or vague documentation, which is the leading cause of custom charges disputes and delivery delays.²

To ensure smoother customs processing, focus on the quality of your information. Here are a few areas to be aware of:³

• Vague descriptions: Using terms like “electronics” instead of “bluetooth headphones" can trigger manual inspections and delays.
• Incorrect Incoterms®: Misunderstanding these international trade terms can lead to disputes over who is responsible for paying tax and customs – the shipper or the recipient.
• Incomplete paperwork: Missing signatures or inconsistent values across different documents (like the packing list and commercial invoice) are top reasons for shipments being held.

To ensure your international shipments glide through clearance, consistency and preparation are key.

• Embed compliance into your preparations: Make customs accuracy a non-negotiable pillar of your logistics. Subscribe to updates from regional authorities, attend trade webinars, and stay up to date on regulatory shifts.
• Standardise your documentation: Create a master checklist for every international market. Ensure every shipment includes an accurate commercial invoice, air waybill, and any specific licenses required by the destination country.
• Leverage specialist support: Consider partnering with a provider that specialises in global compliance. They can act as an extension of your team, helping you navigate volatile rule changes and ensuring your exports stay on the right side of international law.

As trade becomes increasingly borderless, the ability to efficiently manage duties and taxes on international shipments is a vital skill for SMBs looking to take on cross-border shipping. While the regulations may seem daunting at first, they are manageable with the right tools and strategic preparation. Here’s a three-step guide to get you started.

Disclaimer: The information provided on this page does not constitute legal, tax, finance, accounting, or trade advice, but is designed to provide general information relating to business and commerce. The FedEx Small Business Hub content, information, and services are not a substitute for obtaining the advice of a competent professional, for example (but not limited to) a licensed attorney, law firm, accountant, or financial adviser.