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[Expert Series] A Toolkit for the Complexities of International Shipping

Published Date
Author ProShip Shipping Experts

By Alex Alexander, an industry expert in the supply chain and logistics space. It is written from his point of view.

If there is one thing for certain, it’s that the world is your marketplace. Previously, I talked about the adventure and opportunity of cross-border e-commerce [A Guide to Cross-Border Shipping]. With over 80% of the global e-commerce market outside the U.S., the world is your oyster. In fact, expanding your business internationally can increase your market opportunity by up to 5x.


But with great opportunity comes great responsibility. In this article, we will discuss other factors you will need to understand and challenges you will need to navigate to ensure your cross-border success, including taxes, duties, and VAT; data accuracy, prohibited goods, and mitigating fraud. By the end of this article, you'll be equipped to tackle the complexities of cross-border shipping and unlock the full potential of your global business.

Understanding Taxes, duties and VAT

Shipping surcharges around peak season are stressful enough. When you consider international shipping, one of the biggest hurdles is understanding and complying with international tax regulations. Let’s break down the key concepts:

De Minimis Value

De minimis is the threshold below which goods are exempt from customs Tax and Duties (T&D). De minimis values are not a global standard, every country has its own set of rules for de minimis. For example, the de minimis for goods coming into the United States is currently set at $800. This means when you import an item over $800, you will be assessed a tax.


On the other hand, Brazil does not have a de minimis, with a Programa Remessa Conforme (PRC) exemption, or in English, E-Commerce Compliance Program. For example, if you were shipping a product to Brazil as a PRC exception approved merchant, the total landed cost of the item would be calculated as follows:

  • Product Cost: $100
  • Shipping Cost: $20
  • Import Duties and Taxes: 60% of the product cost ($60)
  • VAT: 17% of the total cost ($23.36)

Total Landed Cost: $203.36


The total landed cost can significantly increase the final price of a product, especially when dealing with high import duties and taxes. It's crucial to factor in all these costs when setting your international pricing strategy.


Understanding de minimis rules and values is critical to knowing how your goods will be treated when they arrive at their destination. Also note, how a good enters a country may determine de minimis values. Many countries will have a de minimis exception for parcels entering via postal channel, but no de minimis for goods entering via a commercial channel (i.e. private carriers like UPS, FedEx and DHL).

Value-Added Tax (VAT)

Value Added Tax (VAT) is a consumption tax imposed on the sale of most goods and services. Many countries will assess VAT on incoming parcels, adding another layer of data and regulation. Most countries will list the VAT rates, conditions and regulations. It's crucial to understand the specific VAT rates and regulations in your target markets. As a shipper/sender, it is your responsibility to collect VAT from customers and remit it to the proper authorities – not doing so may delay or hold shipments, and you could incur additional fees.

Delivery Options: DDU, DDP, and Hybrid

Now that you have a basic understanding of de minimis value and VAT, let’s explore how these costs are handled in actual shipping scenarios. Most cross-border shipments will be subject to some form of import tax and your carrier can play a part in how these fees are handled. There are three primary delivery options to consider:

  • Delivered Duty Unpaid (DDU): The receiver is responsible for the import taxes, duties and other fees. This is typically the easiest type of transaction and commonly used with postal services and can be a simpler option for sellers, as the import taxes are being managed and calculated by the last-mile delivery carrier.
  • Delivered Duty Paid (DDP): The shipper/sender is responsible for all import taxes. This option offers a more seamless experience for receivers but can be more complex for sellers, as they need to accurately calculate and charge for these additional costs, often at the time the order is being placed, an in-cart solution. While many technology platforms offer great service these days, the seller does take on a bit of liability if the final bill is greater than what was estimated and paid by the receiver. Major carriers like UPS, FedEx, and DHL primarily offer DDP services.
  • Hybrid: A combination of DDU and DDP, hybrid is where the receiver pays import taxes before final delivery. In most cases, the recipient will pay the fees while the shipment is in transit. Once the fees are paid, the delivery is made. In most cases, the carrier providing this type of solution will have the tools and technology in place to calculate, collect and submit payment of the import taxes. This option can provide flexibility for both sellers and receivers.

Data Requirement and Accuracy

Let’s shift our focus to data requirements and quality. Accurate and complete product information is essential for smooth customs clearance and avoiding delays. For the data requirements, this is not a one size fits all scenario. As a sender, you need to either research these requirements or work with your carrier to make sure you have the requirements you need for all the markets you service.

  • Harmonized System (HS) Codes: Correct HS codes ensure accurate classification and duty calculations. Incorrect codes can lead to delays, additional fees, or even seizure of your shipment.
  • Product Descriptions: Clear and concise product descriptions help customs officials identify and categorize your goods. Avoid vague or generic descriptions that could cause confusion.
  • Accurate Manifests and Invoices: Ensure that your shipping documents accurately reflect the contents of your shipment, including product descriptions, quantities, and values. Misrepresenting the value of your goods can result in further delays. For example, when shipping to the EU, you must comply with IOSS regulations for declaring, collecting, and paying VAT.

Inaccurate data can have significant consequences for your business. Consider this scenario: You declare a shipment as a gift, but customs authorities discover a commercial invoice inside the package. This misrepresentation can lead to delays, additional fees, and increased scrutiny from customs officials. In severe cases, it may even result in penalties or legal action.


By prioritizing data accuracy and staying informed of the latest regulations, both you and your customers will enjoy excellent service and ensure a smooth cross-border shipping experience.

Prohibited Goods

As mentioned above, it's crucial to understand the specific regulations and restrictions in each country. You may be surprised to know what is prohibited in one country and not in another. Shipping prohibited or restricted goods can lead to serious consequences, including the confiscation of the parcel, fines, penalties, and even legal action [Discover unexpected holiday hazmat surprises]. Unfortunately, I have known people who faced serious issues for breaking prohibited goods laws. [Listen in to ProShip podcast episode: Dangerous Goods Shipping 101]


When it comes to managing prohibited goods shipments, it makes the most sense to work with a professional firm to ensure you have the best and most accurate data [Learn more about ProShip x Labelmaster].

Mitigating Fraud and Risk

While international shipping offers immense opportunities, it's essential to be aware of potential risks, such as fraud. It is difficult to monitor every sale, and you cannot eliminate an entire market because of a few bad transactions. Here are a few red flags to watch out for:

  • Unusual Shipping Requests: Be wary of customers requesting specific shipping methods, especially for high-value items. A few years back, I met with a client, and he said he gets a lot of orders with instructions to only ship via postal operator. He was selling high value goods and certain consumers were hoping postal shipments would not be assessed import taxes. As we covered above, postal shipments are typically DDU, meaning the taxes are calculated and collected by the local delivery agent. This could be a sign of attempted tax evasion.
  • Suspicious Shipping Addresses: Watch for orders shipped to unusual or remote locations, or those with multiple shipping address changes.
  • Frequent Returns: A high volume of returns from international customers could indicate fraudulent activity.
  • Multiple Orders from the Same Address: A high volume of orders from the same address, especially for high-value items, could indicate fraudulent activity.
  • Urgent Shipping Requests: Be cautious of customers who insist on expedited shipping, as this could be a sign of fraudulent activity.
  • Requests for Cash on Delivery (COD) or Payment After Delivery: Avoid these requests as they increase the risk of non-payment and potential losses.

Handling Undeliverable Packages

To ensure a smooth cross-border shipping experience, it's important to have a plan in place for handling undeliverable packages. While you should establish clear return policies to minimize customer-initiated returns, you’ll also need to address situations where packages are undeliverable due to factors beyond your control, such as incorrect addresses or customs issues.


In such cases, the original sender is often responsible for the cost of returning the package. It's crucial to consider the value of the returned goods and the associated return shipping costs. Sometimes, it may be more cost-effective to abandon the package rather than incur additional expenses.


Additionally, be aware that undeliverable packages may lead to chargebacks from customers who have already received refunds from their credit card companies. To mitigate this risk, it's important to have a clear understanding of your carrier's return policies and to communicate effectively with your customers.

Final Thoughts: Your Roadmap to International Shipping Success

We have touched on several topics in this article, take the time to ensure you are paying close attention to each and setting your business up for success.

  • Tax and Duties: Understand your duties, taxes and VAT regulations in your target markets.
  • Data Accuracy: The right HS code, product description, and shipping documentation are key to reducing total costs.
  • Prohibited Goods and Fraud: Research and work with experts to comply and protect your business, eliminating fraud risks and avoiding penalties and delays. By implementing these best practices, you can optimize your cross-border shipping operations, reduce costs, and deliver a customer experience as seamless as your domestic shipments.

Ready to elevate your international shipping strategy? Contact ProShip today to learn how our robust shipping solution can help you tackle the intricacies of cross-border shipping.