Landed cost
What belongs in a landed cost, the order the sums run in, and a worked example for the same order into the UK and the US.
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What a product really costs you is the supplier's price plus freight, insurance, duty, import tax and the fees around clearance. The sums run in a fixed order, because each charge is worked out on a base that can include the charge before it. Get the order wrong and you can be several percent out without any single figure looking odd.
The order the charges run in
- Price of the goods, adjusted for anything customs adds, such as packing, royalties, or tooling you supplied to the factory.
- Freight and insurance to the point your destination's valuation rule stops counting them.
- Customs duty, on the customs value.
- Other border charges based on value, such as processing fees.
- Import tax (VAT, GST), usually on the customs value plus duty.
- Everything after the border: broker's fees, port charges, final delivery.
Step 2 is where countries differ. The WTO Valuation Agreement lets each member decide whether transport and insurance belong in the value. The UK counts them up to the place of introduction, the US leaves separately identified international shipping costs out, and Canada stops at the point of direct shipment. This table shows the basis each country uses.
| Sources | |||||
|---|---|---|---|---|---|
| Australia | FOB | Value of the taxable importation: customs value plus duty, international transport and insurance, and any wine equalisation tax. | GST | 10% | Sources |
| Canada | FOB | Value for duty plus duties and taxes imposed under the Customs Tariff and other federal import levies. | GST/HST | 5% | Sources |
| France | CIF | Customs value plus duties and other charges due on import, plus incidental costs such as transport and insurance to the first place of destination. Under IOSS, VAT is on the sale price at checkout. | VAT | 20% | Sources |
| Germany | CIF | Customs value plus duties and other charges due on import, plus incidental costs such as transport and insurance to the first place of destination. Under IOSS, VAT is on the sale price at checkout. | VAT | 19% | Sources |
| India | CIF | Not confirmed | IGST | 18% | Sources |
| Japan | CIF | Customs value plus customs duty and other excise taxes such as liquor tax. | Consumption tax | 10% | Sources |
| Singapore | CIF | CIF value plus duty, where GST is due at import. | GST | 9% | Sources |
| United Arab Emirates | CIF | Customs value including insurance, freight and customs fees, plus any excise tax paid. | VAT | 5% | Sources |
| United Kingdom | CIF | Customs value plus duty and other charges, where import VAT is due. At GBP 135 or less, VAT is on the sale price at the point of sale. | VAT | 20% | Sources |
| United States | FOB | Not applicable at federal level. State sales or use tax follows state law. | No federal VAT or GST | No federal tax | Sources |
Checked 5 November 2026. Each country's sources are linked from its row. "Not confirmed" means the official sources didn't settle it; "None found" means they show no threshold. Download as CSV or JSON.
The same order into the UK and the US
This is our own illustration. Take 400 cotton canvas tote bags made in Vietnam, bought on FOB terms from the port of Haiphong. The prices, freight and fees are invented, and the 6% duty rate in both countries is an assumption, not a ruling on these bags. Look up the real rate for your own code, and any preference you can claim.
Into the UK, as a VAT-registered importer. Goods are £7.50 each. Freight and insurance to the UK port are £450, delivery to your warehouse is £150, and your broker charges £85.
| Line | Working | Amount |
|---|---|---|
| Goods | 400 x £7.50 | £3,000.00 |
| Freight and insurance to the UK port | £450.00 | |
| Customs value | £3,450.00 | |
| Duty | 6% x £3,450 | £207.00 |
| Delivery to first UK destination | £150.00 | |
| VAT value | £3,450 + £150 + £207 | £3,807.00 |
| Import VAT | 20% x £3,807 | £761.40 |
| Broker | £85.00 |
Cash out is £3,000 + £450 + £150 + £207 + £761.40 + £85 = £4,653.40. A VAT-registered owner of the goods can reclaim the import VAT, and with postponed VAT accounting never pays it at the border. So the real cost is £3,892.00, or £9.73 a bag. If you can't reclaim, it's £4,653.40, or £11.63 a bag. See UK VAT on imports.
Into the US, by sea to Long Beach. Goods are $10 each and freight and insurance are $600. This is a formal entry, because the value is over $2,500.
| Line | Working | Amount |
|---|---|---|
| Goods, and the dutiable value | 400 x $10 | $4,000.00 |
| Freight and insurance | not dutiable if shown separately | $600.00 |
| Duty | 6% x $4,000 | $240.00 |
| Section 301 duty on goods of Vietnam | 12.5% x $4,000 | $500.00 |
| Merchandise processing fee | 0.3464% x $4,000 = $13.86, so the minimum applies | $34.58 |
| Harbor maintenance fee | 0.125% x $4,000 | $5.00 |
That comes to $5,379.58, or $13.45 a bag, before your broker and delivery. The US has no import VAT to reclaim, but the fees and the extra duty are real costs. Rates and fees are as of 5 November 2026: the Section 301 rate applies to entries from 24 July 2026, and the fee limits are for fiscal year 2027, from 1 October 2026.
What people leave out
- The exchange rate customs uses. Customs converts at its own published rate, not your bank's, so duty moves even when your supplier's price doesn't.
- Assists. Moulds or artwork you gave the factory for free can be dutiable. The WTO rules list them as an addition to the price.
- Courier disbursement charges. Carriers that advance duty on your behalf often bill for it. Check the rate card.
- Reclaim position. Import VAT is only a timing cost if you own the goods and can recover it. A non-registered buyer carries it in full.
- Who the importer is. On DDP terms the seller carries all of this, and needs to have priced it.
The import duty calculator runs these sums for a real code and route. For the duty step alone, see how duty is calculated.
These pages are guidance, not customs or tax advice. If the numbers matter, have a licensed customs broker confirm them before you price.
Frequently asked questions
Is import VAT part of landed cost?
Only if you can't recover it. For a VAT-registered business that owns the goods it's a cash-flow item, and in the UK postponed accounting can remove even that. For a consumer or an unregistered business it's a straight cost.
Should freight be split by weight or by value across a mixed shipment?
Customs wants a method that reflects the actual costs and that you can show on your records. Weight or volume usually follows the carrier's charge better than value does. For your own margin analysis, use the same method for every shipment so that products stay comparable.
Sources
- WTO: Customs valuation, technical information, checked 5 November 2026
- HMRC: Delivery costs to include in the customs value, checked 5 November 2026
- HMRC: Working out the VAT value using the customs value, checked 5 November 2026
- HMRC: Check how to pay VAT on imports, checked 5 November 2026
- eCFR: 19 CFR 152.103, transaction value, checked 5 November 2026
- eCFR: 19 CFR 24.24, harbor maintenance fee, checked 5 November 2026
- CBP: Customs user fees for fiscal year 2027, 91 FR, 31 July 2026, checked 5 November 2026
- USTR: Notice of actions on forced labor import prohibitions, 28 July 2026, checked 5 November 2026
- CBSA: Memorandum D13-3-1, methods of determining value for duty, checked 5 November 2026