DHL is one of the biggest names in parcel delivery, with a reputation for efficiency and reliability. However, DHL is also known for charging customs fees on deliveries of international orders.
As with most international orders after Brexit, customs duty and VAT charges must be covered, and DHL is no exception. So today, we will cover the essential factors when DHL is your courier, which include:
- What are customs duty, excise duty, and VAT charges?
- How has Brexit impacted DHL deliveries and customs duties and taxes?
- How to pay duties and VAT to DHL?
Fortunately, there is a way to reclaim these charges if you return the goods to the seller. By the end of this article, we will also show you how to get a refund of customs charges on returned goods without the hassle in three weeks!
Without further ado, let’s begin!
What are customs duty, excise duty, and VAT charges?
While many UK shoppers are already familiar with these terms, there is still some confusion and wondering about import charges, who charges them, and why they need to be paid.
This is why we will break down the terms that fall under DHL customs.
Customs duty is a government’s tax on goods purchased online and transported through international borders. The government applies these taxes to raise domestic revenues and regulate the movement of goods. Depending on the value, you might be required to pay import taxes even if you receive a gift from abroad.
The good news is that the customs duty rate is 0% for all goods made and imported from the European Union due to the Rule of Origin, which is still in place.
On another note, import VAT is calculated on the total cost of importing goods, including the supplier’s cost of goods, import duty, and shipping to the UK. You pay the import VAT at a rate of 20% through delivery companies before they deliver the goods.
Maybe not the most common, excise duty charges are applied to tobacco and alcohol products shipped to the UK. In this case, it doesn’t matter whether they are sent as a gift or not. You will need to have these duties calculated and pay for them.
The World Customs Organisation determined all of these duties and taxes.
Why doesn’t DHL include VAT and customs charges in their tariff, and why do they have to be paid before the delivery?
Do you know what a tariff is? In case you don’t, a tariff is a tax placed by the government whose purpose is to raise the price and make any kind of imports less desirable.
This also includes people ordering from an online retailer not situated in the UK.
As DHL explains, customs duty and VAT charges are omitted because these are determined by what the local customs authority deems appropriate. They decide whether imported goods will be taxed or not, which DHL pays when they take over the package.
Why do you have to pay customs duties and taxes to DHL express before the delivery?
In simple terms, DHL pays customs authority immediately on the duty and VAT, which will be added to your VAT and duty invoice to clear the shipment through customs.
This is called an advance payment or disbursement charge.
This charge is 2.5% of the total Duty and VAT calculated if it isn’t greater than £440.00 or £11.00 flat for anything below this amount.
How are duty and VAT calculated?
Customs duties and VATs are determined based on the value and weight of the package.
When DHL Waybill and customs paperwork are turned in, the customs authorities determine how much someone would need to pay customs duty, which DHL pays when taking over the package.
Example of duty calculation
If your total is above £135.00, you might need to pay the import duty.
However, there is a difference in the percentage amount when the goods are coming from the EU and outside of those parameters.
If the goods are coming from the EU, the import duty rate will always be 0%.
But, if the goods are coming outside of the EU, here is an example of how to calculate them and make sure to include the shipping costs:
(Value of goods + transport costs) x 3.5% duty = Total duty payable
Example of VAT calculation
(Value of goods + transport costs + duty charges) x 20% = Total VAT payable
VAT is always paid, regardless of the origin.
If you wish to calculate how much your import duty would be, we recommend using our import duty calculator. With our simple-to-use, user-friendly tool, you can quickly get an accurate breakdown of import charges.
How has Brexit impacted DHL customs and deliveries?
On January 1st, 2021, the UK stopped being a part of the European Union single market and the EU customs union. This meant customs or tax formalities have become required when purchasing goods online – including those sent by post.
This meant that specific rules had to be implemented, including Customs Declarations which were now mandatory for any UK-EU shipments. However, the Rule of Origin was maintained.
Although free trade zones exist worldwide, the most famous ones being in ASEAN countries, and the EU, since Brexit, the UK no longer falls into that category.
DHL has made sure from the start to inform their clients of the novelty of the situation. They also explained what would fall under the overall shipping costs when an individual purchase online and what would satisfy the customs definition of a gift.
Even though there are technically zero tariffs (zero custom duties), there still has to be a Customs Declaration – meaning a Commercial or Pro-forma Invoice is needed. Your customs duty will not be charged if your goods fulfil all the necessary rules of origin. However, VAT will still be charged. Import VAT charges will depend on the customs value.
For the Rules of Origin to be applied, the trader (seller) must provide adequate evidence of the country of origin. This includes any goods purchased online.
How to pay duties and VAT to a DHL courier?
Suppose you purchase goods online from a business in the EU or a private individual. In that case, the customs clearance process should be relatively easy, and inbound duties should not be applied; only import VAT.
However, import duty and VAT may be charged if you purchase anything outside the EU. This solely depends on the value of your package when you made the purchase online.
Here is what you can expect when purchasing goods online and for them to pass the customs clearance. Please note that for your parcel to be delivered as fast as possible, you would need to pay the DHL courier as soon as possible.
DHL Express can cover any costs before the delivery. However, they will charge you a small administration fee. Bear in mind that the handling fee is not refundable in case you decide to return the goods.
Duties will not be charged if your package has a customs value up to £135. This is not applied to excise goods, which will always be charged.
That being said, VAT will always be calculated as well as shipping costs. Import declared value is always required at the customs clearance, which will be carried out by DHL express.
For your parcel to be delivered, you must first reimburse DHL customs for any import and VAT duties and taxes they have paid.
Why do you need to pay VAT again if you paid it previously with your order?
If you have already paid the VAT and your goods are £135 or less, the webshop you purchased from will send a unique code when booking a shipment delivery. This code will be included in the customs declaration and will ensure you do not have to pay VAT again. This is called Import One Stop Shop (IOSS).
However, if the value exceeds £135, the IOSS will not be possible. In that case, the sender will have to book the duties and taxes paid service (DTP), meaning that DHL will cover the total shipping costs and any duty and import VAT charges.
Can I get my money back if I have been charged customs duties and taxes?
You can get a refund of customs charges on returned goods. If you decide that you don’t want the item any more or that it’s not worth paying that high customs fees, you can return the goods to the seller and get a refund of customs charges.
For you to get a refund on custom charges that have been calculated during the customs clearance, you will need to submit a claim to HM Revenue and Customs. They will refund everything except DHL’s courier fees, which are non-refundable.
However, before diving into the entire process, ensure you have all the necessary paperwork.
You will need confirmation of the returned goods and the courier documentation to file this claim. If you did not receive them when you got your parcel, you would need to ask DHL to send them. All you would need is your tracking ID.
Keep in mind that this whole process can be long and difficult. When filling out the forms, you must be careful to complete everything correctly, as the website won’t validate your information. The reason behind us emphasising this is that, in most cases, the reason for HMRC declining the claim is that the form was not filled in correctly.
Unfortunately, you probably won’t be notified if your refund claim gets declined.
When you gather all the documents, you will need to find the C285 form among the CHIEF claims on the gov.uk website. Personal information and information about the courier will have to be provided, alongside the details about returned goods. This whole process can take up to six weeks.
However, we are here to help you and save you from any incoming headaches. Duty Refunds has a fantastic team of experts that will assist you through this process and ensure that you receive a refund in three weeks!
Reclaim duty and import VAT on returned goods with Duty Refunds
Not everything is black and white and gloomy. There is an upside to this ordeal, and the shining beacon is that UK law allows you to reclaim the import VAT and customs duties through a freight forwarder or an agent.
Our experts have already many victories under their belt and have helped many clients to reclaim their duties and taxes. We are here to help you with all the paperwork and ensure your refund is processed as soon as possible.
If you wish to see whether you are eligible for a refund, please fill out the short form on our website and then you can initiate the process with Duty Refunds.
The only thing we would need is a tracking number. If any further documentation is required, we will request it. Most of the time, the process takes around three weeks to be completed and for you to receive your refund. If you wish to check on the status of your claim, feel free to visit your account on our website and check in a few clicks.
We understand the situation’s complexity when it comes to imported goods and charged duties. In this article, we tried to provide you with as much information as possible when receiving your shipment through DHL, and we hope it was helpful.
Remember, you can reclaim customs duty and import VAT if you return the items. If you don’t want to go through the process alone (which we understand), you can initiate your claim with Duty Refunds in just a few clicks!