How tariffs are calculated: a step-by-step example

Understanding how customs duties are calculated helps you price your goods accurately and avoid unpleasant surprises at the border.

Step-by-Step Example

Suppose you are importing cotton T-shirts (HS 6109.10) into the EU from a non-FTA country.

1. Determine the customs value — The CIF value of the shipment is EUR 10,000 (this includes the product cost, freight, and insurance).
2. Look up the duty rate — The EU Common Customs Tariff shows 12% for HS 6109.10 from non-preferential origins.
3. Calculate the duty — EUR 10,000 × 12% = EUR 1,200 in customs duty.
4. Calculate import VAT — In most EU countries, VAT applies on (customs value + duty). If VAT is 21%: (EUR 10,000 + EUR 1,200) × 21% = EUR 2,352.
5. Total landing cost — EUR 10,000 (CIF) + EUR 1,200 (duty) + EUR 2,352 (VAT) = EUR 13,552.

With an FTA

If the T-shirts qualify under an FTA with a 0% preferential rate and you present a valid Certificate of Origin: duty drops to EUR 0 and VAT is calculated on EUR 10,000 only = EUR 2,100. Total: EUR 12,100 — a saving of EUR 1,452.

On Faktorist

The built-in Duty Calculator performs this calculation automatically when you specify the HS code, origin, destination, and shipment value.