Why 6.5% duty and 20% VAT is not 26.5%
The instinctive way to estimate an import tax bill is to add the rates. A 6.5% duty and a 20% import VAT feels like 26.5%, so on a 22,580.00 customs value you brace for 5,983.70.
The actual figure is 6,307.24. Here is where the extra 323.54 comes from.
| Step | Base it is charged on | Amount |
|---|---|---|
| Duty at 6.5% | Customs value 22,580.00 | 1,467.70 |
| VAT at 20% | Customs value + duty + fees = 24,197.70 | 4,839.54 |
| Total taxes | 6,307.24 |
Import VAT is not charged on the goods. It is charged on the goods plus the duty, and usually plus the clearance fees in the taxable base as well. So the 323.54 you did not budget for is exactly two things:
- 20% VAT on the 1,467.70 of duty — 293.54
- 20% VAT on the 150.00 of fees — 30.00
Those two add to 323.54, which is the gap. Tax on a tax is not an anomaly here; it is the design. The duty becomes part of the value of the import, and VAT applies to the value of the import.
The number to quote yourself
Adding the rates gives 26.5%. The effective rate on this shipment — total taxes over customs value — is 27.93%. That is the number to carry in your head, and it moves with the fee line: the more clearance charges sit inside the taxable base, the further the effective rate drifts above the sum of the two headline percentages.
It also means the duty rate matters more than it looks. Every extra point of duty carries 20% of itself in VAT behind it, so on this shipment a one point rise in duty costs 270.96, not 225.80.
The fee line moves the effective rate
Clearance charges look like the small print of an import, and on their own they are. Inside the VAT base they are not quite: each one is charged, and then taxed. Holding the value and both rates fixed and moving only the fees:
| Clearance fees | Total taxes | Effective rate on customs value |
|---|---|---|
| 0.00 | 6,277.24 | 27.8% |
| 150.00 | 6,307.24 | 27.93% |
| 500.00 | 6,377.24 | 28.24% |
| 1,200.00 | 6,517.24 | 28.86% |
Between the first and last rows the fees rise by 1,200.00 and the tax bill rises by 240.00 — the fees themselves are on top of that again. This is the argument for asking a broker to itemise: not because the individual charges are large, but because each one arrives with 20% attached and lands in a number you were estimating from two percentages that never applied.
Cost or cash flow?
One qualification that changes what this bill means. If you are VAT-registered and the goods are for taxable business use, the 4,839.54 of import VAT is generally recoverable on your next return — it is money out of the account for a period rather than money gone. Duty does not come back that way. Outside specific reliefs such as drawback or inward processing, or a refund of duty that was overpaid, it is a cost.
So the same table reads two ways. The importer who can reclaim is looking at a 1,467.70 cost and a 4,839.54 cash-flow event. The importer who cannot — not registered, or the goods are for an exempt use — is looking at 6,307.24 of cost. Those are different businesses, and the headline "6.5% plus 20%" describes neither.
Cash flow is still real for the registered importer: the money leaves at clearance and comes back weeks later. On 6,307.24 of taxes that is a working-capital gap worth planning for, and it is the reason duty deferment accounts and postponed VAT accounting schemes exist — ask your broker whether your country has one before the first shipment, not after.
Working it in the right order
Duty first, on the correct customs value, because it is the part the classification decides and the part no VAT return gives back. Then VAT on everything — value, duty and fees together — rather than on the value alone. That order reproduces the 6,307.24 above; adding 6.5% and 20% gives 5,983.70. The shortcut is not merely imprecise: it always understates, and it understates most where the duty and VAT rates are both high.
Work it for your own shipment
The figures above come from the same code the calculators run, so typing these inputs in reproduces them exactly. Your own numbers are the point though — put your own value, duty rate and VAT rate through the duty calculator, and work out the customs value first if you do not have it.
These are estimates, not assessments. Duty rates, the taxable base, and the valuation rules that decide them are set by national law and by how your goods are classified. A customs broker or your national customs authority gives you the binding answer; this site gives you the arithmetic so you know roughly what is coming and which question to ask.