This article explains how duties and taxes on cross-border orders are paid when you ship with Swap Global, and what that means for your business.
The short version
Your customer pays the full landed cost at checkout. After the order ships, Swap pays the duties and taxes to the carrier, who passes them on to the relevant authority, and then Swap invoices you for what was paid.
How it works
On DDP (Delivered Duty Paid) shipments, the duties and taxes are paid up front so your customer doesn't pay anything on delivery. Here's what happens from checkout to invoice:
- Checkout. Your customer pays the full landed cost, which includes the item price, shipping, duties and taxes. You receive the full amount.
- Carrier invoices Swap. The broker/carrier pay the duties and taxes due at the border, then invoices Swap for them.
- Swap pays the carrier. Swap pays the carrier's invoice. The carrier is responsible for paying the relevant customs or tax authority.
- Swap invoices you. Swap invoices you on a monthly basis for the duties and taxes it paid on your behalf.
What this means for you
- You collect the duties and taxes from your customer at checkout, so you hold the funds that cover your Swap invoice.
- You don't pay customs or tax authorities directly on DDP shipments.
- Your Swap invoice reflects what the carrier charged. If there’s any discrepancy between what you charged the customer at checkout and the final bill, Swap makes up the difference with our total landed cost guarantee.
If a DDP shipment still results in a charge for your customer, or the amounts don't match, see Troubleshooting tax discrepancies.
How this differs from DAP and DDU
On DAP (Delivered At Place) or DDU shipments, duties and taxes aren't pre-paid. The carrier bills your customer before or upon delivery, which can cause delays and rejected parcels. However, there are some countries that do not yet allow DDP shipping or will have carrier-specific restrictions. If you ship to any of these countries, see How to create a DAP/DDU shipping zone in Swap.
Paying duties and taxes vs filing taxes
These are two different things:
- Paying duties and taxes on cross-border shipments is what this article covers. It happens as part of shipping with Swap Global.
- Filing taxes is handled by Swap Tax. If you use Swap Tax, Swap files your taxes for you in the regions you sell in, and you get tax liability and filing reports in your dashboard.
You can sell cross-border with Swap Global without using Swap Tax. If you don't, you remain responsible for meeting your own tax registration and filing obligations. For the reports and filing, see Understanding tax liability reports and Understanding tax filing reports.