GlossaryEN1 min readUpdated: Jun 22, 2026
Customs duty
When a shipment crosses an international border, customs duties are typically the first charge the importer faces – levied by the government either as a percentage of the customs value (ad valorem) or as a fixed amount per unit of quantity.
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Source: https://ec.europa.eu/taxation_customs/business/customs-procedures/customs-duties_en
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Definition & Explanation
When a shipment crosses an international border, customs duties are typically the first charge the importer faces – levied by the government either as a percentage of the customs value (ad valorem) or as a fixed amount per unit of quantity. The applicable rate depends on the importing country's tariff schedule, the product's classification under the Harmonized System (HS code), and the declared country of origin; free trade agreements can reduce or eliminate the rate entirely. Duties serve a dual purpose: generating public revenue and acting as a trade policy instrument – high rates protect domestic producers, low rates encourage imports. Correct HS classification is critical for importers and freight forwarders, as an incorrect tariff heading can trigger duty reclaims, penalties, or customs holds. Within customs unions such as the EU, duties between member states are fully abolished, while a common external tariff applies to goods from third countries. Customs duties are distinct from import VAT and excise taxes, both of which may apply on top.
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