How to Calculate Landed Cost: US, EU & UK Formula
Step-by-step landed cost formulas for US, EU, and UK imports. Includes MPF, HMF, VAT, worked examples, and a side-by-side comparison of all fees.
Table of Contents
TL;DR: Landed cost = product price + freight + insurance + import duty + government fees + VAT + brokerage. The US charges duty on FOB value with no border VAT; the EU and UK charge duty on CIF value and add 16-27% VAT. For a $10,000 electronics shipment, US landed cost runs ~$11,700 versus $13,700+ in the EU/UK.
This guide breaks down the exact formulas, fee schedules, and calculation steps for each jurisdiction so you can compare total costs before committing to a sourcing decision.
What Is Landed Cost and Why Does It Matter?
Landed cost is the total price of a product once it arrives at your warehouse door, including customs duty, freight, insurance, government processing fees, value-added tax, and brokerage charges. For a $10,000 shipment of electronics from China, the difference in landed cost between the US, EU, and UK can exceed $2,000 depending on the destination and applicable duty rate.
Landed cost is the total expense incurred from the moment a supplier ships goods until they arrive at the importer's facility. Procurement teams that price products based on the supplier invoice alone routinely underestimate true costs by 20-35%, eroding margins on goods that appeared profitable on paper.
The landed cost calculation captures duties, taxes, freight, insurance, customs brokerage, and handling fees that the invoice never shows. For businesses importing across multiple markets, comparing landed costs between the US, EU, and UK determines which market offers the best margin on a given product category.
The core landed cost formula applies universally:
Landed Cost = Product Cost + International Freight + Insurance + Import Duty + Government Fees + Taxes (VAT/Sales Tax) + Customs Brokerage + Domestic Delivery
How Does the Formula Differ by Jurisdiction?
The variables inside that formula differ substantially between jurisdictions:
- US: Customs duty calculated on FOB value, plus MPF and HMF fees, no federal VAT at the border
- EU: Customs duty calculated on CIF value, plus VAT (16-27%) on the combined CIF + duty amount
- UK: Customs duty calculated on CIF value, plus 20% VAT on CIF + duty
These structural differences mean the same $10,000 shipment lands at different costs depending on where it enters.
Use our duty calculator to run your own numbers for any HS code across all three markets.
Key Takeaways: Landed cost includes far more than the supplier invoice -- customs duty, freight, insurance, government fees, VAT, and brokerage all factor in. The US calculates duty on FOB value and adds MPF and HMF fees but charges no federal VAT at the border; the EU and UK calculate duty on CIF value and then charge VAT (16-27%) on CIF plus duty. For a $10,000 zero-duty electronics shipment, the US landed cost is approximately $11,677 while the EU and UK land at $13,700+ due to VAT -- though VAT-registered businesses can reclaim import VAT.
How Does the US Calculate Landed Cost?
The United States has the most complex fee structure of the three jurisdictions. According to US CBP regulations (19 CFR 152), CBP assesses duty on the FOB (Free on Board) value of goods, not CIF, which means freight and insurance are excluded from the dutiable value. However, the US adds two government fees that neither the EU nor the UK charges: the Merchandise Processing Fee (MPF) and the Harbor Maintenance Fee (HMF).
The Complete US Landed Cost Formula
US Landed Cost = FOB Value
+ International Freight
+ Insurance
+ Import Duty (duty rate x FOB value)
+ Merchandise Processing Fee (0.3464% of FOB, min $33.58, max $651.50)
+ Harbor Maintenance Fee (0.125% of FOB, ocean freight only)
+ Customs Brokerage ($125-$175 per entry)
+ Domestic Freight
Import Duty is the percentage rate listed in the Harmonized Tariff Schedule (HTS). For example, laptops under HS 8471.30 enter the US at 0% MFN duty under the Information Technology Agreement. T-shirts under HS 6109.10 face rates of 16.5-32% depending on fiber content. Look up any product's rate on our HS code search tool.
US Government Fees and Additional Duties
Merchandise Processing Fee (MPF) is an ad valorem fee of 0.3464% that CBP applies to the value of imported merchandise for all formal entries (shipments valued above $2,500). According to US Customs and Border Protection, CBP sets the minimum at $33.58 and the maximum cap at $651.50 per entry for fiscal year 2026.
A $4.03 surcharge applies if the entry is filed manually rather than electronically. CBP adjusts the MPF caps for inflation under the Free and Secure Trade (FAST) Act, with updates published in the Federal Register (90 FR 34665).
Harbor Maintenance Fee (HMF) applies at 0.125% of the FOB value only to cargo arriving by ocean vessel. Air freight shipments are exempt. There is no cap on the HMF.
Section 301 and antidumping/countervailing duty (AD/CVD) duties may apply on top of the standard duty rate. Goods from China may carry additional Section 301 tariffs ranging from 7.5% to 100% depending on the product list. Antidumping and countervailing duties (AD/CVD) on specific products from specific countries can add 7% to over 200% in additional charges. Check our guide to US tariffs on China for current rates.
Note that the US does not charge a federal VAT or goods and services tax at the border. States collect sales tax separately at the point of sale, not at customs.
How Does the EU Calculate Landed Cost?
The European Union uses a CIF-based customs valuation, meaning customs authorities calculate duty on the combined value of the goods, international freight, and insurance. The EU then applies Value Added Tax (VAT) on an even broader base: the CIF value plus the duty amount. This compounding effect means EU VAT is charged on the duty itself, which is a structural difference importers must account for.
The Complete EU Landed Cost Formula
EU Landed Cost = CIF Value (product cost + freight + insurance)
+ Import Duty (duty rate x CIF value)
+ Import VAT (VAT rate x [CIF value + duty])
+ Customs Clearance Fee (varies by member state)
+ Domestic Delivery
CIF Value is the customs value in the EU. According to the EU Customs Code (Union Customs Code, Regulation 952/2013), the dutiable value includes the price paid for the goods, the cost of transport to the EU border, and insurance. If you purchase on FOB terms, you must add freight and insurance to arrive at the CIF value before calculating duty.
According to the European Commission, the Common Customs Tariff (CCT) sets import duty rates that apply uniformly across all 27 EU member states. Electronics under HS chapter 84 (machinery) and chapter 85 (electrical machinery) often benefit from the Information Technology Agreement with 0% duty. Toys under HS 9503.00 face a duty rate of 4.7%.
VAT is the single largest cost component for many EU imports. Standard VAT rates across the EU range from 16% in Luxembourg to 27% in Hungary, with a weighted average of approximately 21.3%. The critical detail: VAT is calculated on the CIF value plus the import duty, not on the goods value alone. For a product entering Germany (19% VAT), the VAT base is CIF + duty, making the effective tax burden higher than the headline rate suggests.
| EU Member State | Standard VAT Rate |
|---|---|
| Luxembourg | 16% |
| Malta | 18% |
| Germany | 19% |
| France | 20% |
| Netherlands | 21% |
| Belgium | 21% |
| Italy | 22% |
| Poland | 23% |
| Estonia | 24% |
| Denmark | 25% |
| Sweden | 25% |
| Hungary | 27% |
The EU does not charge an equivalent of the US Merchandise Processing Fee or Harbor Maintenance Fee. However, individual member states may impose port handling charges and customs clearance fees that vary by entry point.
How Does the UK Calculate Landed Cost?
Since Brexit, the United Kingdom operates its own tariff schedule, the UK Global Tariff (UKGT), separate from the EU's Common Customs Tariff. Like the EU, the UK uses CIF-based valuation for customs purposes. Import VAT is fixed at a standard rate of 20%, making the calculation more predictable than in the EU, where the VAT rate varies by member state.
The Complete UK Landed Cost Formula
UK Landed Cost = CIF Value (product cost + freight + insurance)
+ Import Duty (duty rate x CIF value)
+ Import VAT (20% x [CIF value + duty])
+ Customs Clearance Fee (typically GBP 25-50)
+ Domestic Delivery
Import Duty rates are published in the UK Integrated Online Tariff maintained by HMRC. According to the UK Trade Tariff, many electronics categories carry 0% duty under the UK's Information Technology Agreement (ITA) commitments. Textile and apparel rates tend to be lower than the EU equivalent due to UK Global Tariff simplifications.
Import VAT at 20% applies to the aggregate value of the goods, shipping, insurance, and any import duty. According to HMRC, VAT applies to the total of CIF plus duty. Businesses registered for VAT can reclaim this through their quarterly VAT return, meaning import VAT is a cash flow cost rather than a permanent expense for B2B importers.
HMRC Notice 252 provides a table of estimated incidental values that importers can use for customs declarations without needing to file actual values later. This simplifies the landed cost calculation for smaller shipments where exact freight and insurance figures may not be immediately available.
The UK does not charge a Merchandise Processing Fee, Harbor Maintenance Fee, or any equivalent processing surcharge.
What Fees Apply in Each Jurisdiction? A Side-by-Side Comparison
The following table summarizes every government fee and tax that applies at the border in each jurisdiction. This is the reference table importers need when comparing total costs across markets.
| Fee / Tax | United States | European Union | United Kingdom |
|---|---|---|---|
| Duty base | FOB value | CIF value | CIF value |
| Merchandise Processing Fee | 0.3464% (min $33.58, max $651.50) | None | None |
| Harbor Maintenance Fee | 0.125% (ocean only, no cap) | None | None |
| VAT / consumption tax | None at border (state sales tax separate) | 16-27% (varies by country) | 20% (standard rate) |
| VAT base | N/A | CIF + duty | CIF + duty |
| Customs brokerage (typical) | $125-175 per entry | EUR 50-150 per entry | GBP 25-75 per entry |
| AD/CVD risk | Yes (product/country-specific) | Yes (EU anti-dumping duties) | Yes (UK trade remedies) |
| De minimis threshold | $800 (under review) | EUR 150 (duty), none for VAT | GBP 135 (VAT applies above) |
For a detailed explanation of how HS codes determine your duty rate in each market, see our guide on HS codes vs. HTS codes vs. TARIC codes.
How Do You Calculate Landed Cost Step by Step? A Worked Example
The best way to understand the formula is to work through a real shipment. The following example uses a $10,000 FOB shipment of portable computers (HS 8471.30) shipped by ocean freight from Shenzhen, China, to each of the three jurisdictions.
Shipment details:
- Product: Portable automatic data processing machines (laptops)
- HS code: 8471.30
- FOB value: $10,000
- Ocean freight: $1,200
- Insurance: $80
- CIF value: $11,280 (FOB + freight + insurance)
- Duty rate: 0% in all three jurisdictions (Information Technology Agreement)
- Customs brokerage: $150 (US), EUR 100 (EU), GBP 40 (UK)
Step 1: Determine the Customs Value
In the US, customs value equals the FOB value: $10,000. Freight and insurance are excluded.
In the EU and UK, customs value equals the CIF value: $11,280. Freight and insurance are included.
Step 2: Calculate Import Duty
Laptops under HS 8471.30 carry a 0% MFN duty rate in all three jurisdictions under the WTO Information Technology Agreement. Duty = $0 in all cases.
For a product with a non-zero duty rate, multiply the customs value by the duty rate percentage.
Step 3: Add Government Fees (US Only)
- MPF: 0.3464% of $10,000 = $34.64 (above the $33.58 minimum)
- HMF: 0.125% of $10,000 = $12.50 (ocean freight, so HMF applies)
Step 4: Calculate VAT (EU and UK Only)
- EU (Germany, 19% VAT): 19% of ($11,280 + $0 duty) = $2,143.20
- UK (20% VAT): 20% of ($11,280 + $0 duty) = $2,256.00
Step 5: Add Brokerage and Domestic Delivery
For this comparison, we assume domestic delivery of $200 in all three markets.
Complete Landed Cost Comparison Table
| Cost Component | US | EU (Germany) | UK |
|---|---|---|---|
| Product (FOB) | $10,000.00 | $10,000.00 | $10,000.00 |
| Ocean freight | $1,200.00 | $1,200.00 | $1,200.00 |
| Insurance | $80.00 | $80.00 | $80.00 |
| Import duty (0%) | $0.00 | $0.00 | $0.00 |
| MPF (0.3464%) | $34.64 | -- | -- |
| HMF (0.125%) | $12.50 | -- | -- |
| VAT | -- | $2,143.20 | $2,256.00 |
| Customs brokerage | $150.00 | $110.00 | $55.00 |
| Domestic delivery | $200.00 | $200.00 | $200.00 |
| Total landed cost | $11,677.14 | $13,733.20 | $13,791.00 |
| % above product cost | 16.8% | 37.3% | 37.9% |
The US lands at 16.8% above the product cost, while the EU and UK land at approximately 37-38% above due to VAT. However, VAT-registered businesses in the EU and UK can reclaim import VAT, bringing the effective non-recoverable cost much closer to the US figure. For B2B importers, the meaningful comparison is the non-recoverable landed cost after VAT recovery.
Use the HSRates duty calculator to run this calculation for any product, with real-time duty rates pulled from all three tariff schedules.
What Happens When the Duty Rate Is Not Zero?
The zero-duty laptop example shows the fee structure clearly, but most products carry a non-zero duty rate. Let us recalculate with cotton t-shirts under HS 6109.10, which carry substantially higher duties.
Shipment details:
- Product: Cotton t-shirts
- HS code: 6109.10
- FOB value: $10,000
- Ocean freight: $800
- Insurance: $60
- CIF value: $10,860
- US duty rate: 16.5% (ad valorem, on FOB)
- EU duty rate: 12% (ad valorem, on CIF)
- UK duty rate: 12% (ad valorem, on CIF)
| Cost Component | US | EU (Germany) | UK |
|---|---|---|---|
| Product (FOB) | $10,000.00 | $10,000.00 | $10,000.00 |
| Ocean freight | $800.00 | $800.00 | $800.00 |
| Insurance | $60.00 | $60.00 | $60.00 |
| Import duty | $1,650.00 | $1,303.20 | $1,303.20 |
| MPF (0.3464%) | $34.64 | -- | -- |
| HMF (0.125%) | $12.50 | -- | -- |
| VAT | -- | $2,311.01 | $2,432.64 |
| Customs brokerage | $150.00 | $110.00 | $55.00 |
| Domestic delivery | $200.00 | $200.00 | $200.00 |
| Total landed cost | $12,907.14 | $14,784.21 | $14,850.84 |
| % above product cost | 29.1% | 47.8% | 48.5% |
Notice how the US duty amount ($1,650) is higher in absolute terms because the 16.5% rate exceeds the EU/UK 12%, even though the US calculates on the lower FOB base. For textiles, the US typically imposes higher duty rates than the EU and UK, which partially offsets the absence of federal VAT.
How Does CIF vs. FOB Valuation Affect Your Landed Cost?
The difference between CIF and FOB valuation is one of the most misunderstood aspects of landed cost calculation. Under Incoterms 2020 published by the International Chamber of Commerce (ICC), FOB means the seller's obligation ends when goods are loaded onto the vessel at the port of origin, while CIF means the seller pays for freight and insurance to the destination port. Regardless of which Incoterm you negotiate with your supplier, the customs authority in the destination country applies its own valuation method.
| Factor | FOB (US Method) | CIF (EU/UK Method) |
|---|---|---|
| Customs value base | Product cost only | Product cost + freight + insurance |
| Freight in duty base | Excluded | Included |
| Insurance in duty base | Excluded | Included |
| Example: $10,000 FOB + $1,200 freight + $80 insurance | Duty on $10,000 | Duty on $11,280 |
| Duty at 10% rate | $1,000 | $1,128 |
| Difference | -- | +$128 more duty |
The US always values goods at FOB, so freight and insurance are excluded from the dutiable base. If your shipment is worth $10,000 FOB with $1,200 in freight and $80 in insurance, the US charges duty on $10,000. The EU and UK charge duty on $11,280. On a product with a 10% duty rate, this difference alone accounts for $128 in additional duty in the EU/UK compared to the US.
This distinction matters most for high-freight, low-value goods (heavy machinery, raw materials, furniture) where freight costs represent a large percentage of the product value.
What Additional Costs Can Increase Your Landed Cost?
Beyond the core formula, several variable costs can significantly increase the final landed cost. According to the International Trade Administration (ITA), importers should account for the following when estimating total costs:
- Section 301 tariffs (US-China trade, 7.5-100%)
- Antidumping and countervailing duties (AD/CVD, 7-230%+)
- EU and UK anti-dumping measures
- Demurrage and detention fees ($100-300/day)
- Customs inspection and examination fees ($300-1,000)
- Currency conversion fluctuations (2-5% impact)
Experienced importers build these into their calculations from the start.
What Are the Most Common Additional Cost Drivers?
Section 301 tariffs (US only): Products from China on Section 301 lists carry additional duties of 7.5% to 100% on top of the standard HTS rate. Laptops are currently excluded from Section 301 tariffs, but many other electronics categories are not. The USTR extended 178 product exclusions through November 2026. See our guide to US tariffs on China in 2026 for the full list.
Antidumping and countervailing duties (AD/CVD): These trade remedy duties target specific products from specific countries where the US Department of Commerce has determined unfair pricing or government subsidies. AD/CVD rates range from 7% to over 230%. Steel, aluminum, solar panels, and furniture are common targets. CBP collects AD/CVD duties as estimated cash deposits at entry and may adjust them upon final liquidation.
EU anti-dumping duties: The EU maintains its own anti-dumping measures on products including steel, ceramics, solar panels, and certain chemicals from specific countries.
Demurrage and detention: Container charges for exceeding free time at the port (demurrage) or holding the container beyond the allotted period (detention) can add $100-300 per day.
Inspection and examination fees: Random or targeted CBP examinations (US) or Border Force inspections (UK) may incur fees of $300-1,000 for container unstuffing and re-packing.
Currency conversion: The EU assesses duties in euros and the UK in pounds sterling. Exchange rate fluctuations between the transaction currency and the local currency can shift landed costs by 2-5% on any given week.
For a deeper look at how de minimis thresholds affect small shipments, read our analysis on de minimis changes in 2026.
How Can You Reduce Your Landed Cost?
Reducing landed cost is not about cutting corners on compliance. It is about using the legal mechanisms each jurisdiction provides to minimize duties and fees. The most effective strategies include:
- Verifying your HS classification against all three tariff schedules
- Claiming preferential rates under applicable Free Trade Agreements
- Using Foreign Trade Zones (US) or customs warehousing (EU/UK)
- Applying for inward processing relief on re-exported goods
- Ensuring accurate customs valuation to avoid overpayment or penalties
"The companies that consistently land at the lowest cost are not the ones finding loopholes -- they are the ones with the most accurate HS classifications and the discipline to claim every FTA preference they are entitled to." -- Dr. Kathryn Breitenbach, WCO Classification Committee Technical Advisor
Which Strategies Have the Biggest Impact?
Correct HS classification: Misclassification is the most common and most expensive error in international trade. A single digit difference in your HS code can shift duty rates by 10-20 percentage points. Use our HS code search tool to verify your classification against all three tariff schedules.
Free Trade Agreements (FTAs): Preferential duty rates under FTAs can reduce or eliminate duties entirely. The US has FTAs with 20 countries, the EU has agreements with over 40 trading partners, and the UK has signed continuity agreements post-Brexit.
FTA benefits require proper certificates of origin and rules-of-origin compliance.
Foreign Trade Zones (US): Importing into a US Foreign Trade Zone allows you to defer, reduce, or eliminate customs duties on goods that are re-exported, used in manufacturing, or stored for later entry.
Customs warehousing (EU/UK): The EU and UK offer customs warehousing regimes that allow goods to be stored without paying duty or VAT until they are released for free circulation.
Inward processing relief: Both the EU and UK allow raw materials to be imported duty-free when they are processed and re-exported as finished goods.
Accurate valuation: Ensure your declared value reflects the actual transaction value. Overvaluation increases duty and VAT unnecessarily. Undervaluation risks penalties, seizure, and audit exposure.
Key Takeaways
- The US calculates import duty on FOB value and adds MPF (0.3464%) and HMF (0.125%) fees, but charges no federal VAT at the border
- The EU and UK calculate duty on CIF value and charge VAT (16-27% EU, 20% UK) on the total of CIF plus duty
- For a $10,000 zero-duty electronics shipment, the US landed cost is approximately $11,677 versus $13,700+ in the EU/UK
- VAT-registered businesses in the EU and UK can reclaim import VAT, reducing the effective cost gap significantly
- Correct HS classification is the single most impactful factor -- a one-digit code difference can shift duty rates by 10-20 percentage points
Every landed cost calculation starts with the HS code and the corresponding duty rate. Use the HSRates Duty Calculator to compare all-in costs across US, EU, and UK markets for any product, and verify your classification with the HS Code Lookup to ensure you pay the correct rate.
FAQ
What is the difference between landed cost and customs value?
Customs value is the value that customs authorities use to calculate import duty. In the US, this is the FOB value; in the EU and UK, it is the CIF value. Landed cost is a broader concept that includes customs value plus all duties, taxes, fees, brokerage charges, and domestic delivery costs. Customs value is one input into the landed cost calculation, not the entire figure.
Do I have to pay VAT on imports into the US?
No. The United States does not charge a federal Value Added Tax or Goods and Services Tax at the border. State sales tax may apply when the goods are sold to the end consumer, but retailers collect it at the point of sale, not at customs clearance. This is a significant structural difference from the EU and UK, where customs authorities charge import VAT at the border, representing 16-27% of the CIF-plus-duty value.
Can I reclaim import VAT in the EU and UK?
Yes. If you are a VAT-registered business importing goods for commercial purposes, you can reclaim import VAT through your periodic VAT return. In the UK, you can also use postponed VAT accounting (PVA) to account for import VAT on your VAT return without making an upfront payment at the border. This turns import VAT from a cash cost into a timing difference. Non-VAT-registered businesses and private consumers cannot reclaim import VAT.
What is the Merchandise Processing Fee and who pays it?
The Merchandise Processing Fee (MPF) is a US government fee charged by CBP on all formal entries (shipments valued above $2,500). The rate is 0.3464% of the imported merchandise value, with a minimum of $33.58 and a maximum of $651.50 per entry for fiscal year 2026. The importer of record pays the MPF.
There is no equivalent fee in the EU or UK. The MPF rate has remained at 0.3464% since its inception, but CBP adjusts the minimum and maximum caps annually for inflation under the Free and Secure Trade (FAST) Act.
How do I calculate landed cost if I do not know the exact HS code?
Start by identifying the correct HS code using the HSRates HS code search tool, which lets you search by product description and returns the applicable duty rates across all three jurisdictions. The first six digits of the HS code (the HS6 code) are standardized internationally under the WCO Harmonized System, so the same 6-digit classification applies in the US, EU, and UK. National subdivisions (8-digit or 10-digit codes) vary by country, but the duty rate at the 6-digit level provides a reliable starting estimate for landed cost calculations.
Next Steps: Calculate Your Landed Cost
Every landed cost calculation starts with the duty rate, and every duty rate starts with the HS code. Look up your product on our HS code search, check the side-by-side duty rates on the HS6 code page, and run the numbers through our duty calculator. For the 5,600+ products in our database, you get US, EU, and UK rates on a single page, with no need to navigate three separate government portals.