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What is the de minimis threshold value?
What de minimis values mean for ecommerce businesses
How to navigate de minimis tax and other thresholds
If you want to sell products internationally, you’re going to have to pay taxes and duties upon formal entry to the destination country, right?
Well, not necessarily.
Many countries have what’s called the de minimis threshold which in Latin means “too small to be meaningful or taken into consideration.” Therefore if your product’s value is under a country’s particular threshold, it may be considered tax and duty-free.
However, as appealing as it sounds, businesses must continually keep on top of changing thresholds and ensure their products are being valued appropriately.
In this article, we’ll uncover what the de minimis threshold means for ecommerce businesses, how to navigate it, and how ShipBob can help.
What is the de minimis threshold value?
The de minimis threshold value refers to the minimum value of goods below which no duties and/or taxes are charged by customs authorities upon importation. This concept plays a crucial role in global shipping and customs, significantly impacting ecommerce businesses and consumers who purchase products internationally. The de minimis value is determined by individual countries and can vary significantly from one country to another.
For businesses involved in cross-border ecommerce, understanding the de minimis threshold is vital for calculating the total cost of shipping goods internationally.
De minimis values by region
The de minimis threshold varies by country and region, reflecting differences in policy, economic considerations, and trade agreements. Here are examples of de minimis values in five key markets:
| Country | De minimis value for duties | De minimis value for taxes |
| United States | $800 | Varies by state |
| European Union | €150 | VAT applies to all goods |
| Australia | AUD 1,000 | AUD 1,000 |
| Canada | CAD 20 | CAD 20 |
| United Kingdom | £135 | VAT applies to all goods |
These examples highlight the diversity in de minimis values worldwide. However, apart from the value thresholds, businesses must be aware that products regulated by certain government agencies impose restrictions to the de minimis rule.
For example, in the US (under Section 321), the following products are subject to restrictions:
- Items requiring inspection before clearance
- Merchandise subject to Anti-Dumping Duty (ADD) and/or Countervailing Duty (CVD)
- Products regulated by Partner Government Agencies (PGAs), including: FDA, FSIS, NHTSA, CPSA, and USDA
What de minimis values mean for ecommerce businesses
De minimis values have several implications for ecommerce businesses and their customers. First, let’s break down how de minimis values might affect a business’s operations and market strategy:
- Cost savings and pricing: Aligning with de minimis thresholds can help businesses avoid import duties and taxes, allowing for competitive pricing or improved margins.
- Market expansion: Higher de minimis values make some markets more attractive due to lower customs barriers, influencing which countries a business might expand to.
- Supply chain efficiency: Structuring shipments to meet de minimis criteria can streamline the customs clearance process, reduce costs, and improve delivery times.
Leveraging the de minimis thresholds to your advantage as a business is great, but what benefits do consumers realize from these thresholds? After all, if the consumer sees no benefit, why would they buy from an international ecommerce seller when they could just buy locally instead?
Well, there are a few benefits that trickle down to consumers:
- Lower prices and accessibility: Savings from de minimis exemptions can lead to lower prices, making international products more accessible.
- Increased product variety: Businesses expanding into new markets or optimizing shipping can offer a wider variety of products.
- Enhanced shopping experience: Faster delivery and no unexpected customs fees improve the overall customer experience.
With the combination of benefits to international sellers and consumers, it’s no wonder parcel volume is expected to grow 11% CAGR up to 266 billion parcels by 2026. The de minimis threshold undoubtedly makes life easier for international sellers however, this increase in shipments also puts a strain on customs authorities, postal services, and local businesses. Therefore, some countries periodically modify their de minimis values which is important to monitor.
How to navigate de minimis tax and other thresholds
Navigating these thresholds is essential for ecommerce businesses looking to optimize their importing activities.
Understanding your responsibilities
Compliance with de minimis rules is an important responsibility for businesses involved in international trade. Here are some key considerations for customs brokers/filers:
- Stay informed: Regulations and de minimis values can change. For example, in 2016 the US raised the value of a shipment of merchandise from $200 to $800 USD with the passage of the Trade Facilitation and Trade Enforcement Act (TFTEA). It’s crucial to stay updated on these changes in every market you operate.
- Accurate valuation: Ensure the accurate valuation of shipments. Understating the value to fall below the de minimis threshold can lead to penalties and legal issues.
- Documentation: Maintain thorough documentation for all shipments, including invoices and proof of payment, to substantiate the declared value if questioned by customs authorities.
- Legal compliance: Besides de minimis values, be aware of other regulatory requirements such as restricted items and special licenses that might be needed for certain goods.
For shipments exceeding the de minimis value, businesses must pay all relevant duties and taxes, ensuring compliance with each destination’s VAT, GST, and duty requirements. Opting for DDP (Delivered Duty Paid) shipping can simplify this. Properly classifying goods and paying tariffs are essential to prevent packages getting stuck in customs and potential fines.
Strategies for maximizing efficiency
Leveraging the advantages of a country’s de minimis threshold is powerful. However, there are additional strategies businesses can implement to maximize shipping efficiency:
- Stagger shipments: If feasible, stagger shipments over multiple days if more than one shipment is required. A shipper is restricted to claiming Section 321 once, per day.
- Leverage technology: Use technology to streamline your logistics and stay compliant. Automated systems can help track changes in de minimis values and manage documentation efficiently.
- Optimize packaging: Reduce shipping costs by optimizing packaging to be lightweight and compact.
- Diversify shipping routes and methods: Explore different shipping routes and methods to find the most cost-effective options that align with de minimis advantages.
- Engage with a logistics partner: Partnering with a logistics provider like ShipBob can significantly simplify the process. ShipBob’s global fulfillment network and expertise in international shipping regulations can help businesses navigate customs, manage inventory strategically across different regions, and ensure timely, cost-effective deliveries.
ShipBob enables cost-efficient fulfillment no matter what
ShipBob stands out as a partner that ensures your business’s domestic and international fulfillment strategy is both cost-efficient and customer-centric. Regardless of whether your exports meet or exceed de minimis values and thresholds, ShipBob optimizes your fulfillment processes.
Simplifying international shipping for businesses
ShipBob simplifies the shipping process for businesses dealing with international orders through a combination of strategic warehouse locations, cutting-edge technology, and logistics expertise. By positioning inventory closer to your end customers in key international markets, ShipBob not only reduces shipping times and costs but also navigates de minimis-related challenges efficiently.
“We want everyone to get their Ombraz in a few days or less with no duties at delivery. Our goal is to remove the barriers to purchase. Now, a customer can get their package without spending an extra 25 euros or Canadian dollars on duties and taxes after purchasing a pair of sunglasses.”
Nikolai Paloni, Co-Founder of Ombraz Sunglasses
Leveraging technology for customs compliance
ShipBob leverages advanced technology to ensure compliance with importing and exporting regulations, including de minimis values. The platform ensures shipments include accurate and timely customs declarations, accompanied by the necessary documentation to comply with the latest regulations.
Moreover, ShipBob offers an end-to-end managed freight and inventory distribution program called FreightBob. With FreightBob, you can leverage ShipBob’s expertise and advanced technology to optimize your business’s logistical and customs compliance efforts.
Get started with ShipBob
Interested in leveraging ShipBob as your fulfillment provider? Connect with our team to get a customized quote.
De minimis value entry FAQs
Here are answers to the most frequently asked questions about de minimus value entry.
How can businesses stay compliant with de minimis regulations?
To comply with de minimis regulations, businesses should stay updated on market thresholds, ensure accurate shipment valuations, and maintain complete documentation, regularly checking official customs sites for updates.
How does de minimis value vary by country?
De minimis values differ across countries, influenced by their trade policies and regulatory environments. Higher thresholds in some countries allow low-value shipments to cross duty-free, while others have lower limits, leading to payment of duties on most imports.
How does de minimis value impact shipping and customs processes?
De minimis values affect whether shipments incur import duties and taxes. Shipments under these thresholds are processed faster and with less paperwork, benefiting businesses and consumers with quicker delivery and lower costs.
What is the de minimis rule for CBP?
The U.S. Customs and Border Protection’s (CBP) de minimis rule allows goods with an aggregate fair retail value of $800 or less per shipment to enter the U.S. duty-free, speeding up the clearance of low-value imports and boosting trade efficiency.
