Who Pays Import VAT and Duty on a Small Knitwear Order from China?

When a small brand orders its first run from a China factory, the quote usually lands as two lines — garment price and courier — and then a third cost appears at delivery: import VAT and, above a threshold, customs duty. This surprises buyers who expected "the price". It is not a hidden charge. It is your own country's tax, collected by the courier because it is the importer's obligation. This guide explains who pays what, how the numbers are built, and why we quote a first 30-piece run delivered to your door but not "all taxes included".

Four costs, two payers

• Garment price (ex-factory or FOB): paid by you to the factory in the quote currency, usually a 30% deposit and the balance before shipping
• International freight: for 30 pieces, an express courier (DHL, FedEx, UPS) door to door; usually confirmed once the carton is weighed and paid before collection
• Customs duty: a percentage of the customs value, set by your country's tariff on the product's HS code (knitted sweaters sit in heading 6110)
• Import VAT / GST / sales tax: your country's consumption tax on the goods, charged on top of customs value plus duty

The factory controls the first two. The last two are set by your government, assessed at your border, and legally owed by the importer — normally the buyer. The courier advances them to customs, then bills you before or at delivery, plus a small clearance fee.

How the number is actually built (EU example)

In the EU, customs value is the goods price plus international freight and insurance to the border. Duty is applied to that. VAT is then applied to goods plus freight plus duty. Rates differ by country: wool sweaters under CN 6110 11 currently carry a duty rate of around 10.5%, and standard VAT runs from 19% in Germany to 25.5% in Finland. Always check the live TARIC database or ask your customs broker — rates change, and the factory does not set them.

• 30 sweaters at €60 = €1,800 goods
• Express courier, one carton ≈ €180 → customs value ≈ €1,980
• Duty at ~10.5% ≈ €208
• Finnish VAT 25.5% on €2,188 ≈ €558
• Courier clearance fee ≈ €20
• Landed cost ≈ €2,766, or about €92 per sweater before your own margin

Note the shape: in a high-VAT country, taxes add roughly 40% on top of garment plus freight. A retail plan that only allowed for €60 plus shipping is under-costed. If you are VAT-registered, the import VAT is usually recoverable in your return; the duty is not.

Why the €150 threshold does not save you

Many first-time buyers have read that parcels under €150 enter the EU duty-free. That relief applies to customs duty on low-value consignments and was designed for consumer parcels; VAT is charged from the first euro and has been since 2021. A 30-piece commercial order is far above €150, so both duty and VAT apply in full. Splitting a run into several small parcels to stay under the threshold is an undervaluation risk, not a strategy — and the courier declares the commercial invoice value anyway.

DAP vs DDP — what a factory can and cannot promise

Incoterms name who is responsible for what. Two of them matter for courier shipments to a small brand.

• DAP (Delivered at Place): the seller pays freight to your address; you pay import duty, VAT and clearance. This is what an express shipment normally is, and what we quote for a first run
• DDP (Delivered Duty Paid): the seller pays everything including your country's duty and VAT, so you receive one "all-in" price
• DDP looks simpler, but it makes the seller the importer in your country. A China factory without a VAT registration or fiscal representative there cannot do that properly; what you often get instead is an inflated estimate, or duty billed back to the shipper and then argued about
• DAP keeps every cost visible: the factory price, the freight, and the tax your own government charged

We do not offer DDP on a first 30-piece order. If a supplier does, ask how they are registered for VAT in your country and who appears as importer on the declaration. If the answer is vague, the "all-in" price is a guess you will end up paying for.

What happens at delivery

• The factory ships with a commercial invoice (goods, value, HS code, fibre composition, origin China) and a packing list
• The courier's broker files the import declaration in your country from that invoice
• You receive an email or SMS with duty, VAT and fee to pay online — or a request for your VAT / EORI number if you import as a business
• Payment releases the parcel; delivery usually follows within one to two working days
• Keep the courier's tax invoice — it is the document you use to reclaim import VAT

Delays almost always come from missing data: no phone number for the consignee, a vague description such as "clothing", or a personal name where the invoice says a company. Give the factory the exact consignee name, address, phone, email and — if you have one — your VAT / EORI number before the carton leaves.

Outside the EU

• United Kingdom: 20% import VAT, with duty on wool knitwear at a level similar to the EU; the £135 low-value rule does not help a commercial run
• United States: knitted wool sweaters carry the standard Chapter 61 duty plus additional tariffs on goods of Chinese origin, and the de minimis exemption no longer applies to China-origin parcels. Budget for tax on every order and confirm the current combined rate with your broker before you set retail
• Japan and Korea: 10% consumption tax / VAT plus knitwear duty on the customs value; commercial imports may need an importer registration
• Everywhere: rates move. Check the current tariff before you set a retail price, not after the parcel reaches the border

How to cost a first run properly

• Take the garment price in the quote currency and convert at a conservative exchange rate, not today's best one
• Add courier freight as a separate line; ask the factory for an estimate by carton weight
• Add duty at your country's rate on goods plus freight
• Add VAT at your standard rate on goods plus freight plus duty; mark it recoverable if you are registered
• Add the courier clearance fee and a 5–10% buffer for exchange-rate movement
• Divide by pieces — that is your landed cost. Set retail from this number, not from the factory quote

How we quote

At Langfield we price a first run as garment price plus international courier to your address, delivered DAP. Duty and VAT are yours, collected by the courier on arrival, and we say so before you pay a deposit. We ship with a complete commercial invoice — fibre composition, HS code, origin — so clearance is a payment, not a negotiation. If you want to know what a 30-piece merino or merino–cashmere sweater will actually cost landed in your country, send the brief and your delivery address; we will give you the two lines we control and show you how to estimate the two we do not.