- PPF Points
- 2,332
When I first started my online business, the idea of selling globally was exciting but also intimidating. I was selling T-shirts, shoes, and accessories, and I quickly realized that shipping internationally wasn’t as simple as I initially thought. I wanted to reach customers worldwide, but there was one major hurdle I wasn’t fully prepared for: taxes, VAT, and customs duties.
Let me share with you my experience and how I tackled these challenges as I expanded my online business globally.
As a business selling internationally, I had to get familiar with VAT, especially in regions like Europe. VAT is a consumption tax that is added to goods and services when they are sold in many countries, and it’s something that can cause a lot of confusion for new sellers.
For instance, when I started selling to the European Union (EU), I didn’t realize that VAT rates differ from country to country. For example, France’s VAT rate is different from Germany’s. At first, I thought I could just include the price of my product and handle it like domestic sales, but that was wrong.
After some research and advice from other online sellers, I learned that I needed to:
Customs and duties were the next challenge. When I first shipped a product to a customer in Australia, I was hit with an unexpected customs fee, and my customer wasn’t happy about it. I quickly realized that customs duties are levied by the country receiving the goods, and I wasn’t properly informing my customers about potential extra charges.
I started clearly outlining customs duties on my website, explaining to customers that they might have to pay additional fees upon arrival. This helped manage expectations, and I also began offering shipping options that included duties in the price, so customers knew exactly what they were paying upfront.
I also researched the rules of each country I shipped to, as some countries have higher thresholds for customs duties (for example, the U.S. has a higher duty threshold for imports than the UK). I started using services like Customs Clearance Calculator to estimate the customs duties for different countries.
At first, it was a bit overwhelming trying to figure out what taxes I needed to pay in each country.
Aside from taxes, another crucial element in selling globally is making sure you have the right shipping partners. At first, I relied on regular postal services, but as I grew, I realized that international couriers like DHL, FedEx, and UPS offer faster, more reliable delivery options—though at a higher cost.
I also set up international payment options to make it easier for customers worldwide to pay. Using services like PayPal and Stripe allowed me to accept payments in different currencies, which helped streamline the process for both me and my customers.
I began using global shipping platforms such as ShipBob or Easyship, which offered integrated solutions for handling international shipping. These platforms provide competitive international shipping rates, customs clearance, and even global tax compliance, making it much easier for me to sell in multiple countries.
Let me share with you my experience and how I tackled these challenges as I expanded my online business globally.
As a business selling internationally, I had to get familiar with VAT, especially in regions like Europe. VAT is a consumption tax that is added to goods and services when they are sold in many countries, and it’s something that can cause a lot of confusion for new sellers.
For instance, when I started selling to the European Union (EU), I didn’t realize that VAT rates differ from country to country. For example, France’s VAT rate is different from Germany’s. At first, I thought I could just include the price of my product and handle it like domestic sales, but that was wrong.
The Solution:
After some research and advice from other online sellers, I learned that I needed to:
- Register for VAT in the countries I sold to: The EU has a rule called the “One-Stop-Shop” (OSS), which allows businesses to register in one EU country and cover all sales across the EU, but the rates still vary by country.
- Ensure I was charging the correct VAT rate: This meant I needed to set up my e-commerce store to calculate VAT based on the customer’s location. Platforms like Shopify made this process easier with built-in VAT calculations.
- Report VAT on a regular basis: As a seller, I had to submit regular VAT returns, which required tracking how much VAT I collected from my international customers.
Customs and duties were the next challenge. When I first shipped a product to a customer in Australia, I was hit with an unexpected customs fee, and my customer wasn’t happy about it. I quickly realized that customs duties are levied by the country receiving the goods, and I wasn’t properly informing my customers about potential extra charges.
The Solution:
I started clearly outlining customs duties on my website, explaining to customers that they might have to pay additional fees upon arrival. This helped manage expectations, and I also began offering shipping options that included duties in the price, so customers knew exactly what they were paying upfront.
I also researched the rules of each country I shipped to, as some countries have higher thresholds for customs duties (for example, the U.S. has a higher duty threshold for imports than the UK). I started using services like Customs Clearance Calculator to estimate the customs duties for different countries.
On top of VAT and customs duties, there’s also the issue of international taxes. Depending on where you’re selling, your business might be required to pay taxes in foreign markets. For example, if you’re selling in the U.S., you might need to collect sales tax in certain states, while in Canada, there’s a Goods and Services Tax (GST).At first, it was a bit overwhelming trying to figure out what taxes I needed to pay in each country.
The Solution:
- Tax Automation Tools: To make things easier, I started using automated tax collection tools, such as TaxJar or Avalara. These tools can integrate directly with your e-commerce platform, calculate the appropriate taxes based on the customer’s location, and even handle filing tax returns for you.
- Consulting a Tax Professional: As my business grew, I decided it was worth the investment to consult with a tax professional who specialized in international taxes. They helped me figure out exactly what taxes I owed in different regions and ensured I was complying with all the laws.
Aside from taxes, another crucial element in selling globally is making sure you have the right shipping partners. At first, I relied on regular postal services, but as I grew, I realized that international couriers like DHL, FedEx, and UPS offer faster, more reliable delivery options—though at a higher cost.
I also set up international payment options to make it easier for customers worldwide to pay. Using services like PayPal and Stripe allowed me to accept payments in different currencies, which helped streamline the process for both me and my customers.
The Solution:
I began using global shipping platforms such as ShipBob or Easyship, which offered integrated solutions for handling international shipping. These platforms provide competitive international shipping rates, customs clearance, and even global tax compliance, making it much easier for me to sell in multiple countries.