Duty-Free
Also known as: Duty Free, No Duty, Zero Duty
Definition
Duty-free means imported goods are exempt from customs duties that would normally apply. This can occur because the shipment’s value is below the de minimis threshold, the product qualifies under a free trade agreement, or other special exemptions apply.
How Goods Become Duty-Free
De Minimis Exemption
Shipments below threshold enter duty-free:
- US: $800 per person per day
- Canada: CAD $20
- EU: €150 (varies by country)
- UK: £135
Free Trade Agreements
Products from FTA partner countries:
- USMCA (US, Mexico, Canada)
- EU Free Trade Area
- Various bilateral agreements
Special Programs
- Generalized System of Preferences (GSP)
- Least Developed Country provisions
- Temporary import bonds
- Duty drawback programs
Duty-Free vs. Tax-Free
| Aspect | Duty-Free | Tax-Free |
|---|---|---|
| What’s exempt | Import duties/tariffs | Sales tax/VAT |
| When applied | At customs/border | At purchase |
| Who benefits | Importer | Consumer |
| Threshold | Varies by country | Varies by jurisdiction |
Duty-Free Shopping
Airport duty-free stores offer:
- Exemption from local taxes
- Primarily benefits travelers
- Subject to quantity limits
- Must be carried in luggage
Qualifying for Duty-Free Import
Requirements often include:
- Certificate of Origin
- Proof of country of manufacture
- Proper HS code classification
- Compliance with rules of origin
- Accurate commercial invoices
E-Commerce Implications
For cross-border sellers:
- Price products under de minimis when possible
- Understand destination country thresholds
- Include proper documentation
- Use DDP or DDU terms appropriately
Common Misconceptions
- “Duty-free” doesn’t always mean “tax-free”
- Some products have duties even under FTAs
- De minimis exemptions have limits
- Still may owe state/local taxes on imports
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