Life lessons from import tax – Wacky Tax Wednesday

“I got a bill from a shipping company today,” said my daughter during a recent video call. “I think it’s for the cards Dad sent me last month. It says something about administration fees and import taxes.” 

For context, my daughter is settling into her first year of university, in France. While I was helping her relocate in August, my husband paid too much money to quickly send her a couple of birthday cards. (It’s a long story.) He sent the envelope from our local post office, where he was helped by a brand-new employee.

In retrospect, the commercial invoice he was told to fill out was likely the wrong type of invoice; he probably could have shipped the cards as documents because they’re paper of little or no commercial value. Never having had a daughter in France, my husband didn’t realize this. Never having helped anyone send anything to anyone in France, the postal clerk didn’t either. But it might not have mattered. When I asked a veteran U.S. postal employee about it yesterday, she told me, “France is tough. They want their tax revenue.”

Boy, do they. The Facture de droits et taxes (Duty and tax invoice) my daughter found in her mailbox was for:

• Frais de dossier (Administration fee): 5 Euros
• TVA à l’importation (Import VAT, aka, value-added tax): 15 Euros

Could she really owe a whopping 20 Euros (close to $25) in duty and import taxes for the pleasure of receiving two birthday cards? 

The shipping invoice provided an email address “pour toute question relative à cette facture” (for all questions related to this invoice), so my daughter sent them a message saying she believed she’d been sent the invoice in error. She explained the package contained two birthday cards that were purchased in the U.S. for less than 8 Euros (about $10). Surely, she couldn’t owe French customs 20 Euros?

She quickly received a courteous reply explaining that all imports originating outside the European Community are subject to import taxes, which are based on the value of the contents, shipping costs, and customs duties. And failure to pay them immediately would result in fines.

So, there it is. Though the value of the cards was “zero,” it seems she must pay the shipping company’s administrative fee as well as import tax on the high shipping costs. I can’t wait to see what she ends up owing on the snuggly socks her brother recently sent her.

My daughter is finding the French to be unfailingly polite, welcoming, and patient, though some aspects of life in France confound her: The grocery store closes at 8:00 p.m. and every Sunday afternoon; it took a week to open a bank account and five more weeks to access online banking; stuff like that. And now this: You may have to pay customs duty and import taxes when someone sends you a gift — or birthday card (via astronomically priced expedited shipping).

This is worth knowing, especially since it’s not unique to France. It can even happen here, in the good old U.S. of A.

My job is to research and write about tax, including customs duty and import tax, so although I was outraged, I wasn’t surprised by our recent debacle. I’m familiar with Brexit parcel price shock, which can occur when people in Britain are billed import tax on gifts shipped from the European Union. I know that if retailers don’t charge purchasers customs duty and import tax at checkout, recipients like my daughter are billed, or their packages are held at customs until they pay the taxes they owe. I know consumers sometimes refuse to pay the customs and import tax and reject the package, at great cost to the retailer.

But I didn’t really feel it until now.

In the end, this doesn’t impact our family too much. The story is good cocktail-party fodder; we can avoid shipping things to our daughter while she’s in France or plan to pay the taxes if we do. And as for her, she’s learning to catch what life throws at her with aplomb. Can a parent ask for anything more?

That said, getting duty and import taxes right is critical for businesses. Can you imagine how I would have felt if I had an ecommerce store ship something to my daughter and then she was billed for the import tax? I’d be furious and would likely avoid that company for future purchases. Wouldn’t you?

So take it from a mom, and think about the pros and cons of including customs duty and import taxes at checkout.

Incidentally, we checked the invoice for the socks. The retailer collected customs duty and import VAT at checkout, so we'll shop with them again.