How to price your products for EU customers (including duty and VAT)

Pricing for EU customers is one of the areas where post-Brexit complexity hits UK small businesses hardest. Get it wrong and you're either losing margin by absorbing unexpected costs, or losing customers who get hit with surprise charges at the door.

Here's a practical framework for getting it right.

Why EU pricing is different now

Before Brexit, pricing for EU customers was simple. You charged the same as UK customers, adjusted for shipping, and that was it. VAT was handled within the single market framework and nobody got surprise bills at the door.

Post-Brexit, there's a gap between what your EU customer pays at checkout and what they actually pay in total to receive your product. That gap — made up of destination VAT, carrier fees and potentially import duty — either lands on your customer unexpectedly, or you absorb it yourself. Neither is ideal unless it's a deliberate choice. And since 1 July 2026 the gap has widened: the EU has abolished the €150 threshold below which parcels entered duty-free, so duty is now in play at any order value.

Step 1: Know your product's duty rate

The first thing to establish is whether your product attracts import duty when entering the EU from the UK. Under the UK-EU Trade and Cooperation Agreement, many UK-made goods qualify for 0% duty — but not automatically. Since 1 July 2026, sub-€150 parcels are no longer duty-free by default. The 0% TCA rate only applies if you claim preference with a statement on origin on your commercial invoice. Without one, IOSS and postal consignments pay a temporary flat duty of €3 per item (in place until 1 July 2028), and other shipments pay the standard tariff rate at any value.

Use ClearShip or the UK Government's Trade Tariff tool to find your product's duty rate. For most handmade goods, craft products, homeware and general consumer goods, the answer will be 0% — provided you claim it. For some textiles, footwear and food products, a rate of 3–17% may apply, with some food products higher still.

Step 2: Calculate the destination VAT

Every EU country has a different VAT rate. The main ones UK sellers encounter:

• Germany: 19%
• France: 20%
• Netherlands: 21%
• Spain: 21%
• Italy: 22%
• Ireland: 23%
• Denmark: 25%

VAT is applied to the CIF value — product price plus shipping plus any duty. So your shipping cost affects the VAT bill your customer faces.

Step 3: Decide your approach

Once you know the duty rate and destination VAT, you have three pricing options:

Option A: DAP with transparency — ship as normal but tell your EU customers exactly what they'll face on delivery. Calculate the landed cost using ClearShip, add a note to your listings, and let customers make an informed decision.

Option B: DDP with built-in costs — cover the import charges yourself and build them into your EU price. Your EU customers pay a single transparent price with nothing due on delivery.

Option C: register for IOSS — for B2C consignments up to €150, the Import One-Stop Shop lets you charge the destination country's VAT at checkout and pay it over through a single monthly EU return. Your customer pays everything upfront: no VAT bill at the door, and no carrier presentation fee, because there's nothing left to collect. Since 1 July 2026, IOSS is also how the €3 flat duty is handled on parcels where you don't claim TCA preference. In practice, IOSS (or a carrier's DDP service) is the mechanism that makes Option B actually work — simply raising your EU price doesn't stop customs charging your customer at the door.

A practical example

A UK candle maker sells candles at £45 each. They want to sell to French customers.

The customer paid £54 at checkout. The gap is £19 — the VAT bill plus the carrier's customs-clearance fee, collected at the door. And that's the good case: skip the statement on origin and the parcel also picks up the €3 flat duty (IOSS/postal) or standard tariff duty.

Under Option A: tell French customers that charges of approximately £19 will apply on delivery.
Under Option B: price French orders at £73, ship DDP, and cover the import charges yourself.
Under Option C: register for IOSS and charge £54 plus £11 French VAT at checkout — the customer pays £65 upfront, nothing at the door, and the clearance fee disappears.

The one thing not to do

Don't ignore the gap and hope customers won't mind. They mind. The surprise bill at the door is the single biggest source of negative reviews and refused deliveries for UK sellers shipping to Europe. It's entirely preventable.

Start by calculating the landed cost for your most common EU shipments. ClearShip does this in seconds. Once you know the numbers, you can make a deliberate pricing decision rather than an accidental one.