How to Handle Customs Fees and VAT for International Etsy Orders
Learn how Etsy sellers can calculate customs fees, charge VAT at checkout, avoid double taxation, set DDP vs DAP shipping, and keep international buyers happy.
I’m a UK-based Etsy seller and I’m looking at reopening shipping to the US using Royal Mail’s DDP option through Click & Drop. When I test different order values, the DDP charges (customs/handling) seem to vary depending on the item value and what’s in the basket.
I’m unsure whether I should (1) add a flat extra amount to my US shipping price to cover DDP costs, or (2) build the estimated DDP cost into each item price. A flat shipping add-on feels unfair on very small orders, but changing item prices also changes the declared value and could affect the DDP calculation.
What’s the best way to structure Etsy pricing/shipping so DDP costs are covered without overcharging low-value orders?
Hi! The fairest (and easiest) way to cover Royal Mail’s DDP/PDDP costs on Etsy is usually to keep your item prices/declared values “real” and build the DDP overhead into your US shipping profile, using Etsy’s “one item + additional item” rates to avoid punishing small orders.
Here’s why: Etsy doesn’t give UK sellers a clean way to add a variable “DDP fee” at checkout (and Etsy removed separate handling/package fees for calculated shipping), so the only practical levers you’ve got are fixed shipping rates and your item price. If you bake DDP into item prices, you can end up (a) inflating declared value, and (b) making the DDP calculation itself drift upward on higher-priced baskets—exactly the loop you’re worried about.
1) Put the “per-parcel” DDP cost into the US shipping price (One item).
Royal Mail’s DDP/PDDP cost often has a per-parcel component (and then any duties/taxes depending on contents/value/origin). So set your US “One item” shipping to cover:
2) Keep “Additional item” shipping low (or £0–small amount) where it’s realistic.
This stops low-value multi-item orders from getting hammered. It also mirrors what usually happens in reality: adding a second small item often doesn’t double your postage, and it doesn’t usually double the “per parcel” part of DDP if it’s still one box.
3) Use 2–3 US shipping profiles if your catalog has very different duty behavior.
If some products trigger higher DDP charges (different HS codes, materials, or country of origin), split them into separate Etsy shipping profiles like:
That way you’re not averaging one product’s DDP cost across everything.
If you sell items that can push orders into “meaningful duty” territory (or you just see big swings in Click & Drop depending on basket contents), the safest approach is to set a reasonable max you’re willing to subsidize and then handle outliers intentionally. Common options:
If you tell me (1) your typical US order totals, (2) whether you ship single-item orders often, and (3) roughly how far the Click & Drop DDP charge swings (low-to-high), I can suggest a concrete “One item / Additional item” setup that covers you without overcharging your small orders.
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