Import VAT, GST and De Minimis Thresholds for Knitwear

By YZR Sweaters · 2026-11

When we walk buyers through a landed cost calculation, the line that surprises people is never the duty — they expected duty. It is the VAT or GST line underneath it, charged not just on the goods but on the freight and the duty too. And in the last couple of years a second surprise has arrived: the de minimis thresholds that used to make small parcels tax-free are disappearing, which quietly changes the maths for everyone shipping small consignments. This guide is the tax layer that sits between your FOB price and your shelf price.

Duty vs VAT vs GST: three different taxes

They get bundled together in one customs bill, but they behave completely differently. Duty is a trade tax on the category of goods — it follows the HS code, varies by fibre and construction, and is a pure cost: you do not get it back. VAT and GST are consumption taxes on the sale, collected early at the border when you import. The critical difference: for a VAT-registered business, import VAT is usually recoverable as input tax when you file your return — so for a properly structured importer it is cash-flow cost, not profit-and-loss cost. The catch is the word "properly": you need a registration, you need the paperwork right at clearance, and you need to be able to wait for the reclaim cycle.

How it is charged matters too: VAT is assessed on the customs value plus freight plus duty. That compounding is why a 12% duty and a 20% VAT do not cost 32% — they cost roughly 34.4% before reclaim, and buyers who quote landed costs ignoring the compounding are quietly under-pricing their own product.

How each major market handles import VAT and GST

• European Union. Standard-rate import VAT (19% in Germany, 20% in France, 21% in the Netherlands, and so on) is due at the border unless you use a relief mechanism. The big ones: deferment accounts (available in the Netherlands and several other states, letting you account for VAT in your return instead of paying cash at clearance) and customs warehousing — the logic in our bonded warehouse guide is largely a VAT-deferral strategy in disguise. If you import through a fiscal representative in the Netherlands with an Article 23 licence, import VAT effectively never leaves your bank account.
• United Kingdom. Since 2021 the UK charges VAT on all imported goods regardless of value — the old £15 threshold is gone. The relief for businesses is Postponed VAT Accounting: you declare and reclaim import VAT in the same VAT return, so no cash leaves your account at all. It is not automatic — it must be set up with HMRC — and we regularly meet importers paying VAT twice because their broker never activated it.
• United States. No federal VAT or sales tax at the border — US importers pay duty and merchandise processing fees only, which is why US landed-cost conversations are shorter. The trade-off is a patchwork of state sales taxes that apply downstream at retail, your problem as an importer only in the sales-tax-nexus sense.
• Australia. 10% GST on imports, with the business-side mechanics similar to VAT regimes, and — relevant to e-commerce shippers — Australia pioneered the collection of GST on low-value imported goods from overseas sellers, the model other countries have since copied.
• Canada. 5% GST (or HST, combining federal and provincial rates) collected at the border on the duty-paid value, recoverable by GST-registered importers.

De minimis: the thresholds that are disappearing

De minimis is the customs value below which a parcel enters duty- and tax-free. For two decades it was the quiet foundation of cross-border e-commerce — ship from the factory, one box at a time, no tax at the border. That era is ending, and knitwear shippers feel it directly:

• The United States ended de minimis for all countries in August 2025. Every parcel now enters through formal or simplified entry with duty and fees due. For anyone running the ship-direct model from China — the pattern our dropshipping guide describes — this is not a margin trim; it is a structural change that has pushed most serious players back toward bulk import into a US warehouse.
• The EU is moving against its €150 duty exemption. Duty-free entry for parcels under €150 has been under active legislative attack, with collection systems being built to charge duty (and VAT, already collected on all values since 2021) on every parcel. Treat sub-€150 duty-free shipping into the EU as a sunsetting benefit, not a planning assumption.
• The UK removed its VAT de minimis in 2021 — the shift that made Postponed VAT Accounting so important — and Canada's CUSMA de minimis levels only relieve qualifying low-value shipments from the US and Mexico, not from China.

The strategic conclusion is simple: any sourcing model whose economics depend on parcels crossing borders tax-free is a model on borrowed time. The durable version is the boring one — bulk ocean freight, proper duty engineering, VAT recovered through registration — with the e-commerce channels served from a domestic warehouse.

What this means for how you buy

• Model VAT in the landed cost, correctly compounding it. A landed-cost spreadsheet that adds VAT as a flat percentage of FOB will misprice you by several points; VAT applies to customs value plus freight plus duty.
• Choose your port of entry for tax mechanics, not just geography. A Dutch Article 23 licence, a UK deferment, or bonded storage can be worth more per container than a freight-rate difference — this belongs in the same conversation as your forwarder selection.
• Be careful with DDP. Under Incoterms, DDP pushes duty and tax onto the seller — which means the factory or its agent imports as principal into your country, usually at a marked-up tax "service". Fine for genuine turnkey needs; expensive as a default. Ask who holds the import VAT registration under any DDP quote.
• Fix your HS classification before optimizing tax. Every VAT and duty figure inherits the accuracy of your classification — the knitwear HS code rules decide which rate stack applies at all.

Where YZR Sweaters fits

We are a Dongguan knitwear factory exporting to buyers across the EU, UK, North America and Australia, and we quote with the tax layer in mind: correct HS classification per style, per-style values and weights documented for customs declarations, carton and packing data prepared for smooth clearance, and support for buyers arranging deferment, bonded or warehouse-based import flows. We are not tax advisers — your accountant owns your VAT registration — but a factory that gets the paperwork layer right removes half the friction of getting your money back. If you are structuring a new market entry, tell us the destination and import route, and we will make sure the export side matches it.

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