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Term

Landed cost

Landed cost is the total cost of a product once it has arrived at the buyer's door: the price of the goods plus freight, insurance, customs duty, import taxes such as VAT, and fees. It is the figure to compare suppliers and destinations on, because duty and VAT are charged on different bases in different countries.

Also called total landed cost, landed cost calculation, landed cost formula, duty-paid costUpdated 13 October 2026

What goes in

ComponentHow it is worked out
Price of the goodsAs invoiced, under the agreed Incoterms rule
Freight and insuranceTo the destination port or door
Customs dutyTariff rate × customs value: FOB in the US, CIF in the EU, UK and Gulf
Import VATOn value plus duty: UK 20%, Saudi Arabia 15%, UAE 5%
US feesMerchandise Processing Fee 0.3464%; Harbor Maintenance Fee 0.125% by sea

The US International Trade Administration defines landed cost as the total price of a product once it has arrived at the buyer's doorstep, and notes that most VATs are calculated on the CIF-plus-duty amount. In the US the Merchandise Processing Fee is due from the importer of record on formal entries; from 1 October 2026 it is at least $34.58 and at most $670.86 an entry. The Harbor Maintenance Fee applies only to cargo loaded or unloaded from a vessel. Dubai Customs charges 5% duty on the CIF value of most goods.

Worked example: one shipment, four destinations

DestinationDutyFees and VATLanded cost
US$2,000 on $40,000 FOBMPF $138.56; HMF $50$45,388.56
UAE$2,160 on $43,200 CIFVAT 5% on $45,360: $2,268$47,628
Saudi Arabia$2,160 on $43,200 CIFVAT 15%: $6,804$52,164
UK$2,160 on $43,200 CIFVAT 20%: $9,072$54,432
$40,000 FOB, $3,000 ocean freight, $200 insurance; an illustrative 5% duty rate in all four

For 2,000 units that is $22.69 each landed in the US and $27.22 in the UK. Import VAT is paid at the border, but it is not always a final cost: in the UK a VAT-registered business can reclaim import VAT on the goods it owns as input tax, while an importer not registered for VAT still pays it and cannot reclaim it.

The mistake people make

Quoting a landed cost as fact. Freight, exchange rates and duty all move, and the ITA's advice is to always call landed costs estimated. The second mistake is using one country's duty base for another: the same 5% rate costs $2,000 on the US's FOB value and $2,160 on a CIF value.

FAQ

Landed cost: common questions

How do you calculate landed cost?
Add the price of the goods, freight, insurance, customs duty, import taxes and fees. Duty is a percentage of the customs value — FOB in the US, CIF in the EU, UK and Gulf — and VAT is usually charged on that value plus the duty.
Is import VAT part of landed cost?
It is part of the cash paid at the border. Whether it is a final cost depends on the importer: in the UK a VAT-registered business can reclaim it as input tax, and an unregistered importer cannot.
What is the US Merchandise Processing Fee?
A fee of 0.3464% of the value of formally entered goods, paid by the importer of record. From 1 October 2026 it is at least $34.58 and at most $670.86 an entry; cargo by sea also pays a 0.125% Harbor Maintenance Fee.

Sources

  1. Determine total export price — US International Trade Administration
  2. 19 CFR 24.23, merchandise processing fee — eCFR
  3. 19 CFR 24.24, harbor maintenance fee — eCFR
  4. Customs user fees to be adjusted for inflation in fiscal year 2027, CBP Dec. 26-14 — Federal Register, 31 July 2026
  5. VAT rates — GOV.UK
  6. VAT on goods from outside the UK — HMRC, GOV.UK
  7. Frequently asked questions — Dubai Customs
  8. E-commerce VAT guide — UAE Federal Tax Authority, August 2020
  9. Guideline on imports and exports under VAT — ZATCA, May 2026

Related terms

On Traqo: Customs valuation — the value duty is charged on, and what is added to it.