Import VAT and GST on Clothing: How It Is Calculated in the UK, Germany, Canada and Australia, and How You Get It Back
Import VAT or GST is charged at the border on almost every clothing shipment into the UK, the EU, Canada and Australia, and it is the line a DDP quote is most often misread on. It is separate from duty, it is calculated on the customs value plus any duty (plus freight in Australia), it is payable by the importer of record, and for a registered business it is normally recovered rather than lost. Rates verified 19 September 2026.
Is import VAT the same as duty?
No. Duty is a tariff on the goods, set by the trade rules between the two countries; for Bangladesh-made clothing it is zero in the UK, the EU, Canada and Australia and about 26.5% in the United States, as our duty guide sets out. Import VAT or GST is the same consumption tax you charge your own customers, collected at the border on the imported value so that imported goods carry the same tax as domestic ones. The United States has no VAT or GST at import; state sales tax applies when you sell.
What is it calculated on?
| Market | Rate | Calculated on | Source |
|---|---|---|---|
| United Kingdom | Import VAT 20% | Customs value plus any duty | GOV.UK VAT rates |
| Germany | Einfuhrumsatzsteuer 19% | Customs value plus any duty; clothing is standard-rated | Zoll |
| Other EU member states | The member state's standard rate | As Germany; each state sets its own rate above the EU minimum | Access2Markets |
| Canada | GST 5% | Value for duty plus any duty; provincial taxes apply at the point of sale | Canada Revenue Agency |
| Australia | GST 10% | Customs value plus international transport and insurance plus any duty (the value of the taxable importation) | ATO |
| United States | None at import | State sales tax applies when you sell, not when you import | USITC |
Who pays it under DDP?
Delivered Duty Paid means the seller arranges and pays for the import clearance and the duty. It does not change who the tax authority regards as the importer. In practice a DDP shipment from us arrives with the VAT or GST inside the landed price you approved, and the entry is filed in a way your accountant can use: if the goods are entered in your company's name, you are the importer of record and the import VAT is yours to recover; if they are entered in the forwarder's name, the tax has been paid but it is not on your VAT return. Tell us which you need before the goods move, because it decides how the entry is filed. The Amsterdam office handles this conversation for EU and UK brands.
How do you get it back?
If you are VAT- or GST-registered, import VAT is input tax like any other: you reclaim it on your return, so it is a cash-flow cost between the border and the return, not a margin cost. The UK requires an EORI number and, for most businesses, uses postponed VAT accounting so the tax is declared and reclaimed on the same return rather than paid at the port. Germany and the other member states recover import VAT through the normal return; the same applies to Canadian GST. Australia's deferred GST scheme lets eligible monthly filers defer the payment to the first activity statement after import. If you are not registered, the import VAT is a true cost, which is one reason a brand crossing the registration threshold should register before its first production run rather than after.
A worked example
Five hundred t-shirts at a customs value of US$6.00 each, US$3,000 in total, with no freight in the customs value. Into the UK: duty US$0, import VAT 20% of US$3,000 = US$600. Into Germany: duty US$0, import VAT 19% = US$570. Into Canada: duty US$0, GST 5% = US$150. Into Australia, with US$500 of freight and insurance added to the taxable value: duty US$0, GST 10% of US$3,500 = US$350. Into the United States: duty 26.5% = US$795 and no VAT. For a registered business the UK, German, Canadian and Australian figures come back on the next return; the US duty does not. The landed-cost calculator runs this for any quantity, price and market.
Three mistakes to avoid
- Comparing an FOB quote with a DDP quote. The FOB number has no freight, duty or tax in it; the DDP number has all three. Convert before you compare.
- Assuming a DDP quote includes VAT. Most do, ours does, but some suppliers quote duty paid and tax excluded. Ask which.
- Forgetting the cash-flow gap. Import VAT on a US$30,000 order into the UK is US$6,000 at the border. It comes back, but it has to be there first.
Frequently asked questions
Do I pay VAT on clothing imported into the UK?
Yes, import VAT at the standard rate of 20%, calculated on the customs value plus any duty. For Bangladesh-made clothing the duty is zero under the Developing Countries Trading Scheme, so the VAT is 20% of the customs value. If you are VAT-registered you recover it on your return, and postponed VAT accounting lets you declare and reclaim it on the same return rather than paying at the port. You need an EORI number to be the importer of record.
Is import VAT recoverable?
For a VAT- or GST-registered business, yes: it is input tax and comes back on the next return, so the real cost is the cash-flow gap between the border and the refund. For an unregistered business it is a true cost. That is the main reason a brand approaching the registration threshold should register before its first production run.
Does DDP mean I pay no VAT?
No. DDP means the seller arranges the clearance and pays the duty and, in our quotes, the VAT, so nothing arrives as a surprise invoice. The tax is still charged on the importation and still sits inside the price you approved. What matters is whose name the entry is filed in: if it is your company's, you can recover the VAT; if it is the forwarder's, you cannot. Tell us which you need before the goods move.
How is Australian GST on imports calculated?
At 10% of the value of the taxable importation, which is the customs value plus the cost of international transport and insurance plus any duty. Bangladesh-made clothing enters at the LDC rate of Free, so on a US$3,000 order with US$500 of freight and insurance the GST is US$350. Registered importers can claim it back or use the deferred GST scheme, which moves the payment to the first activity statement after import.
Why does the US page show duty but no VAT?
Because the United States has no federal VAT or GST. What it has is duty, and for Bangladesh-made cotton knit tops that is the MFN rate of 16.5% plus the 10% Section 301 duty applied from 24 July 2026. State sales tax is charged when you sell to a customer, not when you import.
Where this applies
The manufacturing pages this guide relates to, if you are costing a real run.
Free tools & guides for this
Sources & further reading
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