Discount Exchange Duties

outline learn how to waive the duties shopify charges a customer on a new exchange order, so an international customer swapping an item isn't asked to pay duty a second time this is especially useful if you ship internationally and want exchanges to feel like a straight swap handle exchanges into markets that charge duty on imported goods, such as the uk, eu or canada because duties are only ever charged on some destinations, this is usually set up as a flow so it applies to the orders you choose rather than every return setting condition click add condition choose what should trigger the waiver common choices are destination country → the markets where your customers are charged duty return reason → if you only want to absorb duties on faulty or incorrect items to apply the waiver to all orders , use a catch all condition such as date fulfilled → is after → 01/01/2000 setting outcome click add outcome from the dropdown, select discount exchange duties save the flow what the customer and your team see the customer sees a duties discounted line in their exchange summary, showing the amount taken off your team sees total duties discount in the close breakdown when processing the return on the shopify order, the discount appears as refundid duties discount if the exchange also carries store credit, the two are merged into a single line named refundid exchange credit and duties discount how the discount is worked out shopify does not let anyone set duties to zero on an order duties are calculated by shopify from the value of the goods, and the only lever available is a discount on the order that creates a chicken and egg problem applying a discount lowers the value of the goods, which lowers the duty shopify charges, which changes the total we were aiming for so refundid tries a discount, asks shopify to recalculate, compares the result to the target and adjusts — narrowing in until the total matches the order price with duties removed for almost all orders this lands exactly the exception is explained below where the waiver can only be applied in part every country that charges duty has a de minimis threshold — a goods value below which no duty is charged at all orders under it are duty free; orders over it pay duty on the whole amount that threshold creates a cliff an order sitting just above it pays duty, but discount it by one cent too many and it drops below the threshold, duty disappears entirely, and the total falls further than intended for a narrow band of order values just above the threshold, there is no discount that produces exactly the right total — every option either leaves some duty in place or overshoots when that happens, refundid applies the largest discount that doesn't overshoot the customer gets a partial duties waiver rather than the full amount, and the smaller figure is what shows as "duties discounted" no error is raised, so it is worth knowing the band exists the affected band the band always starts at the country's de minimis threshold how far it extends depends on the country's tax convention and on whether duty is charged on shipping symbol meaning m de minimis threshold — the goods value below which no duty is charged d duty rate t tax rate (use 0 for countries that display tax inclusive prices) s shipping charged on the exchange order the band runs from m to m + width , where the width is cif (cost, insurance and freight — duty charged on shipping) fob (free on board — duty charged on goods only) tax inclusive pricing (m + s)·d m·d tax exclusive pricing (m + s)·d / (1 + t(1 + d)) m·d / (1 + t(1 + d)) with free shipping the two columns are identical, and the band can be written in full as $$ m ;\le; \text{order value} ;<; \frac{m(1+d)(1+t)}{1 + t(1+d)} $$ in short a high threshold, a high duty rate and a low tax rate all make the band wider tax inclusive pricing widens it most of all, because tax drops out of the calculation entirely worked example — a t shirt, with free shipping market tax mode m d t affected band width uk incl £135 12% 20% £135 – £151 20 £16 20 eu excl €150 12% 19% €150 – €164 84 €14 84 canada excl cad 150 18% 13% cad 150 – cad 173 41 cad 23 41 au excl aud 1,000 5% 10% aud 1,000 – aud 1,045 25 aud 45 25 australia has the widest band in absolute terms simply because its threshold is far higher the uk band is proportionally the widest because tax inclusive pricing takes the tax rate out of the sum the comparison is against the whole cart , not each item, so a multi item exchange can move into or out of the band as items are added worked example — the same t shirt, with paid shipping some countries charge duty on the goods plus the shipping ( cif ), others on the goods alone ( fob ) where duty is charged on shipping, adding a shipping cost widens the band below, the same exchanges now carry 20 of shipping in each market's currency market basis tax mode shipping (s) affected band width vs free shipping uk cif incl £20 £135 – £153 60 £18 60 +£2 40 eu cif excl €20 €150 – €166 82 €16 82 +€1 98 canada fob excl cad 20 cad 150 – cad 173 41 cad 23 41 unchanged au fob excl aud 20 aud 1,000 – aud 1,045 25 aud 45 25 unchanged note what this does in the uk with free shipping the band ended at £151 20, so a £152 exchange was clear of it add £20 of shipping and the band reaches £153 60 — the same exchange is now inside it where duty is charged on shipping, whether an order is affected depends partly on the shipping rate the customer picks , which is chosen late in the return journey check the duty basis for each destination against current customs rules rather than relying on the split above — the maths holds either way, but which column applies is a customs question things to note these bands are an estimate the figures assume one duty rate and one tax rate across the cart, and exact arithmetic real carts mix products with different duty rates, and shopify rounds at several points, so the real edge will sit a little either side of the calculated one treat the band as where to look, not as a hard line the duty is still payable discounting the customer's total does not exempt the parcel from duty at the border you are absorbing the cost, not removing the charge shopify only this rule is not available on bigcommerce it can't be combined with other exchange discounts bonus store credit and minimum charge adjustments are not supported on the same exchange prices can move between quote and payment if the exchange total changes after the customer is quoted — a price change, a currency movement, an automatic discount becoming eligible, or a different shipping rate — the exchange is rejected rather than charged at the wrong amount the customer sees this at the end of the journey, so it is worth keeping automatic discounts stable on products that are commonly exchanged same order exchanges are not possible on orders with duties shopify does not allow exchange items to be added to an order carrying duties, even at $0, so these always become new exchange orders see waiving taxes & duties on new exchange orders docid\ w5q ueesb9rmy1icfa ol if you'd like this set up for specific markets, or you'd like to know the affected band for your own products, reach out to your account manager