What is customs value?

Customs value is the value a country's duty is calculated on. It starts from the price paid for the goods and adds whatever freight and insurance the valuation basis includes, plus certain dutiable additions like assists and royalties. It is not the same as the invoice price or the landed cost.

What are dutiable additions?

Dutiable additions are costs added to the customs value regardless of the freight basis: assists (tooling, molds, or materials the buyer supplies free to the seller), royalties and license fees tied to the goods, selling commissions, and packing. They're added on top of the goods and any included freight and insurance.

How much does the basis change the duty?

On $50,000 of goods with $4,000 freight and $500 insurance, an FOB customs value is $50,000 and a CIF value is $54,500. At a 6.5% duty rate that's $3,250 versus $3,542.50 — a $292.50 difference on the same shipment, purely from which basis applies.

Customs Value: FOB vs CFR vs CIF

Q: Is duty calculated on FOB or CIF value?

It depends on the destination country. The United States generally assesses duty on the transaction value, which usually excludes international freight and insurance — effectively an FOB basis. Much of the rest of the world, including the EU, assesses duty on the CIF value, which includes freight and insurance. Same shipment, a different dutiable base.

Customs value is the value your duty is charged on — not the invoice, not the landed cost. What it includes depends on the basis: FOB is goods only, CFR adds freight, CIF adds freight and insurance. Which one applies depends on your destination country, and certain additions are dutiable no matter what. Here’s how each shakes out, worked on one shipment.

What customs value is (and isn’t)

Customs value is the base a tariff rate is multiplied against to get the duty. It starts from the price paid for the goods and, depending on the basis, adds the cost of getting them to the border. It is not the supplier invoice on its own, and it is not the landed cost — the landed cost includes the duty, which hasn’t been calculated yet at this stage.

The three bases

Take $50,000 of goods with $4,000 of ocean freight and $500 of insurance. The customs value depends entirely on the basis:

Basis	Includes	Customs value
FOB	Goods only	$50,000
CFR	Goods + freight	$54,000
CIF	Goods + freight + insurance	$54,500

That’s a $4,500 spread in the dutiable base from nothing but the basis — and it flows straight through to the duty.

Which basis applies to you

This is set by the destination country, not by choice. The United States generally assesses duty on the transaction value, which usually excludes international freight and insurance — effectively an FOB basis. Much of the rest of the world, including the EU, assesses on the CIF value, freight and insurance included. So the same container can carry a different dutiable value depending on where it lands. Always value on the basis your destination uses.

The Incoterm on your contract governs who pays the freight. The destination country governs whether that freight is dutiable. They’re not the same question.

The additions that are always dutiable

Some costs get added to customs value regardless of the freight basis: assists (tooling, molds, or materials you supply to the seller for free), royalties and license fees tied to the goods, selling commissions, and packing. Add $1,500 of assists to the CIF example and the customs value rises from $54,500 to $56,000. These are the line items importers most often forget — and the ones customs most often catches.

Why it matters: it flows to the duty

Customs value is step one of the chain. At a 6.5% duty rate, the FOB value owes $3,250 and the CIF value owes $3,542.50 — a $292.50 gap on an identical shipment. From there it feeds the import duty and ultimately the landed cost. Get the basis and the additions right and every number downstream is right.