The most common sourcing mistake is reading the FOB or ex-works figure as the price you pay. It is not. Landed cost stacks every downstream charge onto that number, and most of them are set by your destination country rather than the seller. Below is the formula, then a fully worked EU example, with every rate carrying a source.
The formula
Landed cost = FOB price + international freight + insurance + import duty + VAT/GST + customs clearance + last-mile delivery. Duty is charged on the customs value; VAT/GST is then charged on the duty-inclusive value in most jurisdictions, which is why a "low duty" still moves the total through the VAT base.
Worked example: a $24,000 6-axis arm into the EU
Assume a crated 6-axis industrial arm, FOB Shenzhen $24,000, classified by your broker around HS 8479.50 (indicative only). Sea freight + insurance to Rotterdam ≈ $1,650. The EU TARIC duty for this heading is low single-digit; we model 2% here purely as an illustration — your broker's classification governs (EU TARIC). Import VAT in the Netherlands is 21% on the duty-inclusive CIF value.
| Line | Basis | Amount (USD) |
|---|---|---|
| FOB price | quoted | 24,000 |
| Freight + insurance | sea, crated | 1,650 |
| Customs value (CIF) | FOB + freight + ins. | 25,650 |
| Import duty | ~2% illustrative | 513 |
| Import VAT base | CIF + duty | 26,163 |
| Import VAT | 21% (NL) | 5,494 |
| Clearance + last-mile | broker + delivery | ~900 |
| Landed total | — | ≈ 31,557 |
That is ~31.5% over the FOB price, of which the duty is only ~$513 — under 2% of the FOB. The VAT (~$5,494) is the dominant line, and in many cases VAT is recoverable by a VAT-registered importer, which can pull the effective landed cost back toward the low-20s percent. Per the China Robot Price Index, Q3 2026, the all-in 18–35% range reflects exactly this duty-small / VAT-and-freight-large pattern across destinations.
Where the number swings
| Driver | Direction | Why |
|---|---|---|
| Destination VAT/GST | Large | 5% (GCC) to ~25% (parts of EU) |
| Freight mode | Large | Air can multiply freight 4–6× vs sea |
| Incoterm chosen | Large | EXW pushes all downstream cost to you |
| Duty rate | Small | Usually low single-digit on robot HS headings |
FAQ
Is duty or VAT the bigger cost?
Almost always VAT/GST. Robot HS headings carry low single-digit duty in the EU, UK and US, while import VAT runs 5% (GCC) to ~25% (parts of the EU) on the duty-inclusive value. Freight can rival VAT if you air-freight. (Sources: EU TARIC, USITC HTS, GCC Common Customs Law.)
Can I recover the import VAT?
A VAT/GST-registered business importing for business use can often reclaim import VAT, which lowers the effective landed cost — but the cash is still outlaid at import. Confirm recoverability with your tax adviser; this is not tax advice.
What is a safe rule of thumb?
Budget the FOB price plus 18–35% for a first estimate (China Robot Price Index, Q3 2026), then refine with a broker quote for your exact HS code, Incoterm and destination before committing.
Figures are illustrative desk calculations against official schedules (EU TARIC, USITC HTS, GCC Common Customs Law) and the China Robot Price Index, Q3 2026. Not legal, customs or tax advice.