Basics
Shipping and delivery charges on an invoice: who pays, and the tax on it
How to bill delivery: as its own line or in the price, flat rate or actual cost, how VAT, GST and sales tax usually apply to shipping, the ship-to address, and agreeing who pays before the goods move.
1 Nov 2026 · 6 min read
Camille sells ceramic lamps from her workshop near Lyon. A shop orders twelve. She sends them by courier for €38, invoices €1,020 plus VAT and hopes the shop will cover the delivery. They do not: nothing on the quote said they would. She pays the €38 herself, and on a small order that is most of the profit. Delivery is easy to bill and easy to forget. It needs agreeing before the goods move, and its own line when you invoice.
Decide who pays, and say so on the quote
| Way | How it works | Good for |
|---|---|---|
| In the price | “Free delivery”: the cost is built into what you charge for the goods | Simple for retail, and for small, regular orders |
| Flat rate | A fixed charge per order or per box, whatever it really costs | Easy to quote; you win on some orders and lose on others |
| Actual cost | What the courier charges you, passed on | Heavy, bulky or international orders where costs vary a lot |
| Customer arranges it | They send their own courier or collect | Trade customers with their own freight deals |
Whichever you choose, write it on the quotation: “Delivery to Lyon, €38”, “Delivery included”, or “Delivery at cost, estimated €40”. A delivery charge that appears for the first time on the invoice is the kind of surprise that gets an invoice queried. See quotations.
Put it on its own line
Show delivery as a separate line, not mixed into the price of the goods. Your customer can check it against the quote, a reseller can see the true unit price of what they bought, and it is clear what to refund if the goods are returned but the delivery is not. Name what it was: “Delivery, courier, 2 boxes”, “Freight to Durban, 1 pallet”, “Installation visit and delivery”.
Tax on shipping
If you are registered for VAT, GST or sales tax, the usual question is whether delivery is taxed. In general terms:
- UK and EU VAT. When you deliver goods you sold, the delivery charge is generally part of the same sale and takes the same VAT rate as the goods. Zero-rated goods, zero-rated delivery. Standard-rated goods, standard-rated delivery.
- India GST. Freight charged by the supplier along with the goods is usually treated as part of one composite supply, taxed at the rate of the main goods. A transport business billing its own service follows its own rules.
- Australia and New Zealand GST. Delivery charged with a taxable sale is generally taxable too.
- US sales tax. It depends on the state. Some tax shipping, some do not if it is shown separately on the invoice and is the actual cost, and handling charges are often taxable even where shipping is not.
These are the common patterns at the time of writing, not rules for every case. Mixed orders, with goods at different rates, and exports have their own treatment. Check your tax office's guidance for your country, or your state in the US.
Billing actual cost
If you pass on what the courier charged, bill the net cost if you claimed back the tax on the courier's invoice, then add your tax on the whole invoice once. The reasoning is the same as for any cost you pass on; see reimbursable expenses. If you add a handling charge for packing and paperwork, show it as its own line and say what it is.
The ship-to address
When goods go somewhere other than the billing address, print both: “Bill to” for the company that pays, “Ship to” for where the goods went. The receiving shop or site can match the delivery, and the accounts team can match the invoice. In some countries the delivery address also matters for tax. In India, for example, the place of supply for goods follows where they are delivered, which decides between CGST plus SGST and IGST.
Shipping abroad: say who pays what
For international orders, agree not only the freight but who pays import duty and the importing country's tax. Trade often uses Incoterms, short codes published by the International Chamber of Commerce. A few common ones:
- EXW (Ex Works): the buyer collects from you and pays everything from your door.
- DAP (Delivered at Place): you deliver to their address; they pay import duty and tax.
- DDP (Delivered Duty Paid): you deliver and pay import duty and tax as well.
Write the term and the place on the quote and the invoice, for example “DAP Toronto”. Our post on billing clients abroad covers currency and export tax.
When delivery goes wrong
If goods are lost or damaged and you refund or resend, keep the original invoice as it is. A refund of the goods, the delivery or both goes on a credit note against it. See refunds after an invoice is paid.
The short version
- Agree who pays for delivery, and how much, on the quote.
- Bill it as its own line, with what it was.
- Delivery often takes the same tax as the goods. In the US it depends on the state. Check your own rules.
- Print the ship-to address when it differs from billing.
- Abroad, name an Incoterm so it is clear who pays freight, duty and import tax.