For international retailers selling into the U.S., returns have just become an even bigger, more costly headache than ever before. With recent changes to tariffs and customs regulations, a hidden complication has emerged: transfer pricing. If you’re shipping products from an overseas warehouse and using a U.S. entity to manage your sales, returns now have the potential to be an expensive tax and compliance risk.

In this post, we’ll break down what transfer pricing is, why it matters for U.S. returns, who it affects, and how Refundid makes it simple for Shopify merchants to stay compliant.

What is transfer pricing?

Transfer pricing is a term you may not be familiar with, let’s break it down. At its simplest, transfer pricing is the price one part of your business charges another for goods or services. For cross-border retailers, it usually comes into play when you have:

• An overseas entity that manufactures or holds stock, and
• A U.S. entity that sells products domestically.

For example, if your U.S. store buys a shirt from your EU warehouse for $10 and sells it for $30, that $10 is the transfer price. Setting a consistent and defendable transfer price ensures you stay compliant with tax rules and customs regulations.

Why transfer pricing matters for returns

Before the recent tariff changes, return shipments were straightforward. Shipping a product back to an overseas warehouse didn’t affect taxes or customs duties. But now, returns are treated like cross-border transactions and must be declared accurately. Which is where it gets a little more complicated. 

Here’s why this is tricky:

• The declared price must match your internal transfer price. Customs expects the value on the paperwork to reflect what your U.S. entity paid for the product, not the sale price.
• Mismatched pricing can trigger penalties. If the declared value on a return shipment is higher or lower than your internal transfer price, you could face duties, taxes, or fines.
• Consistency is key. You need a process that ensures every return uses the correct transfer price, every time, without relying on manual adjustments.

For retailers shipping into the U.S., even a few inaccurate declarations can add up to significant costs and potential trouble down the road. 

Who is affected?

Not every international retailer needs to worry about transfer pricing. This issue mainly affects businesses that:

• Sell products into the U.S. from an overseas entity, and
• Use a U.S. entity to manage domestic sales, often to stay under tariff thresholds.

If you’re a small seller shipping directly to customers from Australia without a U.S. entity, transfer pricing for returns is less relevant. But if you’re managing cross-border stock and want to avoid unnecessary duty costs, it’s something you can’t ignore.

How Refundid solves transfer pricing for returns

Managing U.S. returns while staying compliant with transfer pricing rules can be complicated, as the only returns provider that can correctly handle transfer pricing for return shipments, Refundid makes it simple.

Here’s how:

• Reads Shopify product variant metafields. Retailers set their internal transfer prices in Shopify, and Refundid automatically uses this data for each return shipment.
• Ensures accurate declarations. Every return label and shipment declaration matches the transfer price, keeping customs and tax authorities satisfied.
• Reduces risk of duties and penalties. You no longer need to worry about manual errors or mismatched paperwork causing unexpected costs.

Why This Matters for Retailers

Returns can already be a challenge. Add in tariffs, duties, and transfer pricing rules, and it’s easy to see how errors can quickly become expensive. Using a system like Refundid:

• Protects your margins by avoiding unexpected customs duties.
• Ensures compliance with U.S. transfer pricing rules.
• Saves your team time by automating an otherwise manual process.
• Gives customers a smooth, predictable returns experience, so they’re more likely to shop with you again.

Refundid is the only returns solution that integrates with Shopify to automatically apply your internal transfer prices to every U.S. return, ensuring accurate customs declarations, zero surprises, and full compliance. With Refundid, cross-border returns are an opportunity to keep customers happy and your business protected. Book a demo today to learn more!