If you want to sell your wares overseas, you need to decide how you’re going to distribute them. You might opt to sell them directly, e.g., via the internet, local trade shows or you might even open your own local office, but many businesses prefer to connect with a partner who knows the local market. Options include the use of a:
Ensure a contract is in place which clearly sets out terms and responsibilities involved in exporting or importing your products. The contract terms should ideally use Incoterms, which are standard trade definitions most commonly used in international sales contracts. The contract should cover:
For some goods – such as art, chemicals and military technology - you require a licence to export them. Different countries have different licence requirements so you’ll need to check with each country you are exporting to.
Most goods can be freely sold within the EU without customs controls or charges but do add a commercial invoice and a packing list (if appropriate) to every shipment.
Exports sold outside the EU need to be declared to HMRC. This be done electronically, using the National Export System (NES), or using the paper-copy Single Administrative Document (SAD). The declaration includes details of the classification of the goods being exported and which country they are going to. Alternatively, an authorised agent or freight forwarder can handle the customs declaration for you.
Exports are usually zero-rated for VAT purposes. Ensure you retain copies of your VAT invoices and proof of export so you can avoid paying output VAT on them.
You have to fill out an Intrastat supplementary declaration if your sales to EU countries exceed an annual amount. Exports to non-EU countries outside the EU do not count towards the Intrastat threshold.
Different countries might demand that you have different documentation before they’ll let you import your goods. You, will often, for example, need a commercial invoice as well as shipping documents and a certificate of origin.
Profits on exports by UK businesses are usually taxed in the same way as any other profits. If you have an overseas presence, this could mean profits are liable both to UK tax and to tax in another country. If so, you may be able to claim double taxation relief.
There are a variety of different goods – including firearms, food and textiles – for which you will need an import licence. Whether you need a licence may also depend on where the goods are from.
Little paperwork is required if you are importing from the EU, though you should have a copy of the invoice to be delivered with your goods. If you are importing from outside the EU, you normally need an invoice and a copy of the transport documentation, such as a bill of lading, for customs clearance. For goods worth over £6,500, a valuation statement is also usually required.
To claim the reduced or zero rate of import duty which you’re entitled to when you import goods from certain countries, you will need documentary proof of origin.
Imports can be declared using a Single Administrative Document (SAD), on which you must provide details of the goods using a "commodity code" which dictates the import duty rate. Most importers use a freight forwarder or customs agent to handle customs clearance.
VAT on imports from outside the EU is payable to HMRC at the same rates as UK goods. If you’re registered in the UK, you can also reclaim the VAT in the same way as for goods bought in the UK. Instead of having a VAT invoice from your supplier, HMRC provides a form showing the VAT paid. When goods are bought from a supplier within the EU, you account for VAT on your VAT return. If the purchases from EU countries exceed a certain annual amount you must also complete the Intrastat supplementary declaration.
There are a number of schemes that offer importers and exporters relief of duty, suspension of duty, or repayment of duty. Under some relief schemes such as Inward Processing Relief, Free Zones and ATA Carnets, excise duty and import VAT can be suspended while your goods are in the EU. You can apply for the reliefs by contacting HMRC.
It can be difficult and expensive to take legal action to enforce payment in foreign jurisdictions so before you agree to do business with an overseas business, do all you can to ensure they can and will pay. This could involve:
There are four main transaction types for overseas customers.
Payment in advance – the least risky option, this involves taking payment before dispatching goods.
Documentary credits/ letters of credit – another safe option, your customer arranges a letter of credit with their bank, which pays a bank in the UK once you complete the necessary paperwork and the documents are accepted.
Documentary collection – payment is due when your customer accepts ownership of your goods. Your bank draws up a bill of exchange which allows you to retain ownership of the goods. Your customer can take the goods once they accept the terms of the bill.
Open account – the riskiest option, you supply the goods and invoice the customer, saying when you expect to receive payment.
The main payment types for international transactions are:
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