If you’re thinking about expanding and exporting, our guide covers off key factors that you’ll need to consider.
Exporting can provide huge opportunities to businesses large and small. By exporting to other countries, you can tap into new markets and reach more potential customers, make more revenue, and boost brand awareness. And, the more countries you successfully sell in, the stronger your business profile can be – especially from the point of view of potential investors.
But, there are some downsides too. Factors such as different legal or regulatory rules might affect, for example, how you advertise, package and transport goods). Time zones and other geographical differences, especially language barriers, can cause communication issues between you and you customers. And, although problems can occur when transporting your goods or offering your services around the UK, the likelihood of this increases the further away your target customers are located. In addition, costs such as exchange rate fluctuations, insurance, import duties, labelling rules and taxes, for example, can impact on profits, if they aren’t taken into account from the start.
However, it’s easier now than ever for SMEs to export successfully with ease and confidence – with not only the ease given by technology but also with campaigns such as Exporting is GREAT, which features export opportunities worldwide and across all sectors.
We recommend that you seek tax advice on any export arrangements that you plan to put in place.
If you're exporting goods from the UK within the EU, you must...
1. Check if you need to get an export licence, or to follow special rules.
Not all goods require you to do so, and this usually depends on the type of product you’re exporting. You can find out more about this here.
2. Complete a proforma invoice
This will be requested by your courier or freight-forwarder, and you should charge VAT on this invoice in exactly the same way as you would in the UK. This proforma invoice should then be attached to your consignment, along with your export licence, if you need one.
3. Keep records
You'll need to keep your official paperwork, including your proforma invoices and copies of licences, for 6 years from their date of issue.
4. Declare goods of over £250,000
An Intrastat Declaration is relevant if, in the last calendar year, you moved more than £250,000 worth of goods to other EU countries.
You only need to do this if you’re registered for VAT in the UK, and you can do it by filling in an Intrastat Declaration.
Once you’re registered, you must make monthly Intrastat Declarations.
Goods that count towards the £250,000 threshold include goods that are:
a) Bought or sold
b) Leased, hired or loaned
c) Supplied free of charge or supplied as part of a contract for services
d) Transferred between two branches of your business that are based in different EU countries
e) Moved in or out of the UK to be used in construction.
But you don’t count services or any goods that you’re only taking out of the UK temporarily.
5. Register for VAT in the country you're selling to
But only if all 3 of these apply:
a) You're distance selling (online, by post, phone, or fax)
b) The total value of the goods is over the country's distance-selling threshold
c) You're selling to consumers (B2C), rather than to other businesses (B2B).
If you're exporting goods from the UK outside of the EU, you must...
1. Research your export market
Ensure you’re up to date on the import rules of the countries you’re exporting to.
2. Check if you need to get an export licence or to follow special rules
As some goods are considered restricted in some countries.
3. Get a commodity code
This goes on your commercial invoice and determines what customs duties you’ll be required to pay.
4. Register for an EORI number
You’ll need an EORI number to trade with businesses in countries outside of the EU. EORI stands for HMRC’s Economic Operator Registration and Identification Scheme.
It’s an important identity code used in custom’s entry declarations and customs clearances for both import and export shipments travelling to (or from) the EU (to or) from countries outside of the EU. It must be included on all pre-arrival and pre-departure information accompanying goods entering or leaving the customs territory of the EU and it enables customs authorities to track and authenticate consignments.
You can apply for one here and it should take around 3 working days to process. (UK numbers start with the prefix ‘GB’ and are then typically followed by a 12-digit number that incorporates a trader’s VAT number.)
5. Complete a commercial invoice
If like most businesses, you use a courier or freight-forward to import goods from overseas, this will be requested by your courier or freight-forwarder, and you should enter the value of your goods as the price you’re selling them for and list any freight or export insurance separately. If you’re including free samples with your package, enter these into the invoice as the market value.
Most courier or freight-forwarders’ websites will have detailed guidance on how to complete your commercial invoice, but in general, they’ll include:
• The shipper and consignee’s name, address and phone number
• The reason for the export, and the terms of sale
• What the package includes: including a description of the contents and what it’s use is
• If applicable, tariff codes
• Where the contents were manufactured
• How many units there are in the package, how many packages there are, and how much they weigh in total
• The value (the purchase price) of each unit, and a total value of whole package
• Number of packages and total weight
• The signature of the sender
• The date
6. Attach the commercial invoice to your consignment
It’ll be used by your courier or freight-forwarder to make an official customs declaration (you can do this yourself, but it can be complicated and your goods can be delayed in customs if the information isn’t correct – so we recommend that you get your courier or freight-forwarder to handle this for you).
7. Keep records
You'll need to keep all official paperwork, including your commercial invoices, for 6 years from their date of issue.
8. Pay VAT and duty
You'll need to pay the rates of those of the countries you’re exporting to, but you won’t usually be required to pay UK duty as well. You may be able to zero rate (meaning that you can charge 0% tax on your VAT-taxable goods) if your business is VAT-registered in the UK.
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