You have successfully built your start up and are the proud owner of an SME. Now you wish to expand your business by exporting and importing internationally, to the EU and beyond.
Businesses that choose to expand and sell overseas could find huge opportunities. However, while selling your goods in the UK is a relatively straightforward process, expanding overseas involves further considerations and legislation.
Trading in the EU
Currently, the EU contains 28 member states, meaning your UK business has access to a huge single market. This is hugely beneficial, as most goods can be traded within the EU in free circulation and will incur no import duty. In addition, the majority of UK goods already meet EU-wide standards, meaning that the hardest part has already been done. Simply source a multi-national courier – such as TNT Direct – and begin trading.
On the other hand, importing and exporting outside the EU requires additional legal, financial and bureaucratic consideration.
Trading Outside the EU
Commodity Codes
When moving goods outside the EU, depending upon the type of goods and where they are coming from/being shipped to, each item will carry a different tax and duty.
The Gov UK website provides a full list of commodity codes, detailing the classification, taxes and duties of all goods. These codes will also provide information about whether a license is required (such as for restricted items) for distribution and customs procedures.
Declarations
The declarations required by law for exports and imports follow a similar process. Both use the Customs Handling of Import and Export (CHIEF) System, with import declarations using a Single Administrative Document (a C88), and exports using the National Export System.
For the latter process, it may be easier to use an agent, who will handle the declaration on your behalf.
VAT and Tax Duty – Imports
In the case of imports, VAT is charged at the same rate as good that have been purchased in the UK, but must be paid to HMRC. However, businesses that are VAT registered can reclaim.
The duty paid on imports varies greatly, depending on country of origin and classification, although there are some goods that qualify for a zero or lower rate import duty.
VAT and Tax Duty – Exports
When exporting goods, businesses can achieve a zero-rating. To comply, goods must leave the EU within 3 months and the business must retain evidence, including departure records, accounting and transaction records, and official export records.
On arrival, goods may be subject to local VAT, customs and tax duties. Depending upon the country’s trading laws, it may be the importer or the exporter who is required to pay..
Exporting and importing goods can be the key to success for many SMEs, opening up new markets and leading to revenue increase, company growth and a rise in profits. The key is to carry out thorough research (especially post-Brexit) and comply with all legal and documentation processes.
