Starting to export

1. Overview

If you plan to start exporting, you’ll need to follow the rules depending on whether your goods or services are going to a country:

You can use a commercial agent or a freight forwarder if you don’t want to deal with export procedures yourself.

Contact a UK Trade & Investment adviser in your area for help with starting to export.

UK Export Finance provides small and medium-sized businesses with trade finance and insurance for exporting.

Read about government schemes to help exporters.

You can hire a professional (eg a tax adviser) if you need advice about export duties and VAT.

2. Sending goods and services to EU countries

You don’t have to pay duty and there are no customs checks when sending goods within the European Union (EU). The goods are in ‘free circulation’. This also applies to goods from outside the EU but only if duty has been paid on them.

Exports within the EU are called ‘dispatches’.

Find information on doing business in individual EU markets.

Regulations and product standards are the same in most EU member states. If you sell products in the UK it’s likely that you already comply with standards in other EU countries (eg security for electrical goods).

Paying VAT on dispatches within the EU

You have to:

Your customer is VAT registered

If your customer is VAT registered in their country, they’ll pay the equivalent to VAT for the goods at their country’s rate. You don’t pay any VAT, as goods sent to someone who’s registered for VAT in another EU country are zero-rated.

You’ll need your customer’s VAT registration number for your VATreturn and paperwork proving that the goods have been sent within certain time limits (usually 3 months).

Your customer isn’t VAT registered

You normally have to pay UK VAT on goods you export to customers who aren’t VAT registered. You’ll only be exempt from paying VAT if you’re responsible for delivering the goods and their value is above a certain amount called the ‘distance selling threshold’. In this case your customer covers the VAT.

Distance selling thresholds in each EU country are available from the European Commission.

VAT Helpline
0300 200 3700
Find out about call charges

Paying VAT on services within the EU

You need to charge VAT at UK rates on most services to non-business customers within the EU. If you supply services to a business customer in the EU, you don’t need to charge VAT – the customer is responsible for paying VAT in their country.

There are different rules for some types of service, including:

  • hiring transport
  • land and property services
  • ‘electronically supplied services’ where there’s nobody directly involved in providing them, eg web hosting or music downloads
  • events
  • restaurant or catering services

Paying duty on dispatches within the EU

Goods that have been produced in the EU and are then sent to anotherEU country are in free circulation and you don’t have to pay duty on them.

This also applies to goods from outside the EU if duty has already been paid on them.

ExampleAn importer brings bicycles from China into the UK and pays duty on them. They are now in free circulation. You can buy the bicycles and dispatch them to France without paying duty on them.

If duty hasn’t been paid on goods arriving from outside the EU you have to follow the rules for importing goods from non-EU countries.

Commodity codes

You need a commodity code for goods not in free circulation. The code classifies your goods for duty, tax rates and regulations, eg licences.

Check if you need a strategic export licence for some controlled goods, eg military, defence or security related goods. This also covers Dual Use goods that can be used for both civil and military purposes, eg some software. If you do need a strategic export licence, read the guidance first then apply using SPIRE.

 

3. Exporting to non-EU countries

Exports to countries outside the EU are called exports to ‘third countries’. You need to submit an export declaration for these and may need an export licence.

You might also have to pay custom duties and taxes in the destination country.

Export regulations vary, depending on the country you’re exporting to.

Find information on doing business in non-EU markets.

Commodity codes

You need a commodity code for all exports outside the EU. The code classifies your goods for duty, tax rates and regulations (eg licences).

Export licences

Sometimes you might need a licence for exporting goods to a third country. For example, agricultural goods or valuable antiques often need one. You’ll have to get the licence from the relevant government organisation, eg the Department for Environment, Food and Rural Affairs.

Check if you need a strategic export licence for some controlled goods, eg military, defence or security related goods. This also covers Dual Use goods that can be used for both civil and military purposes, eg some software. If you do need a strategic export licence, read the guidance first then apply using SPIRE.

Export declarations

If you want to export goods to a third country, you must submit an electronic export declaration. You do this by:

Many businesses use an agent called a freight forwarder to handle these declarations for them.

Special rules apply if you’re moving goods via other EU countries before exporting them to a third country. This is called ‘indirect exports’.

There is more information on submitting declarations through NES.

Paying VAT on exports overseas

You can zero-rate most goods you export to non-EU countries, but you must:

You need more detailed records if your customer collects the goods from you.

Services

You don’t charge VAT for services you export outside the EU.

Paying duty on exports to third countries

Duty charges are set by the country you export to and depend on the type of goods, where they come from and their value.

The UK Trade Tariff lists the duty charges, tax, custom rules and paperwork for exports to third countries.

You might be able to claim duty charges and VAT back or delay payments for some exports outside the EU.

This is called ‘duty relief’ and there are a number of schemes you can apply for. Some countries have trade agreements with the EU that allow you to export at lower or zero duty rates. In these cases you must usually be able to prove where the goods originally come from.

Check if there are embargoes or sanctions against exporting certain goods (eg military, defence or security related goods) to individual countries.

4. Exporting via other EU countries

Moving goods through the EU to non-EU countries is known as‘indirect exports’.

Indirect exports need special procedures and paperwork, which generally depend on the final destination of your goods:

  • you must fill in an export declaration – even though the goods are initially moving through an EU country
  • export licences and other controls will depend on the destination of your goods
  • you won’t have to pay VAT on goods exported outside the EU, though you’ll have to show proof that the goods actually left the EU
  • you’ll need a trade control licence if you’re moving strategically controlled goods (eg military or defence) between 2 non-EUcountries
  • you might need a transhipment licence if you arrange the shipment of goods through the UK

Check if you need a strategic export licence for some controlled goods, eg military, defence or security related goods. This also covers Dual Use goods that can be used for both civil and military purposes, eg some software. If you do need a strategic export licence, read the guidance first then apply using SPIRE.

 

 

Author: MixoBiz

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