Exporting goods to customers outside of the United Kingdom is the dream of many small to medium-sized (SME) business owners, as the potential upside, including increased sales volumes and international exposure, are deemed to be well worth the extra paperwork needed to make such a dream a reality.
In this post we’ll briefly outline the three main types of UK exports, as well as provide you with the relevant links you’ll need to get started in the international exporting business.
SMEs Exporting to EU Countries
Goods sent within the EU are described as ‘dispatches’ rather than exports, as they’re deemed to be in free circulation. This is hugely beneficial from your point of view (as an SME owner) as the duty that would normally have to be paid when exporting goods from one country to another is waived.
The same applies to any goods you import from outside the EU (say, from Japan) into the UK, and then dispatch out to another country within the EU, as the Japanese company would have paid UK duty on their goods when selling them to you in the first place, meaning they’re now considered to be in free circulation.
Product standards and regulations are similar across most EU countries, including the UK. In order to pay VAT (Value Added Tax) on dispatches sent within the EU you must take note of each good sold on your VAT return and complete an EC Sales List (ESL). If your dispatches total £250,000 or above you must write an Intrastat Declaration.
Customers who are VAT registered within their own country will have to provide you with their registration number, and you’ll need to keep hold of your dispatch paperwork in order to receive your VAT back. Any customers who aren’t registered for VAT will require you to pay UK VAT on their behalf.
SMEs Exporting to Non-EU Countries
Known as exports to ‘third countries’, exported goods to non-EU countries need to be accompanied by an export declaration and, in certain cases, an export license, with there being a good chance that you’ll have to pay custom taxes and duties for the country in question.
Commodity codes are needed for all third-country exports to classify your goods, VAT must be accounted for on all exported goods to countries outside the EU, with the rate of VAT depending on how said goods are sent, and how they’re collected, and duty charges will be due on all goods exported to non-EU countries dependant on a number of variables.
Indirect Exports
Indirect exports, the act of moving goods through the EU to non-EU countries, requires independent paperwork and procedures depending on the non-EU country in which the goods are due to eventually land.
For each batch of goods your SME wishes to deliver indirectly you must complete an export declaration (despite it being funnelled through the EU) alongside an export license if the destination country requires one.
When exporting to a non-EU country indirectly you won’t need to pay VAT but you will need to keep hold of all relevant paperwork so you can prove your goods originally passed through the EU. Other licences, such as those for trade control and transhipment, may be required.
If this all seems a little daunting, it is worthwhile to note: a freight forwarder or a commercial agent can help you handle the majority of the work when you’re getting your export processes up and running, and your accountant can help you deal with the financial side (including international taxes and duty) of exporting your goods abroad.
Export Tax Experience and Expertise
Here at Tax Agility our experienced accountants can provide you with the expertise you need when it comes to understanding the financial side of exporting your goods abroad.
To speak with a professional to discuss your SME’s current international export ambitions, contact us today on 020 8780 2349 or get in touch with us via our contact page to arrange a complimentary, no obligation meeting.
This blog is a general summary. It should not replace professional advice tailored to your specific circumstance.