Exporting to the EU for international sellers

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We thought that it would be useful to put together a quick and simple guide for businesses in the USA, Asia and the rest of the world who are looking to import into the UK. Our fulfilment service is used by many clients all over the world who trust us to pick and pack their European orders everyday.

The UK is a popular choice for overseas sellers as a place of import, especially for US companies who won’t need to translate their products, yet with very good postal rates to Europe it can act as a useful stepping stone to other markets.

What do I need to register for to sell in the UK/EU?

There is no requirement to register your business

Provided that you do not have any permanent staff in the UK, nor a UK office then there is no requirement to register your business. This means that you won’t be required to pay any Corporation Tax, nor complete any annual filings or tax returns to the UK Government.

When you must register for VAT

From 1 December 2012 you must register for Value Added Tax (VAT) unless you have a UK incorporated company or a UK office. You can register for VAT without the need to register a UK company.

Once registered, you will need to charge VAT (usually 20%) on all qualifying sales within the EU, and make a quarterly or monthly return to HMRC. Registration can take 2-3 weeks and this is best done through a chartered accountant, who will also be able to help with your quarterly returns and other reporting such as EC sales lists.

What does it cost to import to the UK/EU?

When you import from outside the EU to the UK you will always be liable for import duty which varies dependent on the product you are importing and where it was made. You will also need to pay VAT on the import (usually 20%). While there are ways to ensure you don’t pay too much tax, there is no way to avoid these charges. No matter how the goods arrive, duty and VAT must be paid in full before customs will release the goods. You can recover the VAT later, by offsetting against sales.

Importer of Record

Unless you are sending small shipments by post or carrier – something many smaller businesses choose to do for simplicity – you will need to appoint an Importer of Record who will be responsible for the goods and the duty and tax payable. This need not be the supplier of the goods but generally it is, as few companies will take responsibility for someone else’s duty and tax.

Obtaining an EORI number

To become an Importer of Record you will need Economic Operator Registration and Identification (EORI) Number. If you are VAT registered then application is fairly straight forward and usually takes only a few days as you can simply apply for your VAT number to be enabled for EORI. This will also allow you to claim back the import VAT against any future sales.

If you are not registered for VAT, then it will usually take 2-4 weeks to register as an Economic Operator and obtain an EORI number.

Using a freight forwarder

A freight forwarder or customs clearance agent won’t reduce the amount of tax you have to pay, but they will ensure that your goods are charged correctly and clear customs  quickly without storage costs or penalties (both of which can be expensive). Their fee will usually range from £50-100 upwards depending on the complexity and size of the import.

Items sent by courier (e.g. DHL, TNT, FedEx) or by post will be cleared by the courier or post office on your behalf and so there is no need to use a customs agent unless you need help preparing the shipping documents.

EU and international sales

Exporting to the EU from the UK

If you wish to sell your imported goods to a private individual in the EU there are no additional taxes or duties to pay for the recipient or the sender – other than UK VAT which you would need to charge anyway. This is because the EU is a free trade zone and so there are no customs borders. Do note however, that a few European countries, are not in the EU.

If you are selling to another VAT registered business in the EU, again there is no import duty and you do not need to charge them VAT provided you put their VAT number on the invoice.

Exporting from the UK to the rest of the world

If you are selling goods from the EU to the rest of the world, then the recipient will need to pay any local duties or taxes in their country, however no UK VAT should be charged on the purchase. You will need to ensure the fulfilment company you use maintains adequate records to provide the necessary proof of export (in the event of inspection).

Please note that this article is a guide only, and it may not represent all situations. You should always seek professional advice from a specialist tax adviser.

If you would like to learn more about importing to the EU, why not contact one of our consultants today?