Do you currently trade with the EU under EXW or DDP terms?
Incoterms® define where the risk, responsibility, and cost transfers from the seller to the buyer. If you are currently using EXW or DDP to trade with EU buyers and suppliers, this will have implications when the UK leaves the EU. Using the terms above may mean that you need to register for VAT in another EU member state.
Delivered Duty Paid (DDP)
When using DDP the seller is responsible for the export and import customs clearance as well as paying duty and VAT in the buyer’s country. If you’re selling on this term you may need to register for VAT in the buyer’s country as well as registering for an EORI number in that EU country and find an agent who is willing to act as a indirect representative on your behalf for customs clearance purposes. You may also need to appoint a VAT agent or fiscal representative depending on the country. Therefore, you may need to act quick or review the term your company are using.
EX Works (EXW)
This means that the buyer is responsible for loading and arranging onward transport for the goods as well as the customs clearance. Whilst we are in the transition period customs declarations are still not required for the EU and VAT is handled on a reverse charge basis. However, when exporting to non-EU countries VAT is zero-rated and a customs declaration is required as proof that the goods have left the country, so you are not liable for VAT. As a seller you are not responsible for the documentation, but you will need a copy of this documentation as proof that the goods have left the country for VAT purposes.
If you are impacted by any of the above you can contact our International Trade Team at firstname.lastname@example.org and also attend our Virtual Incoterms Training on 12th June, 9.30am-12.30pm where you will have the opportunity to hear more about the above and ask any questions.