There are several actions businesses can take in preparation of a no-deal Brexit and these articles are designed to help you through them.
For businesses who never exported outside the EU, a no-deal Brexit is going to be a steep learning curve. However, don’t worry, it is likely that you already have all the skills you’ll need across your business functions. We’ll show you how to use them.
Who will be responsible for the export or import declaration?
Here are examples of questions we receive:
- We are a UK company and we have clients in Germany, will we have to do customs declarations?
- We import goods in Scotland from the EU, will we have to clear the good through customs?
- Our supplier in the UK is providing us with raw material, do we need to do a customs declaration in Spain?
So who is responsible for the customs declarations, is it the buyer or the seller?
It depends on your commercial agreement.
For each movement of goods there will be at least two customs declarations:
- For exporters: an export declaration out of the UK and an import declaration in your customer’s EU country.
- For importers: an export declaration in your supplier’s EU country and an import declaration in the UK.
Customs declarations trigger compliance requirements and, for import declarations, duties and taxes.
For new exporters, it is often easier (and safer) to let customers do import declarations in their own countries. It will be easier for them to comply with their local rules, pay EU import duties and local VAT. In the same way, it will be easier for buyers to let their EU suppliers carry out export formalities in their own countries.
In fact, you have several options to choose from and you’ll find them in the “Incoterms®”. These are international commerce terms (FOB, CIF, DDP…) published and maintained by the International Chamber of Commerce. They serve as an internationally recognised standard in global trade. They define the role and responsibilities of each party (the buyer and the seller) and cover the transfer of costs and risks.
So to determine who is responsible for the customs declaration, you need to select your Incoterms.
Alegrant’s points for considerations?
- Update your knowledge and get very familiar with Incoterms, this is the cornerstone of your cross-border movements of goods. They are based on trade practices so they are easy to understand and to use.
- Get a copy of the Incoterms for the office (link to the International Chamber of Commerce below).
- Send your sales, purchase and logistics people on training on Incoterms at your local chamber of commerce so they understand the consequences of each terms.
- Get your team to review your intra-EU contracts and purchase orders:
- Do you have incoterms in your current contracts or in your T&C’s? (Sales and Procurement)
- Do the Incoterms or the terms used in your agreement state whether you are responsible for customs clearance? (Sales and Procurement)
- Will your current terms be appropriate for your current experience and capabilities in customs clearance? Are you not taking on too much responsibility or risk i.e clearing goods in a foreign country? (Sales, Procurement, Admin, Finance, Logisitcs)
- What are the most appropriate incoterms for your business, your customer, your supplier? (Sales, Procurement, Admin, Finance, Logistics)
- Will your customers or suppliers accept a change in your contract, the inclusion of incoterms? (Sales and Procurement)
- How will the change of terms affect your cost base given the potential for new import tariffs, VAT changes and other costs of trading? (Sales, Procurement, Admin, Finance, Logistics)
- How will the change affect the mechanism for pricing, buying price, cost of the goods sold, profit? (Sales, Procurement, Admin, Finance, Logistics)
Get the Incoterms right and you are on solid ground for trading in a safe and profitable manner.
Reference: Incoterms ICC
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