Selling to overseas customers

[FRCOLLINS]

UK business - I would appreciate some advise; I am setting up a new website to market and sell a new tool product I have developed. These products will be sold to end users in many countries for example: USA, Canada and Australia. If I am lucky enough to secure a sale to a customer in any of these countries through the website and collect payment, do I simply post the product of to them or is there import procedures I have to go through?

Thank you.

[JamieM]

Hi,

I will run through the basics but there may be additional issues depending on exactly what you are doing.

If you are not VAT registered then yes you can just post them to customers in any country. The only thing you need to consider is that customers outside of the European Union *may* be charged customs duties and local taxes by their countries customs organisation. These are the responsibility of the customer as technically they are importing the product. However it's a good idea to let them know about this as some who are not used to buying from overseas get a nasty surprise and will be unhappy. If using Royal Mail sending to a country outside the EU you need to complete a CN22 customs declaration sticker available from the Post Office. This just details a description of the product and value for customs at the other end. If using a courier (outside the EU) you need to complete a commercial invoice to accompany the parcel. Each country is different and have different alowances for tax free imports.

If you are VAT registered you need to be aware that you charge VAT to all countries in the EU but do NOT charge VAT to countries outside of the EU. The same applies with customs declarations and commercial invoices and you also need to be able to provide proof of export for orders sent outside the EU, otherwise HMRC may charge you VAT on these sales at a later date.

If another VAT registered business in the EU places an order they can submit their VAT number to you and you can zero rate the VAT on their order. i.e. you don't charge them any VAT, they account for it in their own country and you have to record this on your VAT return and complete an EC Sales List which HMRC will either already have sent you or you can request one. I think you can do it online too now.

For sales to the EU you charge VAT at the UK rate unless you reach the distance selling threshold for a particular EU country. For example, if you have great success selling to Ireland and your sales exceed €35,000 then you have to register for VAT in Ireland and from there you would charge the Ireland rate of 21% and account for that VAT in Ireland. I'm not 100% sure if that is the current threshold for Ireland but I think it is.

One to watch out for is the Channel Islands, they are not part of the EU so you don't charge them VAT and have to complete the CN22 or commercial invoice.

This all might sound a bit complicated but it is actually quite simple once you get your head round it. If you want any clarification on any points don't hesitate to ask.

Hope this helps.

Edit: Just to be absolutely clear the EU does not mean Europe, it is only member states of the European Union.

[FRCOLLINS]

Many thanks, JamieM

Your reply covers all aspects of my quiry in a very understandable way.

By the way you have some great websites.

Cheers for now :)