IntroductionAimed at traders, this guide will give you specific information relating to export procedures to countries outside the European Union (EU).
IntroductionHMRC defines an export as goods transported from the UK to a destination outside the EU. Countries outside the EU are known as third countries. Traders who export goods to countries outside the EU must ensure they have the appropriate licences where they are required and make export declarations to customs through the National Export System. You must also make sure that VAT, import taxes and duties in the destination country are paid where necessary, and follow transport procedures, though this is normally the responsibility of the importing person or company. There are a number of export procedures, such as duty relief schemes which can benefit businesses.
VAT on exports and other taxesWhen a third country, meaning a country outside the European Union (EU), receives your goods, it may charge duty. A third country may also charge an equivalent of VAT or purchase tax.Ultimately, the VAT treatment will depend on whether youre exporting the goods directly or indirectly, when you organise delivery and when your customer arranges collection.
VATYou can usually zero-rate goods you are exporting out of the EU as long as you: Ensure they leave the EU within set time limits (typically three months). Keep satisfactory evidence of their departure. Hold sufficient evidence from your accounting records to prove that a transaction has taken place. Keep official evidence of export - either the Goods Departure Message for goods leaving the EU direct from the UK (direct exports) or, for goods leaving the EU via other member states (indirect exports), an Export Accompanying Document (EAD). The EAD must be stamped by customs in the last member state where the goods exit the EU - the Office of Exit.
VAT returns and IntrastatEvery business trading within the EU has to declare its sales on its VAT return. In addition, if your sales of goods exceed the applicable threshold during a calendar year, you will also have to submit Intrastat returns each month.
Common Agricultural PolicyFor exports of agricultural goods and processed foods covered by the Common Agricultural Policy, you may be entitled to a refund or required to pay a levy. See our guide on exporting CAP goods. You may also have to apply for a licence to export certain goods above a defined quantity.
Origin RulesEven if your customer is responsible for paying duty on the goods in the destination third country, you need to provide the right documentation. Third countries may have import duty regimes in place, but in some countries your exports may qualify for a reduced rate of duty or be classed as duty free. Youll need to provide evidence of the products origin to claim the benefit.
The TariffThe Integrated Tariff of the UK (the Tariff) is the official HMRC guide to importing and exporting taxes and duty. The Tariff contains the codes and customs requirements you need for import and export paperwork.Ultimately, third country duties are based on the type of goods youre exporting, their origin and their value, all of which are subject to change in the destination countries. In addition to the Tariff, you can also check with UK Trade & Investment or the destination country about what taxes are to be paid and whether the exporter or importer is obliged to pay them.
Export licences and other controlsExports of some goods are controlled. You may need to apply for a licence, or comply with specific regulations.Weapons and other goods and technologies with a potential military use may require an export licence from the Department for Business, Innovation & Skills (BIS). If goods are to pass through more than one country, you are likely to need a licence for each transit country.
Export licences and other controlsAll military controlled items and some highly sensitive dual-use goods need a licence, even if the export is made to another European Union (EU) country. Some may be subject to sanctions or embargoes with total or partial bans on exporting such goods to named third countries.Less sensitive controlled dual-use goods exports need a licence if shipped outside the EU.
Export licences and other controlsControls also apply to the brokering - which can include warehousing and shipping - and transport of dual-use goods. In addition, UK nationals who trade outside the UK in strategically controlled goods between overseas countries may need a trade control licence through the UK.There are wider restrictions on exports to countries subject to sanctions.
Export licences and other controlsAgricultural products and processed foods typically require a Common Agricultural Policy licence from the Rural Payments Agency (RPA). They may also be subject to a refund or a levy.Exports of valuable antiques and works of art may need a licence from the Export Licensing Unit of the Arts Council..Exports of dangerous chemicals outside the EU may need to be notified in advance to the Health & Safety Executive (HSE) and BIS. Businesses that trade more than one tonne of chemicals a year must register with the new EU chemical management agency REACH, based in Helsinki.
Export declarationsWhen you transport goods out of the European Union (EU) with the intent to permanently export those goods, you must first submit an electronic export declaration via the National Export System (NES), part of HMRCs Customs Handling of Import and Export Freight (CHIEF) system. Exceptionally, a paper export declaration known as a C88/ESS may be used for, for example, merchandise carried in hand baggage (MIB). Indirect exports (ie those moving from the UK but exiting in another Member State must be accompanied by an Export Accompanying Document (EAD). This page explains what to do and, depending on the type of export, other procedures you may have to follow.
Export declarationsYoure not generally required to complete an export declaration for goods being sold within the EU. There are exceptions, for example sales to international organisations, which are treated as exports and exports to special EU territoriesWhen you export goods out of the EU to third countries, you can usually zero-rate the goods for VAT purposes.
How to make the declarationYou will need to have an Economic Operator Registration Identification (EORI) number and register for NES, which you can then access via: Email - not to be used for CAP declarations A web form via the HMRC website XML Community System Provider (CSP) and software houses A paper declaration that HMRC staff will input for you in exceptional circumstancesYou can use an agent, for example a freight forwarder, to make the declaration on your behalf. This can make exporting simpler and faster if youre not authorised to make electronic declarations yourself.
How to make the declarationThe declaration allows HMRC to check that youre complying with export controls, for example licensing requirements, duty and VAT.There are special arrangements for Common Agricultural Policy (CAP) goods, for which you may be entitled to a refund.
How to make the declarationTraders must classify their goods as part of the declaration, including a commodity code and a Customs Procedure Code (CPC). A CPC identifies the nature of the movement of exports. It also describes the purpose of your shipment and informs HMRC about the duty liabilities on the goods. Volume 2 of the Tariff contains a full list of commodity codes and volume 3 contains details of CPCs. You must also provide a reference for the goods, known as a Unique Consignment Reference.Incoterms - internationally recognised trading terms - clarify the obligations of exporter and customer as to who bears the costs of international transport and auxiliary services and responsibility for presenting
How to make the declarationIncoterms - internationally recognised trading terms - clarify the obligations of exporter and customer as to who bears the costs of international transport and auxiliary services and responsibility for presenting documentation. For example, the Ex-Works Incoterm places minimal duties on the seller.Safety and security regulations require you to pre-notify goods due to leave the EU within set time limits ahead of their departure. If you complete normal export declarations, you will be covered, but if youre not declaring them in the usual way, you must complete an Exit Summary Declaration.
How to make the declarationHMRCs Authorised Economic Operator (AEO) scheme allows registered companies to take advantage of the simplified customs procedures that relate to the security and safety of their goods in transit. Businesses will need to have an EORI number before they register for the AEO scheme.
Merchandise in Baggage (MIB)If youre taking commercial goods out of the EU in your baggage, you must declare the goods electronically to CHIEF or exceptionally you may complete a C88/ESS. You can have the declaration stamped by customs when you leave the EU as proof of export to zero-rated goods for VAT, however submitting and clearing a paper export declaration at the port or airport will take longer than if the export declaration was submitted electronically to CHIEF.
International Road Transport If you need to move goods through several countries, you may be able to use the Transports Internationaux Routiers (TIR) procedure to allow your goods to pass through borders with minimal customs intervention. All traders moving goods across the EU under the TIR procedure must also submit an electronic customs declaration using the New Computerised Transit System (NCTS). Moving goods out of the EU via other EU countries is known as indirect exporting.
Temporary exports If you want to temporarily export goods from the EU - for example samples for an exhibition, you can do so by using a temporary export Customs Procedure Code (CPC) in your declaration to NES, or move the goods under an ATA Carnet. The ATA carnet will simplify their export and temporary import into the third country destination. This type of carnet is valid in most major countries and will enable deferment of up to a year of import duties and that might otherwise have applied.
Declarations for exports by post If you export goods out of the EU by post, you must complete and attach a CN22 customs declaration (for goods worth up to £270) or CN23 for goods of higher value. You will need to retain evidence of posting in order to zero-rate the goods for VAT purposes.
Moving goods through the EU tonon-EU countries (indirect exports) Indirect exports - the dispatch of goods via a European Union (EU) country or countries to a third country destination - require special procedures and paperwork. Indirect exports are controlled by the Export Control System which is an EU wide system implemented in July 2009. Indirect exports (whether they are by air, sea or road) must be accompanied by an Export Accompanying Document (EAD) which has a Movement Reference Number (MRN) and Barcode which can be scanned at the Office of Exit in the last member state before the goods exit the EU.
Moving goods through the EU tonon-EU countries (indirect exports) The UK treatment of indirect exports generally depends on their final destination: If youre exporting to a country outside the EU, you must complete an export declaration - even though the goods are initially being sent through another EU country. Export controls and licensing requirements will depend on the final destination of the goods. Goods exported to a customer outside the EU can be zero- rated for VAT even if they initially travel through other EU countries. However, proof of the goods actual departure from the EU will be required.
Moving goods through the EU tonon-EU countries (indirect exports) When exporting outside the EU, you must complete an export declaration, even if the goods are being sent through another EU country first. Indirect exports must be Arrived on CHIEF before they leave the UK. Arrival is the technical term by which goods are presented to Customs via an export declaration - once you have completed this stage, CHIEF will give you permission to progress (also referred to as P2P) your shipment. Failure to comply can lead to trouble in other countries, and even the rejection and the return of your goods. Exporters must also print an Export Accompanying Document to travel with the goods to the Office of Exit.
Moving goods through the EU tonon-EU countries (indirect exports) Depending on their final destination, you may need to satisfy other regulations and obtain other export licences. Indirect exports can only be zero-rated for VAT if you can prove the goods have been exported.
Moving goods through the EU tonon-EU countries (indirect exports) In the UK the export declaration submitted electronically to CHIEF will include all the safety and security data required under the Export Control System (ECS). It is therefore a combined declaration ie fiscal and ECS safety and security data are combined on the UK export declaration. In the UK you do not need to submit separate safety and security information to the ECS - CHIEF will pass the relevant data to the EU ECS system. Once your declaration has been accepted by CHIEF a Movement Reference Number (MRN) will be issued. This can be used to track the movement across the EU to exit and must be closed on the ECS system by scanning the barcode relating to the MRN at the Office of Exit.
Moving goods through the EU tonon-EU countries (indirect exports) The safety and security legislation that came into force in 2009 set minimum time limits for the lodgement of Export Declarations ahead of their departure as follows: For deep sea containerised cargo, at least 24 hours before the goods are loaded For short sea containerised cargo, at least 2 hours before leaving the port For air traffic, at least 30 minutes before departure from an airport For rail and inland waters traffic, at least 2 hours before departure For road traffic, at least 1 hour before departure For supplies for ships and aircraft at least 15 minutes before departure
Outward processing relief (OPR) This relief may be used if youre re-importing goods that have previously been exported from the EU for processing in a third country (a country outside the EU). It enables you to pay import duties on the value added to the goods in the third country instead of the full value of the goods. You need to be authorised by HMRC to claim OPR.
Community system of duty reliefs(CSDR) CSDR is the name for a group of reliefs that promote culture and science. You need to keep records to claim relief on a variety of goods including charity goods, museum exhibits, research equipment and trade samples.
Onward supply relief (OSR) UK VAT-registered traders can claim VAT relief for goods imported into the UK from outside the EU if goods are being moved through the EU to another EU country. To apply for TA, CSDR or OSR, use the correct six-digit Customs Procedure Code (CPC) on your export paperwork. CPCs can be found in the Tariff.
Preferential trade agreements If you are exporting to a third country, which has a preferential trade agreement in place with the European Union (EU), you need to provide your customer with proof of the origin of the products in order to support the claim to preference at the time of importation. You must normally complete a Form EUR1. However, if the value of the goods is below a specified value, you can include the origin declaration on an invoice. You can also apply to become approved to make your own preferential origin declarations on invoices for consignments of any value.
Preferential trade agreements Some countries require a Certificate of Origin showing that the goods originate in the EU in accordance with non-preferential rules of origin. Your Chamber of Commerce can issue the certificate for a fee. Many Arab countries require exporters to supply an Arab- British Certificate of Origin with each shipment of goods. The certificate must be authorised by the Arab-British Chamber of Commerce, who work with chambers of commerce countrywide. You will need to allow sufficient time for this procedure. There are other reliefs which you may be eligible to claim on exported goods. These include customs duty and Common Agricultural Policy charges.
Key export control documents This page is a summary of the declarations and other paperwork youll need to complete before your goods are exported, as well as other types of documents you may need for exports to specific countries. Most export declaration (99.98 per cent) are now submitted electronically to CHIEF. A paper Single Administrative Document (SAD) known as a C88/ESS may be used exceptionally for some exports from the UK. This should be submitted to Customs (National Clearance Hub) for manual input into CHIEF. These declarations will take longer to process and clear than those submitted electronically to CHIEF.
Merchandise in Baggage (MIB) MIB is a declaration that passengers use to export commercial goods and samples theyre carrying with them outside the European Union (EU). An electronic export declaration or, exceptionally a paper C88/ESS must be completed. A copy of this or the Export Accompanying Document (EAD), and have the EAD stamped by customs as evidence of export, so that you can zero-rate the goods for VAT. This may add to delays, so leave sufficient time at the port or airport to complete these processes
ATA carnet You can temporarily export some goods for use outside the EU using an ATA carnet. ATA carnets are issued in the UK by chambers of commerce and industry.
EUR1In some countries, your goods may qualify for reduced import duty. You must provide documentary evidence of the products origin to claim relief. If you claim preference for EU originating goods, you need to complete form EUR1. However, if the value of the goods is below a specified amount, you can make the preference declaration on the commercial invoice.
Non-Preferential Certificate ofOrigin Some countries require a certificate of origin showing that the goods come from the UK. This establishes that the goods have been wholly produced in the UK, or made in accordance with specific rules. Your chamber of commerce can issue this for a fee.
Arab-British Certificate of Origin Many Arabic states require exporters to supply an Arab- British Certificate of Origin with each goods shipment. This must be authorised by the Arab-British Chamber of Commerce, who work with chambers of commerce countrywide.
Health certificates for live animals,animal products and genetic materials Exports of these goods are subject to health conditions agreed between the UK and the destination third country. Generally, the destination country sets the conditions for imports. While the Department for Environment, Food and Rural Affairs (Defra) is responsible for issuing export health certificates, exporters must check with their customers that a particular certificate is acceptable to the authorities in the country of destination. To find out if a particular animal or product can be exported to a particular destination country, exporters should contact their local Animal Health and Veterinary Laboratories Agency office.
Health certificates for plants Most third countries require plant exports to be accompanied by a phystosanitary or plant health certificate issued by your local the Plant Health & Seeds Inspectorate.Standards certification for medicaldevices Medical devices should be accompanied by a Certificate of Free Sale from the Department of Health, confirming that the products meet UK and EU standards.
Licences for military, dual-use andtechnology products Exports of military, dual-use and some technology goods are strictly controlled. You may need to apply for a licence, possibly even to other EU countries. UK Trade & Investment offers a range of market intelligence and export support services. If you are trading in a third country outside the EU and there are unrealistic or illegal trade barriers which make trading difficult in your customers country, you can appeal to the EUs Complaint Register service. This is a single entry point where you can request clarification on third-country tariffs, import formalities, documentation and other measures. You can also make complaints if you think trade barriers are imposed unfairly.
FormalitiesAll the information provided is for informational purposes only and you should seek specialist personalised advice as required. As such, we accept no liability for the actions taken by the readers of this slideshow.All information was provided by Business Link and is covered by Crown Copyright.All information is available as shown below: BusinessLink (2012) Exporting your goods from the EU to a third country. Available at: http://www.businesslink.gov.uk/bdotg/action/layer? r.i=1078172215&r.l1=1079717544&r.l2=1087336726&r.l3=1078171756&r.s=sc&r.t=RESOURCES&topicId=1078171756 [Accessed: 26th August 2012]
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