It is the capital of a business which is used in its day-to-day trading operations, calculated as the current assets less the current liabilities. From an international point of view it would be the capital exporters require to purchase supplies, components, to produce or resell products for sale to international markets.
The Union Customs Code is the EU legislation which provides the legal basis and generic requirements of EU (including UK) customs formalities. Introduced on 1st May 2016, the Union Customs Code also covers special procedures including Customs Warehousing (CW),Temporary Admission (TA), Inward and Outward Processing.
There are many benefits of AEO approval including the following:
Recognised status across the EU
An industry “kite mark” and useful marketing tool
A lower risk score used to determine the frequency of Customs’ physical and documentary checks consignments may be fast tracked through customs controls. If selected for examination priority will be given over non-AEO consignments
Potential for future reciprocal arrangements and mutual recognition with countries outside the EU, for example the USA
Do you have questions about AEO assessment? Contact us to find out how we can support you - call 01733 404419 or email email@example.com
INCOTERMS (International Commercial Terms) are an internationally recognised set of trade terms developed by the International Chamber of Commerce (ICC). The terms define the responsibilities and liabilities between a buyer and a seller. They cover who is responsible for paying freight costs, insuring goods and covering any import/export duties.
There are many different documents required for export, depending on the destinations import requirements, the type of product or whether there is a trade agreement in place. For advice on documents for different products and destination please contact the IOE&IT Helpline.
The Institute of Export & International Trade's mission is to enhance the export performance of the United Kingdom by setting and maintaining professional standards in international trade management and export practice. This is principally achieved by the provision of education, training and practical business support services.
The challenging and often complex trading conditions in international markets mean that our role has never been more vital. The Institute continues to be committed to the belief that real competitive advantage lies in the competence of British businesses. Our future export growth must be underpinned by a sound foundation of knowledge.
Department for Business Innovation and Skills(DBIS)
It would be considered an export of a service and it depends on how the software is delivered. There are three main categories that are tangible software, downloaded software, and software accessed via the cloud.
Tangible software refers to instances where a technology product is sold to a customer in a box or C.D, or memory stick.
Downloaded software refers to is a software license that allows a customer to download a tech tool directly to their local hard drive and then use the software for whatever application they have purchased it for, like music software recording. Please note that Licence costs are included in the WTO methods of valuation for import duty.
Software accessed via the cloud accounts for “Software As A Service” (SaaS) product. This type of software is where a customer accesses it over an Internet connection via the cloud for example.
The big issue for SaaS products are the tax implications, for example in the EU, there is a requirement to be registered for VAT , for companies supply consumers, even if the company is not based in the EU and the US is the same with different state taxes.
Rules of origin are used to determine the origin of a product for purposes of international trade. For example, the EU and Canada have a preferential trade agreement, so for exporters they need to prove their products being shipped meet the rules of origin so that the importer can benefit from reduced or zero import duties.
In the case of an EU company they have to comply with rules to state that their product has EU origin.
For countries where the EU has preferential trade agreements, an EUR1 is required so that it confirms the goods shipped from the EU complies with the rules to be considered as being of EU origin and the products can have preferential import duty applied to them.
An EC Certificate of Origin is a non-preferential document that certifies what the origin of the products is in a shipment. This may be requested by a client or for import compliance.
For example, textiles shipped from the UK to Argentina require an EC Certificate of Origin.
An EUR1 is used for countries where the EU has preferential trade agreements, an EUR1 is required so that it confirms the goods shipped of EU origin and the products can have preferential import duty applied to them.
When using EX Works all of the costs and risks of shipping the goods are for the buyers account. For the buyer it can be a good term to get a clear picture of all of their shipping costs, which can help calculate more accurate landed costs.
However, there are issues when using EX Works. For example the risk passes when the goods are made available for collection. This means that the buyer is responsible for loading the goods, but many companies who use this term as the seller, will actually load the goods.
The other issue is the customs declaration for export, where the buyer has responsibility for this process, yet a seller who is exporting from the UK, would not be charging VAT. Therefore, it is important that they can get proof of export for HMRC audit purposes, which can be difficult in some cases when using the EX Works term. For an exporter it may be better to use other terms, which cover the loading and export declaration process.
An Arab Certificate of Origin is a non-preferential document that certifies what the origin of the products is in a shipment. This may be requested by a client for import for countries in the Arab League which are:
Algeria, Bahrain, Comoros, Djibouti, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Somalia, Sudan, Syria, Tunisia, United Arab Emirates, Yemen.
The EU has a trade agreement with South Korea, enabling preferential trade. However, for shipments over 6000 Euros, normally a EUR1 would be issued to certify the goods meet the rules of origin. However South Korea does not accept the EUR1 form.
For preferential trade with South Korea, then Approved Exporter Status is required to enable preferential import duty. To apply for this, you need to complete a C1454 form and once approved you would use your Approved Exporter Number for your customer to benefit from preferential. Import duties.
Delivered Duty Paid (DDP) is a term where the seller is responsible for the import duties and taxes of the shipment in the country of import. If a company is aware that these charges would be for their account and doesn’t impact on the profitability, then may be the company would opt to use this term.
However, in the majority of B2B shipments, this can result in charges for the seller that would impact on profitability, due to a lot of “unknown” costs that could be applied to the sellers account.
Another issue is that some countries require the buyer to be registered as an importer in the country of import, which restricts the use of this term. For example you cannot ship goods DDP to Russia with DHL.
For all Incoterms, a good rule is to write the Incoterms as follows:
• Incoterm + Place + Version
In the case of FOB, the reason why it is important is that earlier versions of Incoterms rules can be used if specified and there is a different point at where the risk transfers from the 2000 version to the 2010 version.
Under the new Union Customs Code (UCC) and customs special procedures, you do have to be authorised to use Inward Processing. This is either Authorisation by Declaration, if you only use the procedure up to 3 times a year, or Full Authorisation for use of more than 3 times a year.
The UCC came into force on 1st May 2016, so authorisations for Inward processing relief that were granted prior to that date can still be used until the authorisation needs renewing.