Why shouldn’t I use DDP or EXW incoterms?

Looking at both Incoterms from the point of view of a UK exporter post BREXIT there are various pit falls. The main one for DDP is that you, as the seller will be responsible for paying VAT and duty in Europe. This will require you to have a virtual identity in that particular European country. You will need a EU VAT and EUEORI number, a VAT agent and fiscal representation. Importantly and most problematic of all, you will need to find an import customs agent willing to work with you on an indirect basis.

We recommend using DAP if possible and offering your European clients rebates or discounts if they are finding the price of customs clearance and duty restrictive.

You may look at EXW and think where is the problem? The European importer is responsible for everything and you would be correct. The issue comes with them being able to issue a UK export EAD. As the exporter, you have zero rated the VAT to prepare goods for export. If the goods are taken outside of the UK and have not been declared, you will eventually become responsible for the VAT.

We recommend using FCA, you (the shipper) raise the EAD to hand to the transporter. You know therefore it is done and you can safely zero rate your VAT to your EU customer.

Want to find out more?

Call Tony and the Espace team on 01543 418700 or click below

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