A step-by-step guide to shipping and exporting goods

As a small company before engaging in international trade there are some key factors to consider

Selling in the UK is relatively straightforward. Exporting is another matter altogether, because you then have to worry about a whole lot more, including logistics, regulations, stronger packaging and so on.

You do have the option of using a freight forwarder or agent, who can sort out a lot of the paperwork and regulatory compliance issues for you; the downside is that you will have to pay them, and that could seriously cut into your profits.

1 Exporting to the EU

If you’re just going to export to other countries within the EU, it’s pretty straightforward. Because it’s an open market, you don’t have to pay any duty and you won’t be subject to any customs checks.

Product standards are also pretty much uniform across all countries, so as long as your product is fully compliant in the UK, you shouldn’t have any problems.

The only area you might need to worry about is VAT. Make sure you record all sales to EU countries on your own VAT return and on an EU Sales List (ESL).

If your dispatches add up to more than £250,000, you’ll also need to fill in an Intrastat Declaration.

If your customer is VAT registered in their own country, you won’t have to pay it, because they will – just make sure you have their VAT number for your own return.

2 Exporting to countries outside of the EU

a Commodity codes

The first thing you need to do is to get the commodity code for your product – you can see the list by clicking here. It’s pretty comprehensive; for example, if you’re looking to export false beards made out of human or animal hair, your code will be 6704.

A commodity code determines levels of duty and tax that you’ll need to pay, plus lets you know whether you’re going to need an export licence. It is your responsibility to make sure all this is right, even if you’re using an agent.

If you’re not sure which category you’re product fits into, don’t just take your best guess; get help from the Tariff Classification Service by calling 01702 366077.

b Export declarations

To export goods outside the EU (known as exporting to a ‘third country’), you need to submit an electronic declaration.

To do this, you’ll need to register for an Economic Operator Registration Identification number and for the Customs Handling of Import and Export Freight system before making your export submission through the National Export System.

If you’re using a freight forwarder or commercial agent, they will handle this side of the process.

c VAT and duty

Most goods exported to a third country can be zero-rated for VAT, but you have to make sure you register the sale on your VAT return, and make sure you can provide evidence that the goods have actually left the EU.

The amount of duty you pay is set by the country you are exporting to, and will depend on what it is you are exporting and its value.

The UK Trade Tariff should tell you all you need to know for your particular product (using the commodity code from above).

Because the UK and EU are keen to encourage its businesses to export to the rest of the world, it is possible to get duty relief through various schemes.

There are also various agreements in place with different countries that will allow you to export certain goods at lower rates or even for zero duty.

d Restrictions

There are certain items that you can’t export to certain countries; many of these are war zones, and the items involved are armaments, or items which could be used for military purposes, so if you have any doubts at all, make sure you check the government’s Sanctions, embargoes and restrictions page for the latest information.

3 Exporting to a third country via an EU member state

Known as an ‘indirect export’, this involves special procedures and paperwork, which will mainly depend on the final destination.

The main things you’ll need are: an export declaration (even though you’re initially sending your goods to an EU country); an export licence, depending on the nature and final destination of your goods; proof that your goods have left the EU (for VAT purposes); you might also require a transhipment licence if your goods are being shipped through the UK.

4. Receiving payments for your exports

When you export products it’s likely you’ll be managing multiple currencies. Costs like foreign transaction fees, international receiving fees, and currency fluctuations can start to add up if you’re not careful. Look for ways to reduce these costs. Shop around for the best exchange rates and consider opening up local currency accounts. This way you can receive payments in one currency, make any payments to suppliers in that currency and then convert leftover profit back to your domestic currency without having to deal with multiple exchanges.

Fintech providers such as TransferWise offer such a service and can help businesses save money when doing international business. Their free multi-currency account comes with international account details for the US, Eurozone, UK, and Australia. This means you can easily open up an overseas account without needing to leave the country. You can then get paid in US dollars, euros, pounds, and Australian dollars with zero receiving fees. You can also hold over 40 currencies and set up rate alerts to help manage your currency conversion.

When it comes to making payments, TransferWise could also be up to 8 times cheaper than your bank. They’re cheaper because they always convert foreign payments at the mid-market exchange rate. The only fee they charge is a small, upfront cost on the value of the transfer. Providers such as the banks typically inflate exchange rates, and that’s on top of the foreign transaction fees they charge.

5 Packaging

You also need to give extra thought to the type of packaging you’re going to use. There are restrictions on the use of untreated wood, to prevent the spread of insects and disease that could negatively impact on a country’s ecosystem.

Alternatives are easily available in the form of plywood shipping crates, which have a similar strength but can be sent anywhere, as the wood has been treated in the manufacturing process.

You can also get heat treated and kiln dried pallets which have the same unrestricted usage. If you’re not sure, look for what is known as the ‘wheat stamp’, which tells officials that it’s safe to use.

Cardboard boxes are also unaffected by these regulations; you’ll want to get something stronger than if you’re just shipping within the UK, as you’re box is likely to be subject to greater stresses, such as being on the bottom of a large stack of boxes. Heavy duty double wall and triple wall boxes have been designed to deal with just these kinds of conditions.

Whether you use cardboard or plywood will partly depend on the weight of what you’re shipping, but also the distance it will need to travel and the climatic conditions it will pass through.

If it’s likely to be exposed to high levels of damp or humidity, the plywood option will offer far greater protection.

If there is any aspect of exporting your product that you’re unsure about, it’s always best to get expert advice, because the cost of getting it wrong can be a lot greater than usual.

Not that that should act as a deterrent, because the rewards of a successful export venture can be immense, and not just in terms of money; it can also help you really feel like you’ve conquered the world.

This article was updated on June 22nd 2018. 

Further reading on exporting


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