International trade is the core of the business world. Buying and selling goods across national borders enables manufacturers to benefit from an expanded international market, rather than being limited to doing business within their own country of origin. International trade is advantageous for many reasons, including lower productions costs in one region versus another, specialized industries, diversity of resources and consumer preferences.
The EU Market
Exporting to the EU is particularly valuable because it provides access to an extensive and diverse marketplace with millions of consumers. The cornerstone of the EU market is the free movement of goods, which enables products to be transported and sold anywhere in the EU.
Generally, complex and varied national laws have been replaced with a blanketed set of rules for EU countries. This is beneficial because it simplifies the process for businesses that want to trade in other EU countries, while also cutting down on costs. Still, there are rules that businesses must follow to ensure trade is conducted fairly and seamlessly.
Trading with Non-EU Countries
EU import procedures are dictated by the EU customs code, which is the set of all rules covering customs matters in trade with non-EU countries. Its primary aim is to ensure that customs practices in all EU countries are uniform and transparent.
Importing Machinery from EU
When importing machinery from EU to a third country (a country outside of the EU), it is important to make sure you have the appropriate licenses and make export declarations to customs through the National Export System. Other things to take into consideration include:
- Import taxes
- Import duties
- Export procedures (i.e. duty relief schemes)
VAT and Other Taxes
When the third country you’re importing to receives your machinery, you may be charged a duty, in addition to an equivalent of VAT or purchase tax. VAT depends on whether you’re exporting the machinery directly or indirectly, when you organize delivery and when the customer collects the machinery.
It is often possible to zero rate exported goods to third countries by:
- Making sure they leave the EU within set time limits (usually three months)
- Keeping evidence of their departure
- Keeping evidence in your accounting records that the transaction took place
- Providing official evidence of export
Because export regulations depend entirely on the country you’re exporting to, be sure to check the country’s commodity code for all exports outside of the EU. The commodity code allows you to check any regulations that may apply to your export, check any licenses that are needed in the destination country and calculate customs duties and tax that may be due.
To permanently export goods outside of the EU, you must submit an electronic export declaration through the National Export System (NES). To do this, you need an Economic Operator Registration Identification (EORI) and be registered for NES.
Importing Goods from Outside the EU
When importing machinery from a third country, you are required to:
- Make an import declaration to customs
- Pay import duty and import VAT
Machinery coming from countries outside the EU must have an Entry Summary Declaration (ENS). An ENS contains information about goods entering the EU, and must be lodged at the first customs office of entry to the EU by the carrier of the goods. Upon arrival at the customs office of entry to the EU, goods are placed into temporary storage (max of 90 days) until they are assigned to one of the following customs approved treatments or uses:
- Release for free circulation – all conditions have been met and goods are “released for consumption”
- Special procedures – refers to external or internal transit of goods, storage, or specific use
After import, your machinery will be placed under a customs approved treatment or use using a Single Administrative Document (SAD). This document can be presented to customs authorities by the importer or representative by delivery or electronically (each EU country has its own system).
Import Taxes and Duties
Depending on where your machinery came from and its classification, you may be required to pay customs duties and VAT. This is usually determined as a percentage of the value of the goods being imported.
Other Things to Consider
It is important to note that machinery, as well as all goods imported into the EU, must meet the EU technical requirements to protect consumers. This includes product safety, technical standardization, packaging and labeling.
Manufacturers and distributors must:
- Supply machinery that complies with the general safety requirements
- Inform consumers of the risks that a product might pose
- Notify the relevant national authorities if they discover that a product is dangerous