Customs, tax & compliance

Export declaration

The electronic declaration filed with customs by the exporter or its broker so that goods can legally leave the country, stating the description, HS code, quantity, value, consignee and destination. The closed export declaration is the official proof of export for VAT zero-rating, export incentives and foreign-exchange rules. Under EXW this duty falls on the foreign buyer, which causes practical problems – which is why FCA is usually more suitable.

Related terms

Customs broker

A licensed specialist who prepares customs declarations on behalf of importers and exporters, declares the classification (HS code), value and origin of goods, calculates duties and deals with the customs authorities. In many countries brokers are licensed by the customs administration and share responsibility for the accuracy of declarations. A good broker saves money through regimes such as inward processing, bonded warehousing, preferential origin and anti-dumping planning.

Ex Works EXW

The Incoterm with the least obligation for the seller: goods are made available at the seller’s factory or warehouse, not loaded on the collecting vehicle. Loading, export clearance, freight and all risks are the buyer’s. Because a foreign buyer usually cannot file the export declaration itself, FCA is often the better choice for international sales.

Free Carrier FCA

The seller delivers export-cleared goods to the carrier nominated by the buyer at the named place. If the place is the seller’s premises the seller loads the goods; elsewhere (e.g. a port terminal) they are delivered on the arriving vehicle ready for unloading. Suitable for any transport mode; under Incoterms 2020 the buyer can instruct its carrier to issue an on-board bill of lading to the seller, which helps with letters of credit.

VAT (value added tax) on imports and exports

A tax on consumption. Exports are zero-rated in most countries, so the exporter can reclaim the input VAT it has paid. On imports, VAT is collected at customs on the customs value plus duty and other taxes, and a registered importer can usually deduct it, so the main impact is on cash flow. Between VAT-registered businesses in intra-EU trade the reverse-charge mechanism applies. Standard rates vary widely (e.g. 20 % in Türkiye, 19 % in Germany), and some raw materials enjoy reduced rates.

Explained in the trade handbook

Trade handbook