Import vat

Generally, you must pay VAT on imported goods at the same rate that the goods attract. The procedure for making payment depends mostly on whether the country from which you are importing goods is inside or outside the European Union (EU). You can 2) … VAT from goods imported from 3) … the EU when you declare them on your VAT return.

Export VAT

When you export goods outside the EU you can usually 4) … the goods for VAT. To qualify, the goods must leave the EU within a set time limit and you must keep records of the sale and transport of the goods. Separate rules apply to goods that are moved through EU countries to other EU countries. Goods exported to a customer outside the EU can also be zero-rated for VAT even if they initially travel through other EU countries.

Incoterms and contracts

The International Chamber of Commerce (ICC) originally published the very first set of Incoterms in 1936. Since that first publication, they have been updated in 1953, 1967, 1980, 1990 and most recently in 2000.

Because Incoterms are standard definitions, they are used in contracts to reduce confusion and avoid traders having difficulty understanding the import requirements and 5) … practice used in other countries.

Using the correct Incoterms clarifies the contracts you have with your suppliers or customers. 'Incoterms' is a protected ICC trade mark and only the original texts of Incoterms are to be considered as 6) … for incorporation into contracts. You should use the current version, Incoterms 2000, and note this in the contract. These terms should also be used on any paperwork linked to the contract, such as invoices or statements. Failing to state that you are using Incoterms 2000 could result in a dispute.

Incoterms 2000 has been 7) … by the United Nations Commission on International Trade Law (UNCITRAL) and is now available in 31 languages.

The sales contract between the buyer and seller should also state which country's legal system will be used in case of a dispute. If both parties' countries are signed up to the UN Convention, this will provide the legal 8) … for settling the dispute. Incoterms will provide the legal backbone to settling the dispute.

Text e. About incoterms

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What are Incoterms rules?

The Incoterms rules are the International Chamber of Commerce (ICC) rules for the use of domestic and international trade terms

Incoterms® rules are key commercial tools developed and maintained by ICC and used in certain contracts for the sale of goods all over the world. They define the responsibilities of buyers and sellers for the delivery of goods under sales contracts and determine how costs and risks are allocated.

What do they cover?

Incoterms® rules describe mainly the tasks, costs and risks involved in the delivery of goods – excluding intangibles - from sellers to buyers.

Why Incoterms® rules? Why are Incoterms® rules successful worldwide?

Incoterms® rules are international rules that are accepted by governments, legal authorities and practitioners worldwide for the interpretation of the most commonly used terms in domestic and international trade. They facilitate business transactions globally by helping traders avoid uncertainties arising from differing interpretations of such terms in different countries.

Do Incoterms® rules apply to international or domestic contracts of sales?

Incoterms® rules apply to both domestic and international sale contracts.

What are the 11 Incoterms® rules?

RULES FOR ANY MODE OR MODES OF TRANSPORT

EXW Ex Works

FCA Free Carrier

CPT Carriage Paid To

CIP Carriage And Insurance Paid To

DAT Delivered At Terminal

DAP Delivered At Place

DDP Delivered Duty Paid

RULES FOR SEA AND INLAND WATERWAY TRANSPORT

FAS Free Alongside Ship

FOB Free On Board

CFR Cost And Freight

CIF Cost, Insurance and Freight

How are Incoterms® rules correctly used?

ICC recommends that Incoterms® 2010 be referred to specifically whenever the terms are used, together with a location. For example, the term "Free Carrier (FCA)" should always be accompanied by a reference to an exact place to which delivery is to be made. To prevent misunderstandings, parties need to make the intended effect of any variants of the three-letter Incoterms® rules extremely clear in their contract. Incorrect use of Incoterms® 2010 rules has the potential to lead to legal consequences.

Why do Incoterms® rules need revising periodically?

Incoterms® rules are revised periodically to adapt them to contemporary commercial practice. For instance in the 2000 version, increased use of FCA (Free Carrier) prompted ICC to simplify delivery obligations under this rule. Technological changes and developments in electronic communication have influenced contemporary trade and shaped the revision of Incoterms® rules.

Can you name some of the main innovations in Incoterms® 2010?

Two major innovations are the number of rules and their classification . There are 11 rules instead of 13. In addition, the new rules are classified according to the mode of transport (maritime vs. any other mode[s]), reflecting a consolidation and updating of the delivered rules, replacing the precedent categorization into families of rules. In addition it includes the importance of cargo security and the 2004 revision of the United States’ Uniform Commercial Code, which resulted in a deletion ofthe former US shipment and delivery terms. The revised Incoterms® rules also reflect the adoption in2009 by insurance markets of the revised Institute Cargo Clauses (LMA/IUA) (2009). The most recent revision presents practitioners with comprehensible and useful Guidance Notes to facilitate their correct choice of Incoterms® rules.

How can I find out which Incoterms® rule is the right one for my contract of sale?

When agreeing on a contract of sale, the parties should choose an Incoterms® rule that is appropriate to the goods and means of transport. Detailed Guidance Notes in each of the Incoterms® 2010 rules help buyers and sellers decide which rule is appropriate for their contract of sale.

When is the risk of loss or damage to the goods transferred from the seller to the buyer?

The risk of loss or damage of the goods is generally transferred when the seller has fulfilled its delivery obligation in accordance with A4 (Delivery) of the particular Incoterms® rule.

EXW benefits for the seller

In comparison with other Incoterms® rules EXW represents the minimum obligation for the seller. However, when opting for this rule the seller has to take into consideration that under EXW the buyer is not obliged to provide any information regarding the export of the goods (if applicable) to the seller. The seller might require such information for tax or other purposes for instance thus consideration of this fact is crucial. In many cases, the parties are well advised to choose FCA instead.