The European Union is a great federation. It’s a unity in the field of justice and economics. A standardized legal system applies within the common internal market. So once a person or product has entered the EU legally, it can move freely within the union. This means a huge and potentially lucrative sales market. But in order to sell products that are produced outside the EU, you have to arrange, pay and check a lot in advance. Do not underestimate this process, there are many pitfalls that can cause delays and extra costs. This blog will explain step by step which things are important.
Connect and do business
You have found a suitable product to sell on your webshop or through your company. In many sectors, the vast majority of manufacturers are located outside the EU. If you want to do business with them, you are likely to face language barriers and cultural differences. Make sure that you limit the risks for yourself as much as possible by putting clear agreements on paper. Find agreement on delivery, payment, quality, transportation and so on. You can use a standard contract to make sure you don’t forget anything. You can order these on the website of the International Chamber of Commerce Netherlands. https://www.icc.nl/modelcontracten/
It is wise to include penalty provisions in the contract. Then as an importer you will receive financial compensation if the exporter defaults. In consultation with you, a lawyer can tailor the contract to your specific situation. If possible, you can of course also visit the factory yourself. This allows you to build a good relationship as business partners and assess the quality of the products. Alternatively, you can hire a local agent who mediates in the negotiation, removes the language barrier and can check the quality before sending.
Bringing the products into Europe
The business relationship is solid, the goods are neatly sent our way and everything is on time. Super! But you are far from there. Before the products reach European soil, a lot has to be arranged and paid for. First of all, you must declare the import to Customs. You then pay taxes and import duties; after that, the goods may enter free circulation in the EU. You need an EORI number to file a declaration. A freight forwarder already has this number.
To determine in which category your product falls, Customs needs the HS code of the product. The import duties depend on the type and origin of the good you are importing. The EU has a trade agreement with some countries, so you have to pay less import duties. Look here ( https://ticket.douane.nl/arctictariff-public-web/#!/taric/duty/calculate ) for the list of commodity codes.
Then of course old and trusted VAT has to be paid. If you import the goods into the Netherlands, you pay VAT to Dutch customs. If you import via another EU country, you must also pay VAT in that country. Fortunately, this VAT can be reclaimed from the Dutch tax authorities.
Your responsibilities in Europe
By law, as an importer of goods manufactured outside the European Union, you are the producer. This means that you are ultimately responsible and product liable. The merchandise you sell must be reliable and safe for use in the EU. And if something does go wrong and (injury) damage occurs, you are liable.
As an importer, you must guarantee that the products you sell in Europe meet safety, health and environmental requirements. The well-known CE marking is required for medical and electronic equipment and toys, among other things. With this marking, the products can be freely traded throughout the EU. So only do business with manufacturers who can supply goods with CE marking.
Don’t forget to pay attention to the labeling on your products. European consumers should be able to make an assessment of the safety and health risks based on the information on the label. You must also state the identity of the manufacturer and importer. It must be traceable to which batch (batch) each individual product belongs. And of course it must be readable for the consumer, so make sure the label is written in several European languages.
In the unlikely event that something goes wrong with a product that you have sold as an importer in Europe, you are liable. After all, the manufacturer is not established in the EU. If an item that you sold in Europe is defective and causes damage, the victim can hold you liable for this. The financial and legal consequences of such a claim are incalculable. That’s why you need to take out product liability insurance. If you have this, the insurer will pay all legal costs of handling a claim.
Take advantage of international trade
Free trade in the European Union benefits you as a merchant. But of course there is one major drawback to our continent; producing something on European soil is expensive. In many countries outside the EU, labor costs are simply very low and therefore it can be very profitable to import goods from outside. In 2019, the 27 Member States imported EUR 1,935 billion and exported EUR 2,132 billion. The main import partner is China. The most commonly imported product groups are electrical appliances, automobiles and manufactured products. As you can see, there is a lot of money involved in international trade. As an SME or webshop owner you can also benefit from this growth. To get started, you need an experienced customs broker. Call or email Ademar, a company with more than 34 years of experience.