As a customs partner for online stores, we ensure that attractive, European markets outside the EU, such as Switzerland, England and Norway, are supplied seamlessly without customers in these countries feeling a customs barrier, for example through long delivery times or import duties. Each country has its own regulations and requirements for customs clearance when importing and exporting goods. We present you with some special features and show you what to look out for.
Every one of us has had the experience: we order something abroad and when the package arrives, a hefty customs bill hangs on it. What is often associated with annoyance for the end customer can ultimately also have a negative impact on the image of the retailer. Especially for those shipping to or from countries with special customs regulations such as Switzerland, the United Kingdom or Norway, import and export regulations are likely to be a complex issue. But who should actually pay the duties – the trader or the end customer?
DAP vs. DDP - The most important Incoterms.
Merchants who deliver to customers in a country with special customs regulations must define for themselves whether they will bear the customs duties or transfer them to the customer. This provision is called Incoterms, of which we will now take a closer look at the two most important ones: Delivery-at-Place (DAP) and Delivery-Duty-Paid (DDP).
In the DAP procedure, the seller is responsible only until arrival at destination. In this way, he passes on the costs of carrying out necessary import formalities to the end customer. If this is not clearly indicated at the time of sale, the end customer may incur surprising customs duties.
In the DDP procedure, as also offered by MS Direct, the seller assumes the costs and responsibility of customs clearance. In addition to the financial cost, DPP can also be a challenge from a tax perspective, as the seller must also pay taxes in the importing country and thus requires fiscal representation. In the DDP procedure, the trader can also choose between individual and collective customs clearance, each with its own advantages and disadvantages.
Despite its complexity, DDP is now a standard in e-commerce, as the customer experience is significantly better and thus has a decisive impact on the repurchase rate. MS Direct already supports many cross-border merchants in Europe, Switzerland, the UK and Norway.
As an alternative to the cross-border procedure, traders also have the option of setting up branches in countries with special customs regulations. Goods can thus be imported in B2B and then sold and cleared within the country.
Individual and collective customs clearance - the differences.
There are basically two variants of customs clearance of goods – individual and collective. The former refers to the customs clearance of individual shipments, while the latter refers to the customs clearance of multiple shipments of goods that are grouped under a single customs declaration. Which variant comes into question depends on several factors.
In the case of individual customs clearance, each consignment of goods is declared and cleared individually. This is the usual method for small quantities of goods and order volume. Low item weights (Switzerland only) and return rates also favor the use of this customs clearance method. Individual customs clearance requires more effort and time, as each shipment must be checked and processed individually.
Collective customs clearance, on the other hand, refers to the process in which multiple shipments of goods are grouped together and cleared through customs together. This is the usual method for larger quantities of goods, goods with high customs duties and return rates. For Switzerland, this method is also worthwhile for assortments with high article weights. The effort involved in this process is reduced. Only one declaration is required for multiple customer orders and items to be imported are grouped under the same tariff heading.
Switzerland: Both options are applicable.
Switzerland has no longer levied customs duties on industrial goods since 1 January 2024. However, the declaration of imported goods is still mandatory, but the procedure has been greatly simplified along with the abolition of customs duties. When importing into Switzerland, you can choose between individual and collective customs clearance. VAT is still payable on imports.
In cooperation with the Swiss customs authorities, MS Direct has developed a solution that combines the strengths of collective and individual customs clearance for traders. In this way, we can already tell from the product data and shopping carts whether an order is suitable for individual or collective customs clearance. After the split, the orders run fully automated into two different processes, each with the appropriate type of customs clearance.
United Kingdom: Do it the easy way.
In the UK, individual customs clearance is the norm. As mentioned at the outset, the choice here also depends on factors such as the value and frequency of the imported goods and the type of goods. A distinction is made between “Low Value” and “High Value”. Under the Simplified Declaration, for shipments with a value of less than £135, customs clearance is simplified as a full customs declaration is not required. Orders up to this value are usually duty-free and only import VAT is due. However, it should be noted that High and Low Value orders must be listed on a separate collective invoice. MS Direct also handles this expense for its clients.
Norway: It depends on the type of product and the value.
Norway is not a member of the EU, but participates in the European Economic Area (EEA). Nevertheless, the country has strict customs regulations. The import of textiles, food and feed is generally subject to customs duties. Most consumer goods, however, do not require special licenses or permits – but a number of goods and types of goods are subject to registration and approval requirements or special product requirements.
For suppliers not based in Norway, who furthermore have a deep adaptation to the Norwegian market, can register for VOEC (VAT on E-Commerce). This then applies to sales of goods to Norwegian private individuals (B2C) for goods with a value of less than NOK 3,000 (approx. EUR 300). Goods covered by the VOEC scheme are duty-free and no additional customs clearance is required at the border as long as the trader is registered with the Norwegian Tax Administration and an arrival notification with the VOEC number is presented to customs. Articles with a value of more than NOK 3,000 must be imported and cleared through regular customs.
Retailers are responsible for compliance with customs regulations.
In all the above cases, online stores as importers and exporters of goods are responsible for complying with customs regulations and paying the applicable customs duties. Customs and duties are a complex area. Major political changes, such as the UK’s exit from the EU or the abolition of industrial tariffs in Switzerland, expected to take effect on January 1, 2024, have an impact on cross-border trade.
A service provider, such as MS Direct, that specializes in cross-border e-commerce has extensive knowledge of the applicable laws and regulations and ensures compliance. With MS Direct, an intelligent solution also makes it possible to serve several countries outside the EU (such as Switzerland, the UK and Norway) with just one interface, making processing much easier for your store.
Are you planning to expand into attractive markets such as Switzerland and England? We support you with our 45 years of experience in retail and e-commerce from shipping to customs clearance, VAT processing, fiscal representation and returns.