Technological advances have reduced geographical boundaries to nothing, in theory, and there is no technical reason that anyone should not set up an international business as a result. However, there are a number of issues to bear in mind, including tax and duties, logistics and culture/law.
Tax and duties
A key issue for any trader is the possibility that customers will be charged extra duties and taxes on products delivered outside their own territories. Courier companies, for example, can often add administrative charges. There may be additional charges if goods are held up in customs and bills can be received some time after the goods have been delivered. If you are trading to a worldwide audience it is advisable to state on the website that extra charges may apply, in the interests of customer relations.
VAT & digitised products
Digitised products are classed as electronically supplied services for VAT and customs duties. These services include downloaded software, images, information, music, films or games electronic publications, electronic auctions, supply of websites and web services.
If you are a UK supplier of services to:
- a business customer in another EU country the customer accounts for the VAT due in that country and no UK VAT should be charged, provided you show your customer's VAT on the invoice.
- a consumer, charity or government body in another EU country, UK VAT should be charged.
- anyone outside the EU, no UK VAT should be charged.
- X purchased some software from an American website
- This was despatched after credit card payment was received
- X then received an invoice for UK VAT and a charge for processing the VAT payment from a well-known courier company
It is not reasonable to expect a web trader to memorise all of the various tax rates and duty laws around the world. However, he or she can put a note on the website to the effect that extra charges may apply, in the interests of customer relations.
If a company is likely only to sell the occasional item overseas then very few extra logistics need to be taken into account, as a trip to the post office will suffice to deal with the order. Regular orders might necessitate the engagement of a courier company or some other shipping arrangements. For perishable/fragile goods it will be wise to re-examine any packaging involved.
Supposing a company makes entirely respectable swimwear and publishes a catalogue online; this catalogue will not be seen as respectable everywhere. Again, supposing a company sells seeds from a catalogue and wishes to sell them overseas; this sort of approach will not be welcomed by America, where the import of seeds and foodstuffs is strictly regulated.
The point being, you can overcome the technical and logistical objections to exporting goods, but actively targeting a territory for new sales requires as much local knowledge as someone setting up a branch office.