If you're buying from a foreign country, it's important to be aware of the EXW term. EXW stands for Ex Works, meaning the seller fulfills the obligation of delivering goods to "the carrier at his disposal" (CISG). This term ensures that you are not liable for customs fees or taxes.
In other words, "Ex Works" means that a seller makes goods available at its premises. This includes the seller's responsibility to load the goods on the collecting vehicle provided by the buyer. It is recommended that the term Ex-Works be incorporated into contracts for the international sale of commercial goods as it minimizes risks and facilitates early delivery.
Importance of EXW
The EXW term ensures that you are not liable for customs fees or taxes. It does not, however, exempt you from paying any domestic duties or taxes in your home country.
For example, if a USA company buys goods from a Japanese seller and the goods are sent via ocean freight to Long Beach California, this shipment will be subject to U.S. Customs fees. It is important to note that if you are importing goods, your company may be able to claim the purchase as a tax-deductible business expense. The EXW term should not be used for goods bought for personal use since these purchases are generally not tax-deductible.
Seller's Responsibility For Documentation and Shipping
Under EXW, the seller is responsible for the documentation and shipment of goods. Therefore, if a business needs to obtain a commercial invoice or insurance on the goods before shipping, they should discuss this with their supplier. Furthermore, it's important to note that since it is the seller's obligation to ship the goods, they must make sure the goods are available at their premises.
Seller's Obligation to Dispose of Waste
Whether a business is exporting used goods or recycling scrap materials, it is important to note that the seller must make sure any waste generated from their obligation under the contract is disposed of properly.
In summary, when you buy from a foreign country, be aware of EXW. It ensures that you are not liable for customs fees or taxes. The EXW term simplifies export shipments because it does not leave the responsibility of obtaining an export license to the buyer.
MWT Sourcing can support you for the whole process of your global trading whether you would like to buy EXW, FOB or DDP.