import duty

skater_kat

i am interested in importing a particular food-based product from a country outside of the EU, to sell locally on a small scale.

i have seen a lot of speciality food shops of world foods which must have been imported from outside the EU. i am just wondering how this would work in terms of profit, as usualy such foodstuffs would be subject to 20% vat on top of customs duty (which is around 10 percent for the sort of thing i am interested in).

so buying a wholesale product seems like a good idea - until you add on postage, exchange rates, payment fees, customs duty and VAT, it looks like this would increase outlay by at least 35%.

how could one improve this situation? my business would be small and sales will be well below the vat threshold.

chrismac1

Duty - write off. VAT - only by registering. Whether this is worth it depends on who your customers are - in particular, are they businesses? If not they won't be VAT-registered so will not be able to reclaim the VAT you are charging them if you register. If you are converting currency at more than about £300 per delivery, using a forex broker - HiFX is the one my clients use and they are very efficient - will save you 2% or so per conversion. It is important before you begin to factor in all costs and produce a decent product costing. Just yesterday I was doing this for a client who imports a product from the manufacturer in Taiwan, then assembles in the UK and sells to 30 countries worldwide. The different VAT treatments and postage costs between exports to UK, EU and rest of world make quite a big difference to margins.