Making online sales to customers outside of the UK can seem scary. To allay such fears, here are some international sales tips as well as useful information about tax, shipping and fraud
Surprising as it might be to those of us who live here, the UK still has an excellent reputation around the world. This provides an advantage. So make it clear you're based in the UK.
Fortunately, much of the expertise needed to get UK visitors to check out your site (eg search engine optimisation and pay-per-click advertising), can be equally effective in attracting visitors from abroad – and all from the comfort of your own office chair.
The following tax tips aren’t definitive, but they’re a good place to start. Fiscally speaking, the world is divided into two: countries in the European Union and those beyond. Obviously, the UK is bound by EU rules.
Rules are different for US buyers. Individual US states might want to charge sales tax on your sales, but it's their responsibility. You don't have to charge this "use tax", it’s between the buyer and the state in which they live. So, fortunately, UK business you can sell into the US tax-free.
Generally speaking, when you sell into the EU you charge VAT at your usual rate. But there are exceptions. If your online store is starting to turn over serious money by selling into other EU countries, you hit additional regulations. If you exceed the individual VAT threshold for Germany, France, etc, you should charge VAT at the appropriate country VAT rate when selling into that country, not the usual UK rate.
Also, if your customer is a non-UK business in the EU and is registered for VAT in its own country, the buyer is allowed to quote their VAT registration number to you in order to be exempted from tax. If you can't accommodate this, those customers are likely to look elsewhere.
A customer abroad can pay by credit card and you will be paid in sterling, but the payment will be translated into their local currency when it appears on their statement. One handy tool, however, is to have a conversion facility so that you can provide an indicative amount in the potential buyer's local currency.
Orders from abroad are more likely to be from scamsters simply because it's easier for them to get away with it. Generally, the police aren’t interested in small-scale fraud – even less so when the crime is committed outside their jurisdiction.
There are several ways fraudsters work. If the person was using stolen credit card details, the amount is likely to be charged back to you once the true owner becomes aware of the charge. Even someone who genuinely ordered and received the goods can dispute payment. If you use one of the online payment service providers, ask if they operate a merchant protection scheme. Otherwise you can reduce your liability by implementing 3DSecure (Mastercard Secure/Verified by Visa).
Fortunately, fraudulent orders often stand out from the rest and are quite easy to spot. They tend to use the most expensive shipping method available, buy the most expensive products and use free email addresses.
You can ask for a fax of a copy of the back strip of the credit card or proof of name and address. You can telephone to make sure that the number they give is genuine. Most fraudsters give up at the first hurdle.
You can make shipping good overseas easier by using a recognised international carrier such as UPS, Fedex or DHL. They can advise you of any issues. Completing a customs declaration is a must
Most of the retail world leaves customs or import duties to the purchaser. They are responsible for such charges, so you can ignore them. However, it’s worth saying explicitly in your terms and conditions that any charges are the buyer’s liability. There are different procedures for trade sales, so investigate these if you’re operating in this field.
Finally, assuming you’re legal and decent – let the world know you’re there. Anything that adds to your credibility will help you online, so why not list all of the things you have done under the heading ‘We comply with the following legal and tax regulations’.
For detailed guidance on the tax implications of selling to overseas customers, see the Tax Donut.