What is Ex Works?
Ex Works (EXW) is an international trade term that describes when a seller makes a product available at a designated location, but the buyer must cover the transport costs.
Ex Works places the maximum responsibility on the buyer. The Ex Works term is often used in the quotation phase, making it easier to compare the cost of goods among several suppliers. It is also used by buyers that prefer to arrange their own transportation from the origin.
According to the EXW Incoterm, what is the buyer responsible for?
In this scenario, a buyer takes on the responsibility of moving the goods to their final destination. Under EXW terms, the seller doesn’t have to load the goods for pick up and doesn’t have to clear them for export. The buyer must complete all appropriate steps to get the goods ready for exportation without the help of the seller.
According to the EXW Incoterm, what is the seller responsible for?
In the case that the seller performs any of the above-mentioned tasks, it is done so at the buyer’s risk and cost. It must be clearly noted in the Contract of Sale if the buyer and seller agree for the seller to load the goods and bear the risk and cost.
The seller also holds no obligation to make a contract of carriage. In turn, the buyer doesn’t always arrange for transport but can sell the goods to their customers and have that party collect the goods from the seller’s warehouse.
What are some potential issues with EXW?
Potential issues with documents under the EXW Incoterm:
#1: Under the EXW Incoterm, the buyer is responsible for arranging export clearance. This may be a problem in countries that require a local business or a person to act as the importer. For example, the European Union and some Eastern European countries are very strict in this regard. In this case, it is best to specifically request the seller to act as the exporter in the contract of sale.
#2: Another potential issue is proof of export for tax purposes. In many countries, the seller may be required to provide proof of export to avoid sales tax liability. In others, like China, the seller receives a refund of sales tax paid on raw materials upon presentation of proof of export. Under EXW, the buyer is under no obligation to provide such proof to the seller. Any such requirements must be specifically mentioned in the contract of sale.
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