InterTradeIreland Simple Guide to Cross Border Business October 2009

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The guide, developed as part of the InterTradeIreland / MicroTrade initiative, provides companies with basic advice when exploring the potential for cross-border business. The guide provides information relating to the tax, legal and financial obligations and implications on businesses operating on an all-island basis. ‘A Simple Guide to Cross-Border Business’ provides information for companies exploring opportunities across the border by offering them an accessible, easy to use publication with signposting to additional detailed resources. The Guide was compiled in association with FPM Chartered Accountants, Morgan McManus Solicitors and Northern Bank’s Treasury Service.

Text of InterTradeIreland Simple Guide to Cross Border Business October 2009

  • 1. A Simple Guide to Cross Border Business October 2009

2. Foreword Anything youRemoving barriers to cross-border trade and business development plays a key To address this issue, InterTradeIreland has developed the First Stop Shop need to know part in stimulating demand for goodsservice to provide practical information and services, increasing the size ofand advice to businesses wishing to the local market-place and improvingtrade on a cross-border basis. The competitiveness North and South.service also provides market intelligence such as cross-border market information, about trading 2008 was a challenging year for those trade statistics and sectoral reports to engaged in cross-border trade. FallingSMEs that need a quick grasp of their demand was experienced on both sidesnew target market. of the border, particularly in sectors associated with the construction industry.A Simple Guide to Cross Business is cross-border? The total value of cross-border trade a key part of the First Stop Shop. It declined from 3.1bn to 2.8bn. The foodhas become the first point of reference and drink products industry remained thefor any company seeking to enter the key sector. cross-border market, offering up-to- date and user-friendly, comprehensive However, the potential of cross-borderinformation on questions connected with trade remains high as research findings doing business in the other jurisdiction. InterTradeIrelands First Stop Shop can provide from a recent InterTradeIreland Gravity The subjects covered, include legal relevant up to date information in these areas: Model research project shows.1 For totalconsiderations, taxation and banking Legal&TaxAdvicemanufacturing trade over the period 1998issues among others. Sales&Marketing to 2007, the gap between expected and If there are questions which the Simple actual North to South trade was 82% Currency&FinanceGuide does not answer, InterTradeIreland (ie, less than 20% of its potential) while has a Trade Accelerator Voucher to assist Procurement for South to North trade the same gap companies. Under this a business can get Cross-borderTradeStatistics&SectoralReports was 77%. This potential for more trade is up to 2,000/1,800 worth of business consistent across almost all sectors. advice to deal with cross-border issues.E: firststopshop@intertradeireland.comThis gap between actual and potential The First Stop Shop and the Simple cross-border trade is confirmed by resultsGuide to Cross Business are central T: 028 3083 4100 (048 from Ireland),from InterTradeIrelands Business companies exploiting new business Around 40% of businesses throughout opportunities on their doorstep. and ask for First Stop Shop.the island take part in cross-border tradeInterTradeIreland will continue to offer leaving plenty of untapped business assistance to companies to avail of opportunities for cross-border trade. these opportunities and create stronger economic links between North and South InterTradeIrelands report, Regulatorythrough collaborative partnerships in Barriers to Cross-Border Trade andscience technology and innovation, trade Business, has found that there is a lack of and capability improvement. awareness among businesses of the many subtle differences between regulationsIf you would like any further information in Ireland and Northern Ireland. This lackon the First Stop Shop or other of awareness and knowledge can create InterTradeIreland initiatives please a perception that cross-border trade is a contact us on: 028/048 3083 4100 or costly or complex activity. info@intertradeireland.com3 1 InterTradeIreland, A gravity model approach to estimating expected volume of North/South Trade (May 2009). 3. Contents Section Question Page01 IambasedinIreland and want to sell products into Northern Ireland0702 IambasedinIreland and want to sell services into Northern Ireland1503 IambasedinIrelandandwanttobuyproductsfromNorthern Ireland 2304 IambasedinIrelandandwanttobuyservicesfromNorthern Ireland 2905 IambasedinIrelandandwanttoestablishapresenceinNorthern Ireland 3506 IambasedinNorthern Ireland and want to sell products into Ireland4107 IambasedinNorthern Ireland and want to sell services into Ireland4908 IambasedinNorthern IrelandandwanttobuyproductsfromIreland 5909 IambasedinNorthern IrelandandwanttobuyservicesfromIreland 6510 IambasedinNorthern IrelandandwanttoestablishapresenceinIreland 7111 Wearelookingatcross-borderdistributorshipsoragencies7712 Weareexploringacross-borderjointventure8313TheDebtCollectionLegalProcess-RepublicofIrelandandNorthernIreland 87Appendix UsefulTopics99 4. Section 01I am based in Ireland and want to sell products into Northern Ireland 5. 1.1 Must I have an office in NI?Regulations visit the following IambasedinIrelandandwanttosellproductsintoNorthernIreland It is not necessary to have an office websites in Northern Ireland to facilitate sales and the of goods if the goods are to be soldwebsite of the UK Department of directly to the purchaser. However, Trade and Industry (Consumer and if you wish to target a broader Competition Policy) spectrum of clients you may See also the to consider establishing a presence NI Department of Enterprise Trade there. If so, go to Section 5.and Investment website (Consumer Affairs Section) 1.2 Must I form a company in NI? A Company is not necessary but if you anticipate profits in the UK 1.6 At what point does the risk or your venture has an element of pass from me (the seller) to the risk to it, you may wish to considerpurchaser? ring fencing this within a CompanyRisk, in terms of loss, is the structure. The rates of tax in theresponsibility that a carrier, UK must also be considered in borrower, user/purchaser of determining the route you want to property or goods assumes if there take. As trade increases, it mayis damage or loss. Passing of be advisable for tax reasons to Risk means the point at which the establish a separate company. buyer will be responsible for the goods. For example, if goods are 1.3 Do I need a licence to sell delivered by lorry, who bears the products in NI? loss if the goods are stolen in transit Not generally, but this depends before they reach the purchaser? on the type of product to be sold. For example, a licence would be This issue arises just as much required for sale of pharmaceuticals. within your own jurisdiction as in a Specific advice should be taken oncross-border context and is covered each the Sale of Goods legislation, which is broadly similar in both 1.4 Must I declare my goods atjurisdictions. Customs? Do I need to complete Normally, where the seller arranges export documentation? delivery to the purchaser, risk will There is free movement of goods only pass to the purchaser on within the EU and the only goods receipt of delivery. In a cross- which need to be declared at border sale, this may therefore Customs are excisable goods i.e. mean that risk would only pass to tobacco, spirits, wines and beer. the buyer when he receives the goods in NI. 1.5 Must my product meet certain regulations?In a cross-border context, it may You must ensure compliancebe wise to consider appointing with required Consumer/Health & a Distributor in the cross-border Safety Standards. Specific advice market to ensure risk passes to should be taken on each occasionthe Distributor. As soon as that but assistance may be obtainedDistributor collects goods from your from websites. For Consumer premises in ROI, the risk passes to 9 6. him. For further definitions,1.10 What if I am employing someonea new business venture inwill depend on the VAT status of IambasedinIrelandandwanttosellproductsintoNorthernIrelandsee Distributor and Sales Agent in NI to work for me? Northern Ireland, to obtain writtenyour customer. If your customer(Section 11). To determine which legislationconfirmation from your Insurance is VAT registered and the goodsapplies (i.e. UK or ROI) it isCompany in the Republic of Ireland are being exported to NI for1.7 What liability do I have forimportant to establish where thethat it will cover your vehicles/business purposes, effectivelydefective products in NI? employee will be carrying out their drivers for business purposes in no VAT need be charged by theIf goods are being sold through a duties. In certain circumstances, Northern Ireland.supplier. However, the customerDistributor in Northern Ireland, theif your Company is based in ROImust account for the VAT under theDistributor will generally be requiredand employs a NI resident to carry 1.13 Are the traffic/vehicle regulationsreverse charge mechanism (noteto take on liability for defectiveout duties in NI, a special schemethe same in NI?that special wording in this regardproducts. This would be subject known as a direct paymentWhile traffic/vehicle regulationsmust be included on your invoice).to the Distributor being entitled scheme must be operated in the are broadly similar, specific advice In this case you will need to verifyto indemnity from the seller forUK and the employee is required should be taken in each instance.your customers VAT status andthose defective products. In such to register and account for PAYE/ For further information on driverkeep evidence that the goods havecircumstances, the DistributorNational Insurance Contributions in and vehicle licensing in Northernbeen exported. If the customer iswould deal directly with the buyerthe UK. Ireland go to the NI Department of not registered for UK VAT, then Irishand would in turn be entitled to be Environment website www.dvlni. VAT must be charged.compensated by the seller for any Bear in mind that if you employ In certain instances, shouldloss arising to the Distributor assomeone in NI to work for you, that you wish to avoid the expense of You should also be aware of thea result of th