Meaning
Assessing the value of goods at the seller’s premises excludes all subsequent transport, insurance and loading costs from the transaction amount. In international trade, ex works valuation establishes the baseline for calculating customs duties when the buyer assumes responsibility for transport. This method applies only to transactions conducted under the EXW Incoterm.
The boundary of this valuation stops at the factory gate or warehouse door. This limitation prevents the inclusion of international freight costs in the dutiable value of the cargo.
Valuation Methodology
The calculation relies solely on the price of the goods as they sit on the manufacturer’s floor. Buyers who arrange their own collection must ensure that the invoice reflects this specific transfer point. Under ex works valuation, any charges for export packing must be included in the transaction value if they are borne by the buyer.
These details must be documented to satisfy customs auditors during subsequent inspections.
Customs Declaration
Importers must adjust the declared value if they use different freight terms but want to calculate duty on an ex works basis. Customs administrations allow for the deduction of international shipping fees from the total invoice value if those fees are clearly separated. This adjustment results in a lower taxable base.
The resulting duty savings can be substantial on long-distance ocean routes.
Logistical Separation
The separation of domestic and international transport costs remains central to this method. All risk and expense pass to the buyer when the seller makes the goods available at the designated site. The seller has no obligation to load the goods onto the collecting vehicle.
