Businesses can secure a saving when purchasing capital equipment abroad

The cost of purchasing and maintaining capital equipment is a significant challenge for many businesses. In an effort to source the best products on the market at the most competitive prices, many companies have begun to look abroad. While importing capital equipment is not without its challenges, it can be beneficial and cost savings can be made.

There are, however, many factors to consider. The first is the value of sterling against the euro which immediately has an impact on the relative cost of any machinery being imported. Sterling has risen by more than 15 per cent against the euro in the past 12 months. Think about this: simply due to exchange rate shifts, you are immediately making a hefty saving on any import compared to this time last year.

There are also legal and technical issues to think about when importing machinery. Does the equipment meet EU and UK health and safety standards? If equipment is brought into the UK from a destination where safety standards are not as stringent as in the UK, work will need to be carried out to ensure that it can legally be operated here.

VAT issues are another key consideration. To take the example of a tractor – an increasingly popular import - under current guidelines, no VAT duty is due in the EU provided you can prove: the vehicle is more than six months old; it has more than 6,000km on the clock; VAT was paid on the original purchase. If these can’t be proved, the vehicle will be classed as ‘new’ and VAT will be due again on the import. Take professional advice if in doubt.

There are various avenues for sourcing machinery abroad. Online resources are widely available, a good example being www.machineryzone.eu. A mammoth site, it lists tens of thousands of items of equipment and commercial vehicles.

In terms of prices, it’s difficult to make general observations about such a vast market. For example, my own research and anecdotal evidence suggests used tractors can be sourced at hugely attractive prices in France, Germany and Holland. But you need to thoroughly research the market yourself - and remember; if a deal looks too good to be true, it probably is.

Shipping is a critical issue. While the more industrious among you might be tempted to head overseas to pick up your own product, others need to take care to source a competent shipping agent in order to ensure your machinery arrives in accordance with international importation laws. Can you be sure your agent will handle your product with care? Shop around and ask for testimonials if necessary.

One final point worth mentioning is alluded to earlier: exchange rates. In theory, now is a good time to be importing from the Continent given sterling’s rate against the euro. But be mindful that exchange rates are volatile right now and a sharp shift in rates between agreeing a deal and making payment could alter the price you pay significantly. Take professional advice if you have any concerns.

For further information go to www.SmartCurrencyBusiness.com or call 0207 898 0500.