EXW (Ex Works) - Incoterm 2020 - Obligations, Risk, Customs Value
E - Departure
Transport mode
All modes
Valuation group
fob
Risk transfer
Seller's premises
EXW (Ex Works) is the Incoterms® 2020 rule that places the minimum obligation on the seller. The seller makes the goods available at their premises (factory, warehouse, store), without any obligation to load them onto a collecting vehicle or to clear the goods for export.
The buyer bears all costs and risks involved in transporting the goods from the seller's premises to the final destination. This includes loading, inland transport, export and import customs formalities, main carriage, insurance, and unloading.
EXW is suitable for domestic or intra-EU trade where the buyer has the necessary logistics infrastructure. It is strongly discouraged for exports outside the EU, since the buyer would need to handle export customs formalities in the seller's country - which often requires fiscal representation.
In practice, even under EXW, the seller usually loads the goods onto the buyer's vehicle, creating an uncontracted transfer of risk and a frequent source of disputes. The ICC recommends using FCA in such cases.
EXW can be used with any mode of transport (sea, air, road, rail, multimodal). The transfer of risk occurs as soon as the goods are placed at the buyer's disposal at the seller's premises.
Who is responsible for export clearance under EXW Incoterms 2020?
Under EXW, the buyer is responsible for all export clearance formalities, as stated in Article B7. The seller has no obligation to clear the goods for export but must assist the buyer at the buyer's request, risk, and expense (Article A7). This allocation is unusual and often problematic, as the buyer must handle export procedures in the seller's country.
Does the seller have any export obligation under EXW?
No, the seller has no export obligation under EXW. Article A7 explicitly states the seller has no duty to carry out export clearance. The seller's only obligation is to assist the buyer, at the buyer's request, risk, and expense, in obtaining documents and information needed for export. This is the key limitation that makes EXW problematic for international sales.
Why is EXW problematic for international exports outside the EU?
EXW is problematic for non-EU exports because the buyer must perform export customs formalities in the seller's country, which typically requires an EORI number and potentially fiscal representation. The seller retains no documentary proof of goods leaving the territory, creating a VAT zero-rating risk. Customs authorities in most EU member states actively discourage this arrangement.
How does the seller prove export and zero-rate VAT under EXW?
The seller must obtain from the buyer proof that goods have actually left the EU customs territory, such as a customs-endorsed SAD (Single Administrative Document) or an ECS (Export Control System) exit certificate. Without this proof, the seller risks a VAT reassessment on the export sale. It is essential to include a contractual clause requiring the buyer to provide these documents.
Can the buyer perform export customs formalities under EXW?
Yes, the buyer can perform export formalities under EXW, but it is often impractical. The buyer needs a valid EORI number in the country of export and may require fiscal representation. In practice, many customs brokers and authorities expect the exporter (seller) to handle the export declaration. This is why the ICC recommends FCA as an alternative.
What is the difference between EXW and FCA for export clearance?
The fundamental difference is that under EXW, the buyer handles export clearance, while under FCA, the seller handles it. With FCA, the seller retains the SAD and ECS exit certificate, proving goods left the territory and justifying VAT zero-rating. Under EXW, the seller has no such proof. FCA also clarifies the loading responsibility, which is ambiguous under EXW.
Who pays loading costs under EXW Incoterms 2020?
The buyer pays all loading costs under EXW, as confirmed by Article B9. The seller is not contractually obliged to load the goods onto the collecting vehicle. However, in practice, the seller often loads using their own equipment (forklift, crane), creating an uncontracted risk transfer. The ICC recommends using FCA at seller's premises to clarify this obligation.
Is EXW recommended for containerized or maritime shipments?
No, EXW is not recommended for containerized or maritime shipments. The ICC advises using FCA instead, as it better reflects the reality of modern containerized trade where goods are handed to the carrier at a terminal. EXW's risk transfer point (seller's premises) does not align well with container logistics, and the buyer would need to handle export clearance in the seller's country.
What happens if the buyer cannot obtain an export license under EXW?
If the buyer cannot obtain an export license, the goods cannot be legally exported, and the transaction is blocked. Under EXW, the buyer bears the full risk and cost of obtaining export licenses (Article B7). The seller is only obliged to assist upon request. This situation is a major argument against using EXW for controlled goods or exports requiring licenses.
How does EXW affect customs valuation in the importing country?
The EXW price represents the lowest possible invoice value, as it excludes loading, inland transport, freight, and insurance. To determine customs value on a CIF basis (standard in the EU), all these costs must be added: loading, inland transport to exit point, international freight, and insurance. The customs adjustment code AK applies for transport costs to be added.
When does risk transfer from seller to buyer under EXW?
Risk transfers when the seller places the goods at the buyer's disposal at the agreed point within the named place (Article A2/A3). This occurs before loading - the goods simply need to be made available. If no specific point is agreed, the seller may choose the point that best suits their purpose. This means the buyer bears risk during loading, even if the seller performs it.
Is insurance mandatory under EXW?
No, neither party is contractually obliged to take out insurance under EXW (Articles A5 and B5). However, since the buyer bears all risks from the moment of availability, including during loading and the entire transport chain, it is strongly recommended to take out comprehensive cargo insurance covering all risks from the seller's premises to the final destination.
Can EXW be used for intra-EU trade?
Yes, EXW is well-suited for intra-EU trade because there are no export customs formalities to perform within the single market (free movement of goods). The main risks - export clearance complications and VAT proof issues - do not apply. The buyer simply arranges transport from the seller's premises. This is the most appropriate and least risky use case for EXW.
What are the seller's minimum obligations under EXW?
The seller's obligations under EXW are the minimum of all Incoterms 2020 rules. The seller must provide the goods and commercial invoice (A1), make goods available at the named place (A2), package the goods appropriately (A8), and bear costs until availability (A9). The seller has no obligation for loading, transport, insurance, export clearance, or providing transport documents.
Why do customs authorities discourage EXW for exports?
Customs authorities discourage EXW because the buyer (a foreign entity) must file the export declaration in the seller's country, which complicates regulatory oversight. The arrangement makes it harder to track actual exports, verify VAT zero-rating claims, and enforce export controls. Several EU member states have issued guidance recommending sellers use FCA or other terms where the seller handles export formalities.
What is the recommended alternative to EXW for international trade?
FCA (Free Carrier) is the ICC-recommended alternative to EXW for international trade. Under FCA, the seller handles export clearance and loading (if at seller's premises), retains proof of export for VAT purposes, and the buyer is not required to have an EORI number in the seller's country. FCA can be used with any transport mode and resolves all major EXW pain points.
Common mistakes
1Using EXW for non-EU exports when the buyer cannot handle export formalities in the seller's country.
2Failing to specify the precise place of availability, creating ambiguity about the moment of risk transfer.
3Forgetting that the seller has no proof of goods leaving the territory, which can cause export VAT issues.
Seller vs buyer obligations
Obligation
Seller
Buyer
Export formalities
Loading
Main transport
Transport insurance
Unloading
Import formalities
Risk transfer diagram
ICC Explanatory notes
Delivery and transfer of risks
Under EXW, delivery takes place when the seller places the goods at the buyer's disposal at an agreed point (usually the seller's premises), not when the goods are loaded onto the collecting vehicle.
The seller is not obliged to load the goods onto the vehicle provided by the buyer, even though in practice this is often done. If the seller does load, it is at the buyer's risk and cost, unless otherwise agreed.
Key point: if the parties want the seller to be responsible for loading, they should use FCA instead.
Applicable mode of transport
EXW can be used regardless of the mode of transport selected, including multimodal transport. Unlike maritime-specific Incoterms (FAS, FOB, CFR, CIF), it is not limited to waterway transport.
However, the choice of transport mode impacts the customs value: the adjustments needed to convert an EXW price to a CIF/CIP value (customs basis in the EU) vary depending on whether freight is by air, sea, or road.
Place and precise point of delivery
The parties should specify as clearly as possible the point of delivery within the named place. It is at this point that risk transfers from seller to buyer.
If no specific point is agreed and there are several possible points within the named place, the seller may choose the point that best suits their purpose.
Recommended wording: "EXW [exact address of seller's factory/warehouse] Incoterms® 2020"
Example: EXW Warehouse 3, North Industrial Zone, 69200 Vénissieux, France - Incoterms® 2020
Critical points
Loading risks
The seller often loads in practice without contractual provision - a major source of disputes.
Under EXW, loading is contractually the buyer's responsibility. However, in most cases, the seller loads the goods onto the truck because they have the equipment (forklift, overhead crane, loading dock).
This gap between contractual theory and practice creates a legal grey area:
If goods are damaged during loading performed by the seller, who is liable?
The buyer could argue that the seller accepted the loading obligation de facto.
The seller could argue they acted as a courtesy, at the buyer's risk.
Recommendation: if the seller actually loads the goods, it is preferable to use FCA (seller's premises) which clarifies this obligation. Otherwise, include an explicit contractual clause on loading responsibility.
Export clearance
The buyer must handle export formalities in the seller's country - often problematic.
Under EXW, export formalities are the buyer's responsibility. However, in most countries, the export customs declaration must be made by the exporter or their authorized customs broker in the country of export.
Practical consequences:
The foreign buyer must have an EORI number in the seller's country (or use a customs broker).
In some countries, the buyer may need fiscal representation to complete the formalities.
The seller has no documentary proof of the goods actually leaving their territory, which can complicate the justification of VAT zero-rating for exports.
Recommendation: for any sale outside the EU, prefer FCA where the seller handles export formalities and retains documentary proof of the goods leaving the territory.
Proof of export and VAT
The seller has no proof of goods leaving the territory - tax risk.
One of the most underestimated problems with EXW in an international context is the issue of export VAT.
To benefit from VAT zero-rating on export sales, the seller must be able to prove that the goods have actually left the EU customs territory. Under EXW:
The seller does not carry out the export.
The seller has neither the SAD (Single Administrative Document) nor the proof of exit (ECS - Export Control System).
The seller must rely on the buyer to provide this proof.
In the event of a tax audit, if the seller cannot prove actual departure, they risk a VAT reassessment on the supposedly exported sales.
Recommendation: contractually require the buyer to provide proof of exit (copy of the customs-endorsed SAD, ECS exit certificate). Better still, use FCA.
Detailed seller obligations (A1-A10)
Article A1General obligations
The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may be required by the contract.
Any document referred to in A1-A10 may be an equivalent electronic record or procedure if agreed between the parties or customary.
Article A2Delivery
The seller must deliver the goods by placing them at the disposal of the buyer at the agreed point of delivery, if any, at the named place of delivery, on the agreed date or within the agreed period.
If no specific point has been agreed within the named place, and if there are several points available, the seller may select the point that best suits its purpose.
Article A3Transfer of risks
The seller bears all risks of loss of or damage to the goods until they have been delivered in accordance with A2, with the exception of loss or damage in the circumstances described in B3.
Article A4Carriage
The seller has no obligation to the buyer to make a contract of carriage.
Article A5Insurance
The seller has no obligation to the buyer to make a contract of insurance.
Article A6Delivery / transport document
The seller has no obligation to the buyer.
Article A7Export / import clearance
a) Export clearance: the seller has no obligation. However, the seller must render the buyer, at the buyer's request, risk, and expense, assistance in obtaining any documents and/or information needed for export clearance formalities.
b) Transit assistance: the seller must, at the buyer's request, risk, and expense, provide assistance in obtaining any transit documents.
c) Import clearance: the seller has no obligation.
Article A8Checking / packaging / marking
The seller must pay the costs of those checking operations (such as checking quality, measuring, weighing, counting) that are necessary for the purpose of delivering the goods in accordance with A2.
The seller must, at its own expense, package the goods, unless it is usual for the particular trade to transport the type of goods sold unpackaged. The seller may package the goods in the manner appropriate for their transport, unless the buyer has notified the seller of specific packaging requirements before the contract of sale is concluded. Packaging is to be marked appropriately.
Article A9Allocation of costs
The seller must pay:
All costs relating to the goods until they have been delivered in accordance with A2.
Where applicable, the costs of packaging and marking (A8).
The costs of providing assistance to the buyer in obtaining documents or information (A7), subject to reimbursement by the buyer.
Article A10Notices
The seller must, at the buyer's request, risk, and expense, provide or render assistance in obtaining any information, including security-related information, that the buyer needs for the transport and/or export/import of the goods and their transit through any country.
Detailed buyer obligations (B1-B10)
Article B1General obligations
The buyer must pay the price of the goods as provided in the contract of sale.
Any document referred to in B1-B10 may be an equivalent electronic record or procedure if agreed between the parties or customary.
Article B2Taking delivery
The buyer must take delivery of the goods when they have been delivered as envisaged in A2.
Article B3Transfer of risks
The buyer bears all risks of loss of or damage to the goods from the time they have been delivered as envisaged in A2.
If the buyer fails to give notice in accordance with B10, the buyer bears all risks of loss of or damage to the goods from the agreed date or the expiry date of the agreed period for delivery, provided that the goods have been clearly identified as the contract goods.
Article B4Carriage
The buyer has no obligation to the seller to make a contract of carriage. However, the buyer must arrange, at its own cost, for the carriage of the goods from the named place of delivery.
Article B5Insurance
The buyer has no obligation to the seller to make a contract of insurance. However, it is strongly recommended that the buyer take out transport insurance covering risks from the point of collection.
Article B6Proof of delivery
The buyer must provide the seller with appropriate evidence of having taken delivery.
Article B7Export / import clearance
a) Export clearance: the buyer must, at its own risk and expense, obtain any export licence or other official authorization and carry out all customs formalities necessary for the export of the goods.
b) Transit assistance: the buyer must, at its own risk and expense, carry out transit formalities.
c) Import clearance: the buyer must carry out and pay for import clearance formalities, including customs duties and taxes.
Article B8Checking / packaging / marking
The buyer has no obligation to the seller. However, the buyer must pay the costs of any mandatory pre-shipment inspection, including inspection mandated by the authorities of the country of export.
Article B9Allocation of costs
The buyer must pay:
All costs relating to the goods from the time they have been delivered as envisaged in A2.
All costs of loading the goods (the seller is not obliged to load).
Any additional costs incurred if the buyer fails to take delivery or to give appropriate notice (B10).
Where applicable, all duties, taxes, and other charges, as well as the costs of carrying out customs formalities for export, transit, and import.
The costs of obtaining documents and information (A7, A10) and assistance provided by the seller.
Article B10Notices
The buyer must give the seller sufficient notice of the date or period for taking delivery and, if applicable, the point within the named place.
The buyer must, in due time, advise the seller of any security information requirements so that the seller can comply with A10.
EXW vs FCA comparison
Critère
EXW
FCA
Export formalities
Buyer
Seller
Loading
Buyer (ambiguous in practice)
Seller (if seller's premises)
Transfer of risks
Seller's premises (made available)
To carrier or seller's premises
Proof of export
None for the seller
Seller holds the SAD
Export VAT
Tax risk for the seller
Seller justifies zero-rating
Recommended use
Domestic or intra-EU
All modes, domestic and international
Bill of lading (maritime)
Not applicable
Option B for documentary credit
Impact on customs value
Incoterm EXW belongs to group FOB. This group determines which adjustments (AK/BA) are applied to the invoiced price to calculate customs value.
Collection window: provide a time window for collection.
Proof of exit: for exports, contractually require the buyer to provide proof of the goods leaving the territory (SAD copy, ECS certificate).
Packaging: specify packaging requirements for the intended transport.
Notice: the buyer must notify the seller of the collection date and time with sufficient advance notice.
Analysis by profile
Advantages
L'acheteur a la maîtrise du transport tout au long du trajet. Flexibilité sur le choix des prestataires, les délais et les coûts.
Disadvantages
Obligations maximales. L'acheteur est responsable des formalités douanières dans le pays du fournisseur. L'acheteur doit dans la majorité des cas être fiscalement représenté dans le pays tiers.
Recommendations
Limiter l'usage de l'incoterm EXW aux achats locaux ou intra-UE.
En cas d'achat auprès d'un fournisseur tiers, flux à anticiper si peu habitué.
S'assurer des obligations à respecter pour la réalisation des formalités douanières.
Contractuellement, bien définir avec précision le lieu de transfert des risques et de répartition des coûts.
Coordination à prévoir avec l'acheteur au regard de la déclaration en douane à l'exportation.
Assurance transport principal conseillée.
Important : Transport insurance is recommended for this Incoterm.
Comparative analysis (radar)
EXW
Compare with
Common mistakes
1
Using EXW for non-EU exports when the buyer cannot handle export formalities in the seller's country.
2
Failing to specify the precise place of availability, creating ambiguity about the moment of risk transfer.
3
Forgetting that the seller has no proof of goods leaving the territory, which can cause export VAT issues.
4
Letting the seller load the goods without a contractual clause, creating a grey area in case of damage during loading.
5
Not taking out transport insurance when the buyer bears all risks from the seller's premises.
EXW 2020: Who Handles Export Clearance & Loading? - The Trade Hub