EXW

What it means

EXW, Ex Works, is the Incoterms rule under which the seller only makes the goods available at its warehouse or premises and the buyer bears all costs, risks, loading and customs formalities. It places the fewest obligations on the seller.

Risk passes to the buyer when the goods are made available at the agreed place, even if the buyer has not yet loaded them. This is the key moment of passing of risk, after which the buyer bears any damage to the goods.

EXW suits mainly domestic trade or buyers with their own transport and export experience. In international trade, FCA is often recommended instead, as the seller loads the goods and handles export formalities, which is more practical for both sides.

How it works in practice

For exports outside the EU under EXW, the buyer or its forwarder handles export. The seller, however, needs proof that the goods left the EU to apply the VAT exemption, namely confirmation of exit from customs clearance. If the buyer does not provide it, the seller may have to pay the VAT.

Likewise, for an intra-EU supply where the buyer arranges transport, the seller needs the buyer's written statement that it transported the goods and other proof of transport to apply the exemption. Without them, the tax authority will deny the exemption and assess VAT.

In practice the seller often loads the goods even though EXW does not require it, because the buyer lacks equipment. If damage occurs during loading, disputes over liability arise, so the contract should state expressly who loads and at whose risk.

What to watch out for

Under EXW the seller loses control over where the goods go, which complicates proof of export and sanctions compliance. If the goods are sold domestically instead of exported, or end up in an embargoed country, the seller may face tax and legal consequences.

EXW is not recommended if the buyer cannot handle export customs formalities in the seller's country. In the EU, the export declaration must be lodged by a person established in the EU, which a foreign buyer without a representative often cannot arrange.