Consignment export, one of the most frequently used terms in global trade, describes the shipment of goods to foreign brokers, buyers, or the overseas branches or representative offices of suppliers, with the final sale to be made later. Shipments for consignment exports must be completed within one year from the date of the declaration. As the GoTradeGo foreign trade platform, we will provide detailed answers to the questions of what consignment export is and how it is done.

What is consignment export?

Within the types of exports, consignment export involves a three-way relationship. The person exporting the goods is called the consignor, the person receiving the goods is called the consignee, and the goods themselves are called the consignee. When we look at the question of what consignment export is;  

In consignment exports and sales, goods are shipped to the buyer at an agreed price, and payment is made later. The seller who completes the sale sends their products to another seller, distributor, or commission agent without receiving any payment.  

With globalization and increasing competition, companies are opting for consignment export methods. Sellers and buyers use consignment sales to expand their market share and conduct sustainable trade.  

How to do consignment export?

Consignment export can be used when goods are not sold all at once and will be sold in parts later. Here's how consignment export works to facilitate sales for companies;

To carry out a consignment export, the seller creates an invoice. This document must state "consignment export" .  

The declaration is created through the exporters' association system. The city is indicated on the declaration as "consignment export" . Additionally, the payment method is selected as "payment against goods".

If a declaration for consignment export was created via e-Union, there is no need to apply to the Exporters' Association with the original documents.  

After the declaration is created electronically, if the declaration code is selected as "consignment export" and the city of "consignment export" is entered in field 44 of the declaration, the declaration is automatically transferred to the Exporter Association Approval Desk for registration and approval.  

To register the declaration at the Exporters' Association Approval Desk, you need to contact the approval desk and obtain the association's approval.  

Once the union's approval is received, the declaration is registered, customs procedures are completed, and the consignment export is carried out.  

It is essential that sales be made within one year from the date of completion of the declaration. In addition, this period may be extended by two years by the General Secretariat of Exporter Associations due to justifiable and compelling reasons.  

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E-Invoice in Consignment Exports

In initial consignment exports, it is more appropriate to issue a paper invoice during the export process since the final sale will be shipped later. If an invoice is issued in the name of the consignee abroad within 7 days following the sale of the consignment goods, and if this invoice relates to a final sale and a new customs declaration needs to be opened due to the transition from temporary export to final export, then this invoice must be issued as an export e-invoice. If there is no attached customs export declaration, this invoice will be issued as an e-archive invoice.  

As a result, since the first invoice will be considered a delivery and not an actual sale, the invoice must be issued in paper form for the first consignment export.  

You might also be interested in: What is an e-export invoice? How to issue an e-invoice for export?

VAT Refund in Consignment Exports

In consignment exports, the one-year right granted may be extended for another two years by the Export General Secretariat due to justifiable and compelling reasons. If the goods sent cannot be sold within the export period, they must be brought back into the country in accordance with customs regulations. What is the scope of VAT refund in consignment exports?

VAT is levied upon the final sale of goods. However, consignment exports are considered exempt, therefore VAT will not apply. The exporter can receive a refund of the VAT they charged but could not deduct for the exported goods after the final sale, according to general principles. After the final sale, the seller will declare the exemption with a VAT return.  

We have provided detailed information about consignment export, a system used by exporters on the GoTradeGo foreign trade platform. You can explore GoTradeGo to learn more about export and import and to work with foreign trade experts.