Nowadays, as globalization is consolidating, more and more companies are starting to export services in order to find new markets and increase their customer base. However, we often encounter greater difficulties with regard to trade in goods, especially in the legal sphere, since we cannot export any kind of service, such as, for example, health and education, which are services of public interest.
In addition, it is necessary to do a convenient research of the market of services, to know better the target companies and to be able to offer them better the service. Today, tourism services are gaining more and more importance over non-tourist services. Among these, business services grew by around 8.9% compared to 2016.
The General Agreement on Trade in Services (GATS), which regulates foreign trade in services, needs to be taken into account for the export of services.
Within the services to be exported, we have several types:
- Export of cross-border services, where the supplier and the client operate directly from their countries, without the need for any physical movement.
- Reverse export, where the customer travels to the supplier’s country and receives the service.
- Movement of people, where the service provider travels to the destination country, in order to offer the service.
- Establishment abroad, where the supplier establishes a headquarters in the destination country and offers the service from there.
Legal aspects for the internationalization of services
Nowadays, many companies, both for goods and services, are opting to internationalize themselves, in order to reach other markets that allow them not only to grow the company, but also to survive due to issues such as the lack of internal demand, although there is less and less talk about internal and external demand, simply talking about demand. However, this can lead to many complications as the regulations governing the services offered by the exporting company may differ in some respects and should not be overlooked.
These aspects are:
– The existence of international agreements between trading countries.
– Whether or not the service we sell is exportable, in accordance with GATS (General Agreement on Trade in Services) regulations.
– The political and legal stability of the country, which may hinder or promote the provision of the service in the destination country.
– Taxation to be applied, since we are talking about operations with a third country, so international double taxation must be avoided. In the case of business services, this will mean that within the EU legal framework, the company receiving the services will not have to pay VAT, however, they will have to submit an invoice within the time limit prescribed by the tax. It will also depend on whether or not the service is provided within the tax territory. In this case, the VAT charged in the territory of destination will be charged.
– Administrative aspects. Considering that we are going to sell abroad, it is very important to know the administrative rules of the destination country, as we may find that some of these services may not be tradable.