In the last two years, the (possible) exit of the United Kingdom from the European Union has caused quite a stir. A multitude of practical and legal points of attention and issues were identified for citizens and businesses.
For many companies, the postponement of the United Kingdom's withdrawal from the European Union until 31 October 2019 is an opportunity to make the necessary preparations to neutralize the adverse effects of Brexit. In addition, we believe that it is also a moment to consider whether Brexit also offers opportunities.
What the outcome will be of the United Kingdom's withdrawal from the European Union is currently opaque. In principle, everything is still possible, from no Brexit over a negotiated Brexit to a Brexit without an withdrawal agreement. Under the motto "hope for the best, prepare for the worst", we provide below a basic list of points of attention and action in the field of customs and VAT.
A company needs an EORI number to trade with countries outside the EU (so-called third countries). This number is based on the company number, but must be applied for with the Customs and Excise administration. The Customs and Excise authorities have already proactively issued an EORI number for approximately 20,000 companies. If your company trades internationally and does not yet have an EORI number, we recommend that you to apply for one immediately.
The United Kingdom is an important trading partner today and is likely to remain so in the future. Companies are therefore well advised to build up both internal and external knowledge in the field of customs legislation and formalities. It is also advisable that you do the same with regard to VAT. Contact specialists in the field, such as VAT advisers, customs representatives or logistics service providers, to examine your trade flows.
The main effect of Brexit on supply chains will be the reintroduction of tax frontiers between the European Union and the United Kingdom. This will imply the end of the principles and rules of the intra-Community system that currently apply to the movement of goods from the European Union to the United Kingdom.
It is therefore important to identify where your company will be confronted with additional VAT and / or customs issues and formalities. In the field of VAT, your company may be confronted with new VAT registration obligations (with or without mandatory VAT representation), other VAT treatments and reporting of purchases and sales transactions, etc. In this context, it is also recommended to check whether your ERP package is ready to handle these changes. In the field of customs, on the other hand, your company may encounter new duties and formalities.
In order to obtain a complete overview of the VAT and customs impact of Brexit, we recommend that you not only look at the physical flows of goods but also pay attention to the legal relationships between your company and its trading partners in the United Kingdom. After all, where and when title of ownership transfers and from whom to whom is of great importance for the VAT and customs consequences that apply in commercial transactions.
Fortunately, there are also simplification measures in the field of VAT and customs. Customs and VAT licenses and simplifications make the trading process smoother and allow for the temporary storage of goods or give the possibility to work under suspension of customs duties, excise duties and / or VAT. In addition, there are options for avoiding pre-financing of levies and taxes. Existing permits will have to be expanded if necessary. New permits must be applied for in time.