BREXIT

new rules from 1st January 2021 

 

PREPARE YOUR COMPANY FOR JANUARY 2021 - BREXIT AND CUSTOMS DUTIES    

 

                The United Kingdom has left the European Union and the post-Brexit transition period is ending on December 31st, 2020. There is talk of the "New Beginning of Great Britain", but what does this mean for us citizens and entrepreneurs from EU countries?

                January 1st, 2021,will be a date that will surely go down in history not only of Great Britain but of the whole of Europe, if not of the world. United Kingdom leaving the EU, known as Brexit became a reality on February 1st, the withdrawal agreement concluded between the EU and the United Kingdom becomes effective. According to it, Great Britain (along with Northern Ireland) will become a third country, which will cause considerable difficulties related to traveling or the exchange of goods between countries. The consequence of leaving the single market of the European Union is, first of all, basing economic relations on the general principles of the World Trade Organization (WTO), which means, i.e. the introduction of customs duties and customs controls, changes in the rules of settling VAT, excise duty, restrictions for transport companies or the need for entrepreneurs and exporters to adapt to the new British regulations. These and many other difficulties will certainly become the new reality of the trade between the European Union and the United Kingdom on January 1st, 2021.

 

At the moment till December 31st, 2020, there is still a transitional period which, in a sense protects the interests of entrepreneurs and citizens on both sides of the EU and GB. Until that date, the relationships remain rather unchanged, i.e.:

  • absence of customs duties and other barriers to trade,
  • maintaining the current rules for crossing the EU-United Kingdom border (traveling with IDs),
  • export of goods to the UK under the current rules,
  • the existing EU regulations on VAT and excise duty apply,
  • maintaining the current rules for road and air transport.

                A new agreement that would introduce regulations to the cooperation between the United Kingdom and the EU Member States has been undergoing intense negotiations for a long time. The time of the global pandemic does not help the situation, so most of the first discussions were conducted in the form of video conferences. At present, there is no full agreement on the form and terms of cooperation.

 

export - import

                The emergence of (currently non-existent) barricades for trade in goods and services, as well as barriers to mobility and cross-border exchange, will undoubtedly be supported by the fact that the United Kingdom will no longer participate in the creation of EU policies after the transition period. The results will affect not only public administration and enterprises, but also citizens and businesses on both sides, so everyone must be aware of them and most importantly they must prepare for them.

                Due to the decisions taken by the government of the United Kingdom regarding the future relationship with the European Union and not extending of the transition period, these inevitable disruptions will appear from January 1st, 2021, and there is a risk of increasing the pressure companies are already under due to the COVID-19 pandemic. It is very important now to make all concerned aware of the upcoming changes and their consequences and help them prepare for what is to come, no matter which scenario is implemented.

BELOW, WE PRESENT THE CHANGES THAT WILL TAKE PLACE, REGARDLESS OF THE RESULTS OF THE NEGOTIATIONS

 

                The changes will become effective automatically and will enter into force on January 1, 2021, and from then on, the United Kingdom will no longer be part of the EU's single market and the customs union, whichwill create barriers to trade in goods and services and cross-border mobility and exchanges.

                The United Kingdom has officially confirmed that there will be no extension of the transition period. However, taking into account the fact that the world has been declared a state of the pandemic, which has caused a considerable pressure in world markets, the United Kingdom plans to introduce border controls in stages after the end of the transition period.

The reintroduction of border controls will take place whether or not there is a free trade agreement.

Below is the calendar for the implementation of the changes:

 

  • from January 1st,2021

traders importing standard goods, covering everything from clothes to electronics, will need to prepare for basic customs requirements, such as keeping sufficient records of imported goods and will have up to six months to complete customs declarations. While tariffs will need to be paid on all imports, payments can be deferred until the customs declaration has been made. There will be checks on controlled goods like alcohol and tobacco or toxic products and chemical substances. Businesses will also need to consider how they account for VAT on imported goods.

 

  • from April 1st, 2021

all products of animal origin (POAO) – for example meat, pet food, honey, milk, or egg products – and all regulated plants and plant products will also require pre-notification and the relevant health documentation.

 

  • from July 1st,2021

traders moving all goods will have to make declarations at the point of importation and pay relevant tariffs. Full Safety and Security declarations will be required, while for SPS commodities there will be an increase in physical checks and the taking of samples: checks for animals, plants, and their products will now take place at GB Border Control Posts

 

Source:
https://www.gov.uk/government/news/government-accelerates-border-planning-for-the-end-of-the-transition-period

               Customs controls on the European Union side will be carried out under the Union Customs Code according to a common system, which is based on a risk analysis, which is applied to all other external borders of the Union for the movement of goods both from and to non-EU countries. It is highly probable that due to increased border controls the delivery time in logistics supply chains will be extended and will put a heavy administrative burden on businesses.

               After the end of the transition periodon January 1st, 2021, for all customs formalities to be met EU companies that intend to transport from/to the United Kingdom will need to have a special registrationnumber (EORI - Economic Operators' Registration and Identification), which is a number of the Community System for Registration and Identification of Economic Operators.

Advice to businesses and Member State administrations


EU businesses must acquaint themselves with the formalities and procedures for doing business with the United Kingdom as a third country as of 1 January 2021. They should also factor in the increased administrative obligations and potentially longer timeframes resulting from these formalities and procedures. This might entail significant changes to the organisation of existing supply chains. Businesses are responsible for assessing the actions needed in view of these changes, in light of their individual situation.
The administrations of EU Member States have prepared the major border passage points and developed solutions to ensure the application of the Union Customs Code in this context. Where necessary, they should continue implementing and refining those options, and pursue their efforts to raise awareness among businesses, targeting small and medium-sized enterprises (SMEs) in particular.


Source: "COMMUNICATION FROM THE COMMISSION TO THE EUROPEANPARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS - Getting ready for changesCommunication on readiness at the end of the transition periodbetween the European Union and the United Kingdom", Brussels, 9.7.2020COM(2020) 324 final

Tax regulations for the import and export of goods
(tariffs, VAT, excise duties)

 

                Until December 31st, 2020 there are no tariffs, quotas, no border controls, and no need to prove the origin of the goods transported on goods traded between the EU and the UK. Regarding VAT and excise duties, the United Kingdom participates in the EU customs union and is part of the EU territory during the transition period.

                From January 1st, 2021, it will be necessary to prove the origin of the goods. Those that do not comply with the origin requirements will be subject to customs duties (even if the zero-duty, zero-quota trade agreement between the EU and the UK is concluded).

 

Advice to businesses and Member State administrations

 

Traders will need to be able to demonstrate the originating status of goods traded for them to be entitled to preferential treatment under a possible future EU-UK agreement. Goods not meeting origin requirements would not benefit from those preferential trade arrangements.EU businesses should also be ready to start treating any UK content (inputs and processes) as ‘non-originating’ in the context of trade with current Union preferential partner countries, in order to be sure that their exports can continue to benefit from the preferential treatment accorded by the Union’s Free Trade Agreements in any event as of the end of the transition period.13 United Kingdom content incorporated in goods obtained in third countries with which the Union has preferential trade arrangements and imported into the Union will be also ‘non-originating’. The United Kingdom will henceforth be a third country for the purpose of the direct transport/non-manipulation rule and businesses should adapt their logistics accordingly.

Furthermore, EU businesses should get acquainted with the relevant VAT procedures and prepare for their application. They should factor in increased administrative obligations andpotential delays where relevant. This might entail significant changes to the organisation of existing supply chains and accounting processes.

The administrations of EU Member States should prepare for the additional burden created by these changes, both in terms of staffing and training, and step up awareness-raising, targeting small and medium-sized enterprises in particular.


Source: "COMMUNICATION FROM THE COMMISSION TO THE EUROPEANPARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS - Getting ready for changesCommunication on readiness at the end of the transition periodbetween the European Union and the United Kingdom", Brussels, 9.7.2020COM(2020) 324 final

More information:  https://www.gov.uk

BE PREPARED FOR ALL POSSIBLE SCENARIOS

 

                Failure to reaching an agreement between the European Union and the United Kingdom would certainly lead to serious disruptions. In the absence of any agreement, goods imported from the United Kingdom into the Union would be subject to the EU's "Common Customs Tariff", while the other way around goods imported from the Union into the UK would be subject to the tariffs applicable in that area.

( New global tariffs that will enter into force onJanuary 1st, 2021 after the transition period for EU goods in the event of no agreement on the future relationship available here- https://www.gov.uk/guidance/uk-tariffs-from-1-january-2021 )

 

Sources: