Brexit has changed the way exchanges are done between the UK and the EU. Here are the main changes.
What is Brexit?January 31, 2020 was a historic date for the European Union and the United Kingdom, the day when the British archipelago has officially left the European Union. This departure follows the results of the referendum of June 23, 2016 during which over half of British voters decided on the withdrawal of the United Kingdom from the European Union. In order to prepare for this exit, the United Kingdom and the 27 countries of the European Union have decided to set up a transition period. It took about 11 months for the administrations of the various countries of the European Union and the British government to reach a compromise in the Brexit negotiations. And above all, during this period, companies had to become compliant with the new regulations, as well as with the administrative procedures put in place on January 1, 2021.
What documents to travel to or work in the UK?Brexit has put an end to the free movement of people and goods. The borders have been restored between the United Kingdom and the 27 countries of the European Union. For private individuals, no more identity cards and fast border crossings: you will need a valid passport to enter the British territory. European nationals wishing to stay there for more than 6 months or find work there will now be required to obtain, before signing their employment contracts:
- either a visa,
- or a residence permit.
What are the commercial consequences in terms of customs and value added tax (VAT) between the United Kingdom and the 27 EU countries?As mentioned previously, the agreements concerning the movement of goods between the United Kingdom and the European Union have been rendered null and void on January 1, 2021 at midnight. Cross-border exchanges are therefore, as from this date, considered as coming from or arriving from third countries. Brexit has changed the rules of commercial operations, thus impacting the operational management of European companies working with the United Kingdom, as well as British companies working with the European market. Since January 1, 2021, all goods from the EU to the UK are subject to a declaration with the customs administration. The same applies to goods departing from the United Kingdom and bound for the EU.
Read also: Brexit – HMRC published thorough guidelines regarding the movement of goods between the United Kingdom and the European UnionEach transaction is subject to specific customs formalities. Some are checked directly at the border post, which increases the time drivers spend at a standstill. These additional steps also increase transaction management costs in general. These post-Brexit costs are now shouldered entirely by importing and exporting companies. In most cases, this has therefore also impacted customers, who have experienced a price increase. Following the trade and cooperation agreement signed between the EU and the UK, a free trade area has been created with:
- No duties or quotas on the goods exchanged if they comply with the rules of preferential origin provided for in the agreement.
- Full market access for services and public procurement.
- Strong provisions on fair conditions of competition.
- Bill of lading of the importer,
- Or certificate of origin.
What of the EORI number?The EORI number is used to register economic operators with the customs administration. Their identification allows the monitoring of their import and export commercial transactions. The main role of the EORI number is to guarantee the security of customs operations. Obtaining it is mandatory for all companies wishing to carry out exports, imports or any other operations requiring the implementation of specific customs procedures, such as for example an application for an AEO (Authorized Economic Operator) or the implementation of Domestic Clearance Procedure. Before 1st January 2021, importing and exporting companies were required to have a single EORI number for all their import and export transactions. Following Brexit, companies located in the European Union with activities from the United Kingdom must now obtain a second EORI number in order to meet local requirements. The same is true for British companies performing activities in the territory of the European Union. Brexit has added complexity to trade between the United Kingdom and the European Union.
Read also: Brexit – Check the validity of a UK EORI numberASD Group’s teams specialise in supporting companies carrying out exchanges with the United Kingdom. Since Brexit, we have been supporting our clients in cross-sectoral areas, such as tax, customs and social sectors. Implementing our customised solutions will facilitate day-to-day operations, guaranteeing regulatory compliance, process optimisation and cost reduction.
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