ASD GROUP > FREQUENTLY ASKED QUESTIONS - FAQ - BREXIT - SALES OF GOODS IN THE EU

Brexit - FAQs Sales of goods in the EU
after 1 January 2021

Please note: the following information is subject to rapid change. Furthermore, the information contained in this FAQ is given for information purposes only and is not intended to replace a personalized and in-depth study of your business. For a personalized study of the consequences of BREXIT on your business, please contact our experts.

The UK officially exited the EU on 31 January 2020. In practice, a transition period was decided from 1 February 2020 to 31 December 2020. During this period, nothing will change in terms of VAT or customs.

However, from 1 January 2021, the United Kingdom will effectively have to be treated as a non-EU country.

The EU and the UK have finally agreed on a free trade agreement, which provides for a number of measures to facilitate trade as of January 1, 2021.

Here are the main customs measures contained in this free trade agreement:

  • the movement of goods between the UK and the EU will be subject to customs controls. However, trade will be duty and quota free, provided that companies comply with the rules of origin ;
  • There will be no mutual recognition of European and British certifications. Therefore, to market goods in the EU and the UK, businesses will be required two separate certifications ;
  • British agri-food goods will have to carry health certificates and undergo sanitary and phytosanitary controls at the border inspection posts of the member states.

WARNING: the signing of this FTA does not change the fact that the UK will effectively have to be treated as a non-EU country for customs and VAT purposes.

For movement of goods between the EU and the UK:

  • EU countries will no longer impose Intrastat declarations;
  • The UK will continue to impose Intrastat declarations.

However, UK border controls will gradually be re-established and for every movement of goods between the EU and the UK, it will be necessary to file an export declaration with UK Customs and an import declaration in the country of import.

To carry out import operations into the EU, you will need to appoint a customs representative in the country of import and have a European EORI number.

Unless a free trade agreement providing for exemption from customs duties, is concluded, the importation of goods into the EU from the United Kingdom will necessarily give rise to the payment of customs duties.

No, you will not be able to use you UK EORI number to import into the EU. You will need to apply for a European EORI number.

To obtain a European EORI number, please contact us.

B2B sales of goods shipped from the UK to the EU will no longer be subject to the Distance Selling regime.

B2B sales of goods shipped from the UK to the EU will no longer be subject to the intra-Community supply/acquisition scheme.

This means that all sales of goods shipped from the UK to the EU will be subject to the import/export regime.

Importing goods into the EU from the UK will normally result in the payment of import VAT to European Customs. However, in certain EU countries and under certain conditions, it will be possible to benefit from the reverse charge system for import VAT on request.

In principle, intra-Community VAT numbers allocated to UK businesses should remain unchanged after 1 January 2021.

In some EU countries your VAT number will no longer suffice. You will need to appoint a tax representative who is established in the country of supply and has sufficient creditworthiness. To find out whether you need to appoint a tax representative, contact us.

In addition, for countries that will not require the appointment of a tax representative, the services of a tax agent will still be essential to complete all VAT formalities (obtaining a VAT number, filing VAT returns, filing and following up refund applications, etc.) and to ensure compliance with local regulations.

BtoB sales focus

Your B2B sales of goods shipped from the UK to the EU using incoterm on departure (e.g. Incoterm DDU) will be exports to the UK for you. You will still be able to continue to charge ex VAT.

However, you will be required to file an export declaration with UK Customs.

Customs and tax obligations in the EU will be the responsibility of your European customers.

Your B2B sales of goods shipped from the UK to the EU under Incoterm DDP conditions will be considered:

  • In the UK, as exports excluding VAT;
  • In the country of delivery, as taxable imports followed by local sales excluding or including VAT, depending on the country concerned.

This means that you will have to charge your customers with UK VAT, unless a local reverse charge mechanism applies.

It will be compulsory to file an export declaration with UK Customs as well as an import declaration in the country of delivery. You will therefore need to appoint a customs representative in the country of import to carry out the import formalities on your behalf.

You will also need a European EORI number and a VAT number in the country of import.

BtoC sales focus

From 1 January 2021, the Distance selling scheme will no longer apply. In principle, you will have to invoice your EU customers without VAT.

However, VAT on import into the country of delivery will be charged by the carrier to your European customer before the parcel is delivered, which could result in a large number of parcels being refused. Indeed, European private individuals are used to buying inclusive of VAT, and there is a good chance that they will refuse to pay an extra charge on delivery. Therefore, we strongly recommend that you take care of the import into the EU (see question n°11).

You will need to act as an importer in the country of delivery. These sales will then constitute for you:

  • In the United Kingdom, exports excluding VAT.
  • In the country of delivery, taxable imports followed by taxable local sales.

You will therefore be able to charge the VAT of the country of delivery at the time of order, and no additional charge will be made to your customer at the time of delivery.

To act as an importer, you must appoint a customs representative in the country of delivery and ask him to carry out the import formalities on your behalf. You will then be responsible for paying the import VAT in the country of delivery (which is then recoverable), unless you opt for reverse charge of import VAT where possible.

In any case, you will need to have a European EORI number and a VAT number in the country of delivery in order to import and charge VAT in the country of delivery.

Amazon will no longer handle the shipping of your parcels between the UK and the EU, due to new export/import customs formalities.

As a result, in order to continue selling in the EU, you will need to ship your goods to Amazon’s European warehouses yourself, which means that you will need to take responsibility for importing into the country of delivery.

To do this, you will need to appoint a customs representative in the country of delivery to carry out the import formalities on your behalf. You will have to pay the import VAT in the country of delivery (which is then recoverable), unless you opt to reverse charge import VAT where possible. You will in any case need to have a European EORI number and a VAT number in the country of delivery.

WARNING: the rules applicable to BtoC sales in the EU will again be radically changed from 1 July 2021 when the E-Commerce VAT reform 2021 comes into force. To prepare you for this reform we offer you our audit and/or distance learning services. To benefit from these services, please contact us.

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