FAQ Brexit - Sales of goods in the UK after 1 January 2021

The UK officially exited the EU on 31 January 2020. In practice, a transition period has been 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.

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

In order to import goods into the UK, you will need to appoint a UK customs representative and have a UK EORI number.

Unless a free trade agreement providing for exemption from customs duties is concluded, the importation of goods into the UK from the EU will be subject to the payment of customs duties

No, you will not be able to use your European EORI number to import goods into the UK after 1 January 2021.

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

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

Therefore, all sales of goods shipped from the EU to the UK (BtoC AND BtoB) will be subject to the import/export regime.

The importation of goods into the UK from the EU will in principle give rise to the payment of import VAT to customs. However, it will be possible to apply for reverse charge of import VAT in the UK on request.

Your UK VAT number will remain unchanged after 1 January 2021.

The UK should not require EU businesses to appoint a tax representative.

However, the services of a tax agent will still be essential to complete all VAT formalities in the UK (obtaining a VAT number, VAT reporting via the specific platform “Making Tax Digital”, filing and monitoring refund applications, etc.) and to ensure compliance with UK tax and customs regulations.

Your B2B sales of goods shipped from the EU to the UK under Incoterm DDP conditions will be considered as “inbound” sales for you:
<ul>
<li>In the country of departure, exports excluding VAT;</li>
<li>In the UK, taxable imports followed by taxable local sales.</li>
</ul>
In principle, you will therefore now have to invoice your customers with UK VAT.

It will be compulsory to file an export declaration with customs in the country of departure as well as an import declaration in the UK. You will therefore need to appoint a customs representative in the UK to carry out the import formalities on your behalf. You will also need a UK EORI number and a UK VAT number to carry out the import and to invoice UK VAT.

The applicable treatment will depend on the value of the consignment:
<ul>
<li>If the value of the consignment is less than or equal to GBP 135, you will be required to charge UK VAT from the first sale. <strong>Therefore, you will be required to have a UK VAT number from 1 January 2021.</strong></li>
<li>If the value of the consignment is greater than £135, you will be required to charge VAT. However, UK import VAT will be charged by the carrier to your UK customer prior to delivery of the parcel, which could result in a large number of parcel refusals. Indeed, British private individuals are used to buying inclusive of VAT, and are likely to refuse to pay an extra charge on delivery. Therefore, we strongly recommend that you take care of the import into the UK (see previous question).</li>
</ul>

The threshold of 135 GBP corresponds to the price excluding VAT charged to your customer for all the products in the same consignment.

This price excluding VAT is exclusive of insurance and transport costs, provided that these are invoiced separately and not included in the sale price of the products.

You will need to act as an importer in the UK. These sales will then constitute for you:
<ul>
<li>In the country of departure, exports excluding VAT;</li>
<li>In the UK, taxable imports followed by taxable local sales.</li>
</ul>
You will therefore be able to charge UK VAT when you order, and no extra charge will be made to your customer at the time of delivery.

In order to act as an importer, you will need to appoint a customs representative in the UK and ask him to carry out the import formalities on your behalf. You will have to pay VAT on import into the UK (which is then recoverable) unless you opt for reverse charge. In any case, you will need a UK EORI number and a UK VAT number to import and charge UK VAT.

Having a place to store your goods in the UK will enable you, when your goods come from outside the EU (from Asia for example), to avoid having to go through the EU and therefore avoid paying import duties and VAT once on entry into the EU and a second time on entry into the UK.

It will also allow you to streamline customs formalities and drastically reduce delivery times.

Sales to your UK BtoC customers will have to be invoiced with UK VAT. To build up advanced stock in the UK you will first need a UK storage provider. Then it will be mandatory to file an import declaration in the UK. Therefore you will need to appoint a customs representative in the UK to carry out the import formalities on your behalf. You will also need to have a UK EORI number and a UK VAT number to carry out the import and charge UK VAT.

Marketplaces will become liable for UK VAT on your behalf. This means that you will not have to charge your customer, but the marketplace, and without VAT.

This is because UK VAT will be charged to the customer by the marketplace itself.

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

As a result, in order to continue selling in the UK, you will need to ship your goods to Amazon warehouses in the UK yourself, which means that you will need to take care of the import into the UK.

This will require you to appoint a customs representative in the UK to carry out the import formalities on your behalf. This will mean that you will have to pay the VAT on import into the UK (which is then recoverable) unless you opt for reverse charge on import VAT. In any case, you will need a UK EORI number and a UK VAT number.

Then, as Amazon will be liable to pay UK VAT on your behalf, you will need to invoice Amazon, rather than your customer, without VAT. This is because the UK VAT will be charged to the customer by Amazon itself.