We have prepared safe solutions for all possible BREXIT variants for our existing and potential partners with business connections to Great Britain.
Let us together prepare to brexit!
Dear importers and exporters,
Today we are very close to Brexit and preparations for its arrival gather momentum.
If you’re among those who trade with Great Britain (GB), you can’t avoid big changes related to customs processes.
That’s why our qualified employees have prepared and worked out the most important information and points, which would be connected with export and import from/to Great Britain.
VAT
Following the transition period, the common VAT system won’t be applicable to GB any more. This fact means that for deliveries and movements of goods between the EU and GB, the VAT rules according to the customs regulations for imports and exports will be applied instead of the mode of delivery and purchase of goods inside the European Union (Intrastat and reverse charge mechanism). The tax office will be the VAT administrator for imports of goods by a VAT payer in the Czech Republic.
VAT, thus, doesn’t need to be paid at the moment of importation under the condition that it would be specified as such in the declaration of taxes of the VAT payer.
For imports of articles of commerce to GB in terms of VAT, it will be necessary to submit a customs declaration and to ensure its completion by a departure from the EU as a proof for making a claim of exemption from taxation in the export of goods.
Customs duty
After the transition period, i.e. from December 31, 2020, the goods from GB would be considered as the goods from a third country. The EU has concluded trade agreements with a lot of countries and coalitions, on the basis of which it is possible to apply preferential customs duties for the goods which have their origin in these countries (as a rule, 0% customs tariff). An analogous trade agreement is also being prepared between the EU and GB.
In the event that this agreement wouldn’t come into force till the end of the transition period, the customs duty defined by the EU customs tariff will be applied to all goods imported from the territory of GB.
And the same will be true for the opposite direction (from the EU to GB). The goods imported from the EU to GB will be burdened by customs duties according to the GB customs tariff.
Goods movement
After the end of the transition period, the territory of GB will not be considered as an EU customs or tax territory. This fact means that a customs declaration should be applied for import and export of goods between the EU and GB. A transit customs declaration must be issued for the passage of goods via the EU/GB border.
Considering expected transport limitations on the EU/GB border, we recommend that you use the electronic logistic envelope system, which will ensure passage of goods (of means of transport) through the border without customs formalities and delay.
Origin of goods
Within EU trading with countries with a concluded trade agreement, which regulates preferential partnership, the components coming from GB (in relation to materials and processing) will be considered to be non-original goods.
It will mean practically reevaluation of all supplier declarations, in which GB goods were calculated as EU original goods.
Northern Ireland
The above-mentioned changes don’t concern the territory of Northern Ireland for the duration of the 4-year transition period. Northern Ireland will continue to use the EU rules regarding the flow of goods, i.e. including the Union Customs Code.
The goods imported from the territory of Northern Ireland will continue to be considered as goods which have the EU status, i.e. without collecting customs duties. The analogous rules will be true for the opposite direction.
In case of sending or receiving goods via the other GB territories, however, it will be necessary to realize transportation on the basis of a transit document, T2, for the transport of the goods with a status of EU.
Brexit is a process executed in the United Kingdom of Great Britain and Northern Ireland (hereunder referred as GB), on the basis of which this country has terminated its membership in the European Union.
The United Kingdom of Great Britain and Northern Ireland withdrawal from the European Union on January 31, 2020. From the next day, thus, it stopped being a member of the EU and became a third country.
At the present time, so called a transition period is being applied (till 12/31/2020), when the trade between the United Kingdom and EU is governed by the EU regulations.
Till the end of the transition period (12/31/2020), it brings nothing for the importers and exporters, and the present state is preserved for mutual trading.
After that date, a situation will definitely arise where it will be necessary to issue customs declarations for imported or exported goods.
It will depend on a possible commercial agreement whether a contractual duty would be applied after 1/1/2021 on the goods coming from the United Kingdom to the EU. Unfortunately, no consensus has been reached till now in the wording of this agreement.
Within the preparation, it is necessary to assess impacts on your realized commercial transactions with the United Kingdom and with the goods coming from the United Kingdom.
And already today, it is necessary to consider customs-procedure costs and evaluate influence of the GB goods (i.e. of the non-original EU goods) contained in your products in relation to the determination of origin of the final product.
At the same time, it will be necessary to evaluate your goods from the point of view of prohibitions and limitations in the trade with a third country; we are talking about dual-use goods, different types of licenses, phytosanitary measures, etc.
It is also necessary to be aware that decisions made by the GB state administrative bodies will no longer be valid in the EU territory (for example, Binding Tariff Information - BTI, assignation of an EORI number). And conformity assessments issued by a notified body with its principal office in GB will be also non-acceptable.
The difference will consist in effectiveness of the trade agreement between the United Kingdom of Great Britain and Northern Ireland and the European Union.
The hard Brexit means that this agreement would not enter into force at the end of the transition period (i.e. presently on 1/1/2021). The impacts on the mutual trading will be significantly bigger without such an agreement, especially from the perspective of collecting duties and applying trade and political measures (for example, licenses).
In any case, regardless on the form of Brexit, it will be necessary to provide customs clearance of the parcel to ensure goods movement.
We very soon got used to the single market in the EU, which has started since 2004. The inner borders of the EU countries have been removed, and free movement of goods, persons, services and capital has begun.
The movement of goods began to be reported in a form of Intrastat monthly reports, and the payers were settling VAT in declarations of taxes, and it all practically without any actions of the customs administration.
Hand-in-hand with the creation of the single market, which relates to the cancellation of trade limitations and to the common customs tariff, there is also a necessity of convergence of the legal orders of the member states and of acceptation of the EU Council and Commission regulations.
The customs union is an agreement between states, on the basis of which customs duties are removed, similar customs regulations and a common customs tariff toward third countries are applied. The EU customs union is not unique in the world; an analogous agreement is concluded, for example, between Russia, Kazakhstan and Belarus.
The United Kingdom of Great Britain and Northern Ireland consists of England, Scotland, Wales and Northern Ireland. A separate state Ireland is also part of the island.
England, Scotland, Wales and Northern Ireland withdrawal from the EU on January 31, 2020. To prevent from the creation of a hard border on the Ireland part of the island, it was necessary to define a legal status of Northern Ireland by Protocol on Ireland and Northern Ireland at the moment of termination of the transition period (from 1/1/2021).
This Protocol enables Northern Ireland to be part of the customs territory of the United Kingdom and to use, thus, benefits of the free trade agreements, which would be concluded between the United Kingdom and third countries.
Northern Ireland will continue to observe some EU regulations, especially those relating to the goods and to the Union Customs Code.
If there is a risk that goods entering the territory of Northern Ireland would get to the EU single market (i.e., first of all, to Ireland), the EU customs duties will be applied to them. And if there is no risk that goods entering the territory of Northern Ireland from other parts of the United Kingdom would get to the EU single market, no customs duties will be paid.
None of these exemptions for Northern Ireland concerns Scotland.
In case of postponement of the transition period, the actual state will remain valid.
PST CLC is one of the strongest professionals in the sphere of customs services in the Czech Republic, history of which goes back to 1991, with a wide network of customs-declaration branch offices and experts in customs procedures. We have been preparing to Brexit for a long time and have worked out a clear strategy as to how to proceed during customs clearance upon exportation and importation of the goods, as well as how to provide smooth goods clearance in case of movement of the goods via the EU/UK border.
By reason of complexity and importance of proper preparation to Brexit for importers and exporters (for example, origin of goods, VAT deduction, phytosanitary measures, expiration of permits, etc.), we recommend consultation with customs experts of PST CLC. Don’t hesitate to contact us brexit@pst-clc.cz.
If you have any questions about brexit, contact us!
