The way UK companies export goods to the EU will change next year. While both sides negotiate a new trade deal, exactly what will change remains unclear. Discover what the current rules on UK to EU trade are and what a new deal could mean for your business.
What is the Brexit transition period?
The Brexit transition period was designed to give the UK and EU time to negotiate a new cross-border relationship that will cover areas such as trade, immigration, policing and security co-operation. The Brexit transition period started on February 1st 2020 and will end on December 31st 2020.
What are the current rules on exports to the EU?
During the transition period, the UK is still considered as an EU country. Therefore, EU companies importing from the UK still benefit from the free movement of goods between EU member states. Imagine you’re the owner of a company that exports plastics to a drinks manufacturer in Amsterdam.
Until December 31st 2020, your buyers will be able to purchase products from your business without incurring any import duties, taxes or customs clearance in the Netherlands. After that, a new trade deal will begin which could affect the plastics market.
While new trade rules could leave your business out of pocket, you can save up to 90% on payments to your suppliers or employees overseas. Get five fee-free transfers, at market-beating rates, when you register with Azimo Business Visit the Azimo pricing page to see just how much you can save versus other providers.
What could the new trade agreement look like if there’s a no-deal Brexit?
If negotiators fail to reach a deal, i.e. a no-deal Brexit, the UK will have to export most goods under World Trade Organization (WTO) rules.
Under WTO rules, your buyers will pay new tariffs on most goods that you send to the EU. The cost of these new tariffs could force EU buyers to seek cheaper alternatives or ask you to reduce your prices to remain competitive.
One of the tariffs in question would be the UK Global Tariff (UKGT). The UKGT would replace the EU’s customs import tariff. Despite its critics, the UKGT could boost the economy by encouraging EU countries to import more UK goods.
That’s because the UKGT would remove other tariffs on products that the UK doesn’t produce at all or manufacture in large quantities. Removing these tariffs could make these goods cheaper to buy from the UK and therefore stimulate more demand from EU countries.
What could the new agreement look like if a trade deal on exports is reached?
Any new trade agreement will begin on January 1st 2020 and is likely to be one of two options.
The first is a free-trade agreement (FTA), which would operate similarly to the EU’s ‘free movement of goods between members’ rule. The other would be a Comprehensive Economic and Trade Agreement (CETA). Also known as a ‘Canada-style’ deal, it’s the trade agreement the EU currently has with Canada.
An FTA would mean the rules on EU imports and exports stay the same, i.e. no tariffs (border taxes on goods) or quotas (limits on the amount of goods moved).
A CETA would get rid of most, but not all, tariffs on goods traded between the UK and the EU. However, tariffs would remain on goods like poultry, meat and eggs. A CETA would also increase quotas but would not eliminate them altogether.
Exporting products to the EU after a no-deal Brexit
In the event of a no-deal Brexit, WTO rules would come into place. And that would mean companies in the UK having to adjust to a new playing field when it comes to exporting to the EU.
Due to some WTO rules being product-dependent, no real blueprint applies to all businesses. That said, Azimo Business has put together this list of what these new steps could be, with a table below explaining what they mean:
- Checking if your buyers have an EORI number.
- Considering the Common Transit Convention (CTC) if you’re moving goods between or through Iceland, Norway, Liechtenstein, Switzerland, Turkey, North Macedonia and Serbia.
- Making any Safety and Security Declarations.
- Deciding if you will make your own customs declarations or use an intermediary service such as a customs agent or freight forwarder.
- Confirming what the VAT obligations are for exporting your product to the EU.
- Seeing if your goods now require any additional licences or certification.
- Submitting applicable goods to Sanitary and Phytosanitary (SPS) protocols.
- Checking the export requirements for your specific goods and destination.
- Ensuring any wooden packaging is ISPM 15 compliant.
- Declaring the consignee of the goods.
- Completing any Export Health Certificates.
|European Operators Registration and Identification (EORI) number||An EORI number is a code assigned by HMRC or equivalent body to track imports and exports across the EU.|
|Common Transit Convention (CTC)||A CTC allows goods to bypass customs declarations and duties at each border. You can also complete some customs processes away from the border.|
|Safety and Security Declarations||Your intermediary or carrier is required to submit a safety and security declaration (which forms part of the export or customs declaration) to UK customs.|
|Customs declarations||When you bring goods into the UK, you or your intermediary will need to make a full declaration to customs officials.|
|VAT obligations||UK businesses exporting products to the EU may need to employ VAT representatives in different countries to comply with EU VAT obligations.|
|Licences and certification||These will cover controlled goods such as livestock, plants, chemicals and medicines. An inspection fee may also be applicable.|
|Sanitary and Phytosanitary (SPS)||SPS measures are checks required under EU legislation. SPS applies to goods such as live animals, products of animal origin, plants and plant products.|
|Export requirements||These are country-specific rules. For example, in Turkey, there is a Special Consumption Tax applied to certain product groups at different rates.|
|ISPM 15 compliance||For items like wooden crates carrying oranges, you’ll need to confirm that your packaging is compliant with the export authority.|
|Consignees||The consignee is the person who is financially responsible for the receipt of a shipment.|
|Export Health Certificates (EHC)||You’ll need to complete an EHC to show any animal or animal products meet the health requirements of the destination country.|
Does your business buy products from EU suppliers? Visit Azimo Business’ guide to importing goods from the EU after Brexit and keep your business running smoothly.
Will Brexit affect international money transfers?
Depending on who you ask, if the UK leaves the EU without an FTA or similar deal, Brexit could strengthen the euro.
Some observers, however, say Brexit could lead to unpredictable currency movements, further complicating trade between the two sides.
For more information, we’ve written a guide on how to get the best exchange rates, including more on currency fluctuations and getting rate alerts.
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