What are the implications of Brexit to Cross border trade?

Cross border trade post Brexit

By Caitlyn Buchanan, 28.02.2019 Updated 16.09.2020

The Brexit transition period will conclude on 31st December 2020 and the United Kingdom will leave the European Union regardless of whether a trade deal is reached. As such, there are some important implications to cross border trade post Brexit that many businesses will need to prepare for including EORI, VAT and CE Markings.

Do I need an EORI Number post Brexit?

An Economic Operators Registration and Identification number or EORI number is required for businesses that import or export of goods in or out of the EU. An EORI number is required for dealing with customs when importing or exporting goods. Goods must be assigned a classification code which will determine the customs and duty to be paid when importing products.

EU Based businesses trading with the UK

After the UK leaves the EU, the non-European Union trade rules will apply when importing or exporting goods. EU based businesses that trade goods with the UK post Brexit will need to obtain an EORI number for registration and identification. When importing goods from a non-EU country (the UK), an import declaration is required, and the goods will be subject to customs control. When goods are exported to a non-EU country the goods require an export declaration and will be subject to customs control.

UK Based Businesses trading with the EU

For a business that is established in the UK, an EORI number will be required to import or export goods with the EU after Brexit.

Non-EU Based Business

Businesses that are outside of the EU will need to continue using an EORI number when trading with the EU after Brexit. It is not expected that non-EU based businesses will need an EORI number when trading with the UK after Brexit however, goods will still need to pass through customs.

Obtaining an EORI number

Depending on the location of the business an EORI number can be assigned by the revenue commissioner or customs authority and may be aligned with a company’s existing VAT number. Please contact us today for more information or to proceed with an EORI application.

Charging VAT after Brexit

In the likely event of a no-deal Brexit, there will be changes for companies that are involved in cross border trade. Because the UK will not be a part of the EU, the Distance Selling Regime will no longer apply resulting in the following:

  • EU businesses that sell goods to consumers in the UK would no longer account for VAT on sales because VAT is not charged outside of the EU.
  • EU registered businesses would not be required to register for VAT in the UK, as there is no registration threshold to consider. Additionally, when exporting outside of the EU, suppliers must keep evidence that the goods have left the EU or they could be responsible to cover VAT charges at the applicable rate.
  • Any EU businesses currently registered for VAT in the UK under the Distance selling regime could cancel its UK VAT registration with immediate effect.
  • A UK business that sells goods to EU consumers through a zero-rate VAT the sale would be treated as an import of goods into the EU. As a result, these sales would be liable to import VAT and customs tariffs. Depending on how the goods are sold either the UK supplier or EU customer would be required to pay this. UK business should be aware that this could make a purchase more costly for their customers.

CE Marking

The majority of products sold within the European Economic Area (EEA) must have a CE Marking. A CE Marking is a quality and standards certification required for various products. This mark shows the product has been assessed and meets EU regulations of health, safety and environmental protection. A CE marking can be obtained for products that are manufactured both in and outside of the EEA before they are sold within the EEA.

It is the manufacturer’s responsibility to ensure the product is compliant and affix the CE marking. When products are imported from outside of the EU importers must ensure the products comply with the relevant requirements, the products do not present a risk to the public and that documentation is available before products are sold in the European market.

Maintaining a CE Marking Post Brexit

Any company that is importing and/or exporting in Europe are required to have an address on their packaging. Under the regulations, both importers and exporters must indicate the following three elements on its packaging:

  1. Their name,
  2. registered trade name or registered trademark, and
  3. the address which can be contacted regarding the product.

It has been speculated that post Brexit a UK based company will be required to have an EEA address on their packaging to maintain a CE Marking. This address can be that of the authorised representative such as a registered address. If your company need update your product labels to show an EEA address as part of its Brexit preparations Euro Company Formations can assist, we offer Registered Office Address services in many EEA jurisdictions that can be used on labelling/packaging.

If your company will be involved in Cross border trade post Brexit and needs assistance in obtaining an EORI number, VAT number or EEA address as part of its Brexit preparations, Euro Company Formations can assist. Please act quickly as you may need to account for registration and printing time in advance of the 31st of December 2020. Please contact us today for more information.

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