Brexit: What changed on 1 February 2020 for customs and tax?
The United Kingdom left the European Union on 31 January 2020.
In accordance with the Withdrawal Agreement, it is now officially a third country to the EU and hence no longer participates in EU decision-making.
The EU and the UK have, however, jointly agreed on a transition period, which will last until 31 December 2020.
During the transition period:
- Nothing changes for citizens, consumers, businesses, investors, students, and researchers in both the EU and the United Kingdom; and
- EU law continues to apply in the United Kingdom.
There is no impact on customs or taxation during the transition period. However, even if the European Union and the United Kingdom conclude a highly ambitious partnership covering all areas agreed in the Political Declaration by the end of 2020, UK’s departure will have serious consequences for public administrations, businesses, and citizens as of 1 January 2021. These changes are unavoidable and stakeholders must prepare for them. To assist, the Commission is reviewing – and where necessary updating – the over 100 sector-specific stakeholder preparedness notices it published during the Article 50 negotiations with the United Kingdom.
In the area of tax and customs, the relevant updated ‘notices for readiness’ can be found underneath:
- Excise duties
- Value-added tax (VAT) – goods
- Value-added tax (VAT) – services search for available translations of the preceding link•••
- Customs including the preferential origin
- Annex 1 – Business Transit Scenarios
- Annex 2 – Business Export Scenarios
The full list of readiness notices is available here.
Guide for businesses
Brexit will affect your company if:
- it sells goods or supplies services to the UK
- it buys goods or receives services from the UK
- it moves goods through the UK
- it uses UK materials and goods to trade under preferential schemes with EU partner countries.
This means, for example:
- You will need to file customs declarations when importing or exporting any goods to/from the UK or when moving your goods through the UK.
- In addition to the customs declaration, you may need to provide security and safety data.
- You will need a special license to import or export certain goods (e.g. waste, certain hazardous chemicals, GMOs).
You will need to comply with additional formalities if importing or exporting excise goods (alcohol, tobacco, or fuel) to/from the UK.
- You will generally have to account for VAT in the EU country where you import goods from the UK. You will be exempt from VAT in the EU on any goods that you export to the UK, but you will then need to comply with any VAT rules for imports in the UK.
- You will have to comply with different VAT rules and procedures for transactions with the UK than for transactions within the EU.
The changes may be even more substantial if there is no EU-UK Agreement by the end of the transition period. In this case, in addition to the formalities above:
- You will also have to pay customs duties on goods that you bring into the EU from the UK.
- You may be affected by quotas for certain goods entering the EU from the UK.
Additionally, you should be aware that if you are using any UK materials or processes, these will not be considered as ‘originating’ under existing EU preferential schemes anymore.
The sooner you start to get ready for these changes, the lower the risk that your business will face major disruption after the transition period.
The checklist below provides some practical steps you should take to get ready:
- TALK to your business partners. The end of the transition period might also impact your supply chain, so you need to be aware of what it means for your suppliers, intermediaries, or transporters, too.
- CONTACT your local authorities and advice centers to get full details and explanations on what you need to do to be ready for the end of the transition period. The contact details for each Member State can be found below
- CONSULT the ‘readiness notices’ on a wide range of topics, to help businesses get ready for the full impact of Brexit.
- ACT now! Do not wait until the end of the transition period to think about how you need to adapt. Some of the processes and procedures you need to follow take time, so you should start as soon as possible to avoid unnecessary difficulties for your business.