While Brexit has dramatically changed and in many ways hurt existing trading relationships UK businesses had with the EU, it’s still possible to do business with our closest foreign neighbours in the European mainland.
Yes, the rules have changed (and in many cases, new ones have appeared where none existed before), but if you understand what’s required of your business, you can make it. Here are the most critical pieces of information you need to know.
Customs declarations
When the UK was a member of the EU, it participated in the customs union, which allowed for the free movement of goods among member states. Now the UK is outside the EU, businesses bringing goods in or out of the EU must complete a customs declaration.
Most declarations are submitted electronically through the customs of import and export freight (CHIEF) system. You can appoint an agent to complete one on your behalf.
If you are going to do it yourself, you need to apply for access to CHIEF and purchase third party software that can submit declarations through the system.
You will only be required to make a declaration in advance if your goods:
- are worth more than £873
- weigh over 1,000kg
- are excise goods
- need a licence
- are ‘restricted goods’.
You must normally submit a full declaration at the time the goods enter the EU unless you are putting them into temporary storage.
Tariffs and rules of origin
To export tariff-free into the EU, traders in the UK must check that their goods meet the Rules of Origin (RoO) requirements as set out in the UK-EU Trade and Cooperation Agreement, and that their products have the correct documentation. Otherwise, payments are due.
The RoO determines the ‘nationality’ of a product based on the origin of the materials and components used in its production. The purpose is to ensure that goods from a third country are not sold to the EU without the appropriate tariff being applied.
To benefit from the zero-tariff provision, you have to prove your goods originate in the UK. If they were created or were “significantly transformed” in the UK, your products should pass the RoO test.
To get proof of origin, you can use the Government’s trade tariff tool, which will tell you the specific documentation you need. However, if you’re sending a small consignment — something that does not exceed £135 in value — you’re exempt from the RoO.
What about tax?
Items sold to the EU from England, Scotland and Wales are subject to the local rate of VAT and charges in the destination country — unless your items are worth up to €150, in which case you can operate through the one stop shop.
That means that you may have to deal with a VAT system that you’re not used to. The best course of action in this scenario is to either work with an international accounting firm or one in the destination country (we can recommend a suitable accountant).
You will also need to complete a UK VAT return. However, your items will be zero-rated, so while you need to file a return, you won’t actually have to pay any VAT in this country.
Looking for business and tax advice? We’ll help where we can and put you in touch with international trade specialists if you need in-depth support to trade with clients in the EU.