Finally, a Brexit deal!!!
Today the United Kingdom (UK) and the European Union (EU) closed a Brexit deal. As of January 1, 2021 the UK is a non-EU country from a VAT and customs perspective. The deal could have favorable consequences for various customs topics. For both VAT and customs the important thing to remember is: everything will change as of January1, 2021, also with a deal.
One of the consequences of the deal is that goods originating in the UK and the EU will be subject to reduced customs duty tariffs of 0%. From both a VAT and customs perspective the UK will still be considered as a non-EU country though. For more information about the deal, we refer to the website of MHA MacIntyre Hudson (the Baker Tilly UK Member Firm).
In several publications on this website we discussed important VAT and customs topics related to Brexit. Below we summarize a few of the most important items to consider.
What is going to change and what will be important for your business?
Customs, export, import and Incoterms
Goods which are transported to the UK from the Netherlands as of January 1, 2021, and vice versa, will be subject to customs formalities, export and import.
The question which arises is: who is responsible for the import and export? In order to determine this, the agreements between the parties involved are relevant. The agreed Incoterms could give an indication of the responsibilities per party involved. The Incoterms determine which party is responsible for arranging the export and the import of the goods.
It is therefore important for businesses to determine whether the Incoterms agreed upon in the past are still suitable and sufficient. Based on the Incoterms and the obligations for your company it must be determined whether you need an EORI number for the communication with customs in the Netherlands and possibly also in the UK.
Maybe an import VAT deferment license is also recommendable. This license arranges that the Dutch import VAT due does not have to be paid at the moment of import for goods entering the Netherlands from non-EU countries, such as the UK.
One other aspect that must be checked is whether your logistics partner is still capable of fulfill all your wishes and demands. Trading with an EU country could be complex, however trading with non-EU countries could be even more complex. Aside from the customs and VAT consequences, there could also be issues in the day to day practice, think of delays at the border and additional paper work. Additional costs could be a consequence. It is therefore very important to make sure that every party involved in the supply chain is prepared and ready.
VAT in the UK
Depending on your activities it is important to verify whether you have a VAT registration and reporting obligation in the UK.
Preparation is key!
VAT and customs are important, but make sure that you consider all aspects for your business! Preparation is key! The UK will be a non-EU country as of January 1, 2021 and customs formalities will become applicable.
Make sure that you are prepared for Brexit!
We would be happy to assist you, in close cooperation with the VAT and customs experts of the Baker Tilly member firms in the UK. If you would like to discuss your business or gain more insight into how to arrange your contracts in order to be prepared for Brexit, feel free to contact Marisa Hut or Stevie Mols of VAT & Customs Advisory.