For many online retailers, the UK is one of the most important and largest foreign markets. Since 01 February 2020 GB is a so-called third country. We are currently in a transition phase, which will end on 31.12.2020 at 24:00 CET. Also for traders who, within the framework of the Pan-EU programme, have Amazon their products shipped to the UK and stored in fulfilment centres there, nothing will change until 31.12.2020. From 01.01.2021, however, GB will become a third country from the point of view of sales tax and customs law. Our partner Francine Dammholz is a former customs officer and founder of Zollcoaching. In the following, she reports how she experienced the beginnings of the Brexit and what you as an entrepreneur need to know to avoid customs problems from 2021 on.

Brexit and how it all began...

I remember this moment clearly. It is mid-March 2019 at some German customs office. Staffed as never before, the German customs administration is gearing up for the Brexit. I, at that time as a customs officer still in the middle of it. For weeks we have been tense: How many customs declarations per minute can we manage? We calculate like mad and yet have no idea what to expect.

And then 21 March 2019: The remaining EU states agree to postpone the British withdrawal. "And now?" I ask my colleagues when I hear the news. It doesn't take long before the telephone rings stormily - entrepreneurs and traders call, they sound panicky: "What should we do now, Mrs. Dammholz? What do we do now?"

That was over a year and a half ago. A lot has happened since then. The Chronicle of Brexite now fills whole books and I now advise companies and no longer work for customs.

Whether or not a trade agreement with the UK is reached, from 01.01. 2021 onwards, your company will face many bureaucratic hurdles.

If you sell goods from the UK on the European market, you become an importer. From now on you will have to make customs declarations and complete other customs formalities. If you have previously delivered goods to the UK, you will now become an exporter and will have to file export declarations and complete other customs formalities.

How to best prepare for Brexit

1) Apply for an EORI number

The Economic Operators' Registration and Identification (EORI) number is a unique number assigned in the European Union by the competent authorities to identify economic operators and, where appropriate, other persons vis-à-vis the customs authorities. The EORI number is issued free of charge by the Directorate General of Customs on request.

2) Determine the customs tariff number

Every product in cross-border goods traffic requires a customs tariff number. It is also called HS code, goods tariff number or code number. The amount of customs duty to be paid and other import/export restrictions, such as the requirement for a licence, depend on this number. The correct customs tariff number thus forms the basis for a smooth import/export of goods and every correct commercial calculation. In practice, however, it is not uncommon for many companies to unknowingly apply incorrect customs tariff numbers for years. This is perfectly understandable, as customs tariff law is very complex and full of opaque regulations. Customs' official tool for this is EZT-Online.

3) Choosing and handling the right customs procedure

It is important to choose a customs procedure that is suitable for your purposes. In most cases you will want to sell your product directly. Then you should apply for a release into free circulation. You can be represented by a customs agent, a forwarding agent or a courier service.

What else is to be expected?

More controls and longer supply chains

Even if a free trade agreement with 0% tariffs is finally agreed, imports and exports between the UK and the EU will from now on be subject to conformity checks and also controls on imports for safety, health and other public order reasons.

Do you already have longer supply chains planned in your supply chain due to formalities and controls that need to be obtained?

UK EORI number and customs authorisations become invalid

UK EORI numbers are no longer valid in the European Union. However, an EORI number is required in order to be able to submit a customs declaration at all.

Customs authorisations issued by British customs authorities are no longer valid in the EU. Unless a company with a UK EORI number also has a branch in the EU. In this case it is possible to apply for the authorisation to be converted to the European EORI number.

Here, too, the rule is to act as quickly as possible, because the mills of bureaucracy often grind very slowly.

Change in the use of trade agreements

The EU has trade agreements with a large number of countries. If a product meets the requirements of the respective agreement, no or only low customs duties need to be paid on import. From 1 January 2021, companies will have to prove the origin status of goods in order to benefit from a possible future EU-UK trade agreement. If they cannot do so, normal third country tariffs will apply despite the existence of a possible trade agreement.

At the end of the transitional period, materials from the UK which are further processed in the EU, for example, will be considered as non-originating in the EU.

This has far-reaching consequences. If, for example, the UK material is installed in a machine in the EU and then exported to Switzerland, it depends to a large extent on the raw materials used in the machine. It depends on this whether the goods ultimately fall under the EU-Switzerland trade agreement and no customs duties are payable or not.

Conclusion: No one knows at this stage whether a trade agreement will be reached or not. Independently of this, however, one thing is certain: from 2021 onwards, companies with international trade in goods will face a host of bureaucratic obstacles. Personally, I therefore think that an initial customs chaos is very likely. Unfortunately, free movement of goods with the UK will be a thing of the past from 2021.

What can you do now?

You probably have many questions now and are unsure what this means for your company. Please arrange your non-binding consultation by clicking on this link. In a personal analysis meeting we will then discuss your individual customs questions and current challenges together.

About the author

Francine is a commercial lawyer, former customs officer and nationwide expert on the subject of goods imports. Her mission is to help otherwise excellently positioned companies to unknowingly burn a lot of money when importing goods and to expose themselves to liability risks that they are not even aware of. For this reason she founded her company Zollcoaching.

Francine Dammholz, founder of Zollcoaching

Francine dam wood

Diploma in Finance/ Business Law LL.M / Managing Director

Phone: 0251/9811565320

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