The end of the year is just around the corner and with it the end of the transition period after the Brexit at the beginning of the year. As a reminder: Since February 1st 2020, the United Kingdom has only been considered a third country of the EU. Until the end of the year, the exit agreement from the EU, which provides for a transitional period until December 31st of this year, has been in force. This means that as of the new year 2021, the EU law will no longer apply to the United Kingdom, and that the United Kingdom will no longer be part of the EU internal market and the EU customs union from then on either, unless another deal is concluded.
Warehousing1 sums up the most important potential changes for eCommerce merchants due to the Brexit. Especially in this critical phase of European historiography it is important to keep a cool head. If you are not sure which steps you should consider in your online shop regarding shipping to and from the UK, Warehousing1 is the right partner for you.
What is the current state of affairs regarding the Brexit?
Many companies from Great Britain have now moved to the EU in order to avoid high duties, taxes and other costs in advance. As a result, the market within the EU - despite the Corona pandemic - has experienced a massive upswing and the competition in the market is stronger than ever. It remains uncertain how the import and export of goods will continue from January 2021 onwards. Of course the EU is keen to maintain a close economic partnership with the UK, but no agreement has yet been reached on future economic relations. Despite the withdrawal at the beginning of the year, the concrete effects of the Brexit are still unclear. However, the European Commission published the so-called Readiness Communicationon July 9th of this year, which provides assistance to companies and stakeholders for the transition in the different economic sectors.
What your company needs to consider when doing business with the UK in the future
The Readiness Communication and all related documents provide tips and guidelines for companies that could be used in the future handling of sales projects from and in the UK. Here, we present 3 scenarios that your online shop could be confronted with and show you how your company can overcome these hurdles.
1. What are the consequences in import and export of the final Brexit without an agreement?
Great Britain is regarded as Europe's leading market in eCommerce. Statista forecasts that the eCommerce market in the UK will generate annual sales of around 85,933 million euros in 2020. 70 % of German online shoppers also do their online shopping abroad, one in three of them in the UK. If no trade agreements can be concluded with the individual EU states, merchants must pay import sales tax on behalf of the customer for deliveries up to 135 pounds in value. This means that all deliveries have to go through customs first, which results in an enormous amount of extra work and, above all, more time. It is to be expected that, especially at the beginning of the changeover, all delivery times will be extended - to the dismay of the customers. DHL is planning to add €5.50 per parcel for deliveries from Germany to the UK. In addition, each shipment must be accompanied by a commercial or pro forma invoice (if the value of the goods equals zero).
2. If there is no deal between the UK and the EU, what changes can be expected in regards to customs?
As a business, it is essential to register with the relevant customs authorities and apply for an Economic Operators' Registration and Identification number (EORI) . For this purpose, as a customs declarant, you must generally be resident or operate a site in the EU. All information is exchanged electronically between your company and the authorities using the ATLAS IT system, which requires a declaration and certified software.
Note: The EU guidelines state that processing via a representative office should also be permitted for all customs formalities.
3. What will change for Amazon-Pan-EU or EFN traders who have previously used warehouse locations in the UK?
Amazon has already announced that there will be changes for FBA-merchants that affect EFN (European Shipment Network) or Amazon Pan-EU sellers. If you are one of the 60% of Amazon traders who also sell their products on other Amazon retail marketplaces, it is important to know that there will no longer be inventory transfers between UK and EU warehouses. In order to continue to sell your goods in the EU and the UK, you will need to have a warehouse in both locations.
What you should check before the beginning of the new year 2021 if your company imports/exports from/to the UK
✔ Have you already adapted all existing trade permits? Before the turn of the year, check how the legal situation has changed, for example with regard to processing and storage locations in the UK.
✔ Do you need to apply for new customs authorizations? Find out in advance about the deadlines you have to meet for the authorization to operate a depository warehouse when importing goods.
✔ Are your reference fees to be recalculated? This point is particularly essential if no free trade agreement between the EU and the UK is reached after the end of the transitional period.
Conclusion
Even if it is not yet clear how exactly trade between the EU and the UK will continue in 2021, it makes sense to take a critical look at your company's current structures. Will extended delivery times pay off through customs clearance and appropriate inspection of deliveries? Does it make sense to accept higher costs due to customs documents and increased shipping costs?
You are not sure how your online shop can cope with these possible challenges? With over 500 partner locations (also in the UK) at our side, Warehousing1 is well positioned to advise you on the Brexit and alternatives for warehousing and fulfillment. Simply contact us via our contact form and we will find the ideal Brexit solution for your company.
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