VAT and customs duties
Once the United Kingdom starts negotiating its exit from the EU, companies with international operations will enter a phase of uncertainty. What might change with regard to imports and exports after Brexit?
The UK has voted to leave the EU and is now due to start its exit procedure.
The specific impact on trade with the EU will of course depend on the precise Brexit date and the terms negotiated between the UK and the EU, so that it will probably not become apparent straight away. Yet, even at this stage, we can identify the following issues as major challenges for international trade if the UK actually leaves the EU.
- Until a new FTA is concluded, the UK will lose the benefit of favourable customs tariffs to which it has so far been entitled as an EU Member State.
- Movements of goods between the UK and EU Member States will be classified as imports and thus become subject to customs duties, depending on the trade agreements between the UK and the EU at that time.
- Import and export customs declarations will be required for any goods moved between the UK and an EU Member State. This administrative work is usually given to a carrier or a customs agent, causing additional expenses.
- The increased volume of import and export transactions may increase strain on the efficiency of CHIEF (Customs Handling of Import and Export Freight), the electronic system used for this purpose by the UK customs authorities, HMRC.
- Customs exemptions and systems will acquire greater importance as ways to delay, suspend or overrule the customs charges incurred through import.
Further details can be found in our collection of major issues on customs and VAT for the event that the UK leaves the EU.
Nevertheless, at present, we believe it would be rash to take economic measures as the UK has so far not yet formally notified the European Council of its intention to withdraw from the European Union, as required under Article 50 of the EU Treaty (also known as the Lisbon Treaty).