After years of delays, discussions and debates, Brexit finally became a reality in 2021.
While the full impact of Brexit is yet to be felt by the United Kingdom and its European neighbors, largely due to the continuing coronavirus pandemic, it’s important that European businesses continue to brace themselves for substantial changes — both in terms of actual business and the logistical work around it.
While some people remain optimistic about the shockwaves of Brexit, it’s hard to argue that the rules haven’t been changed for online European ecommerce vendors by the latest free trade agreement.
In this article, we’ll look to outline what changes you can expect, and what steps you should be taking to prepare.
What does Brexit mean for EU sellers?
The 1st of January 2021 saw border requirements placed on goods moving between the EU and the UK. This marks a significant change for customs, as it also does for goods moving between Northern Ireland and EU countries, including Ireland.
The Free Trade Agreement announced in December 2020 covers a significant amount of goods and services, along with other areas such as investment, competition and data protection. In this agreement, it was decided there would be zero tariffs and zero quotas on all goods that comply with the appropriate rules of origin.
Despite this, problems at the border can still emerge and stall the delivery process. Increasing checks are expected to become commonplace. Likewise, traders are now expected to complete new customer declarations. In general, there will be greater restrictions and taxes on goods arriving and leaving both sides of the equation. This UK Gov guide is a brilliant starting point for businesses.
European vendors should also consider contacting their local data protection regulators about potential changes to data laws. It may be that you are no longer able to collect, store and transfer UK customer data in the same manner.
Similarly, EU cross-border copyright mechanisms may now impact your online business.
Customs and VAT
European ecommerce vendors now need to make customs declarations and complete official customs processes when transferring goods between the EU and the UK.
If these are not completed correctly, goods will be rejected at the EU border.
European businesses selling to buyers in the UK will be required to pay import VAT if:
- They’re based outside of the UK
- They’re selling goods sent in parcels worth £135 or less (Goods that exceed this cost will be paid for by the UK buyer)
Failing to address these issues can also incur extra taxes and delayed shipments, leading to disappointed and frustrated customers overseas. Avalara outline these details in full.
What about EU-based third-party sellers?
Of course, many European ecommerce sellers do not have their own platform but prefer to sell through big-name third-party sites. So, how does Brexit affect vendors selling through eBay, for example?
As of 1st of January 2021, eBay began collecting and remitting VAT for UK imports on all consignments up to the value of £135. The only consignments which are VAT exempt include smaller ones up to £15.
eBay is handling and charging buyers the applicable VAT amount directly, dealing with the relevant authorities on behalf of their vendors.
European sellers trading with UK buyers are required to provide gross prices and applicable VAT rates used to calculate gross prices on all listings. As of the beginning of Brexit, all eBay vendors are required to list this information.
How to make sure your business is prepared
We’re a few months into Brexit now, so some advice for how you can prepare your existing or new business to start shipping to the UK again does exist.
Of course, the basics of ecommerce apply. Have a great ecommerce website with localised language, excellent customer service policies and social media integration for multiple ways to get in touch (trust us, with the frustrations Brexit can potentially cause, these points are vital and it may be worth investing in a top store builder platform that will help you implement these features).
Here is a basic checklist for EU sellers looking to trade with UK customers:
- Establish the division of responsibility with your trading partners within the UK
- Ensure you’ve completed the correct paperwork for the type of goods you’re shipping
- Be aware of necessary border requirements
- Have a strong understanding of the customs procedures within your country
- Check for unique shipping restrictions for your products (i.e. food or agricultural products)
- Check and apply for the documents, licenses and certificates required for your goods
- Pre-notify UK authorities about the goods you are planning to export to the UK
- Review the marking, labeling and packaging of your goods (they may require additional approval)
- Understand the new rules for paying import VAT
Consulting legal advice before you start shipping is a good way to ensure you’re up to date.
Brexit means changes for European vendors with large customer bases (primarily in the form of paperwork), but there is no need to panic.
There will be an ironing-out period where business will drop, but until the pandemic is over it will be difficult to access the full impact of Brexit upon the industry. Until then there are numerous guides and ever-changing news stories to follow. Stay up to date and proceed with the requirements set out now.