Brexit was a long time coming, but now the new FTA is in place, how does it affect UK and EU cross-border e-commerce retailers?

At the end of 2020, a trade deal was struck and the UK officially exited the Withdrawal Agreement on the 31 December. While the UK was part of the EU, companies could buy and sell goods across EU borders without paying duties and taxes and there were no limits on the amount of things that could be traded.

Since the deal was agreed, retailers trading online into and from the UK have faced new challenges, particularly in relation to compliance and the impacts of new paperwork requirements, and associated costs – not to mention potential delays as brands scramble to understand the new trading requirements.

To help brands understand the new requirements, here are the fundamental changes that apply to UK retailers exporting to the EU and EU retailers exporting to the UK, according to ESW’s Trade Compliance experts.

What’s changed for UK retailers exporting from the UK into the EU?

As of 1st January 2021, a duty threshold of €150 applies to any shipments into the EU. This means that duty is applicable for all orders above that amount. For goods to avail of no duty, they need to

  • Be of UK origin (country of origin)
  • Qualify based on the country of origin regulations (different products have different qualifying rules)
  • number of the exporter in the UK.

While there is currently a €22 VAT threshold for orders, this will be eliminated on 1st July 2021 for goods moving from the UK to the EU and VAT will be applicable on all shipments, regardless of value.

Following the agreement, customs and import/export declarations are now required for exchanges between the UK and the EU although qualifying goods can avoid duty based on Country of Origin (COO)regulations.

UK retailers shipping to the EU must now obtain an Economic Operators Registration and Identification (EORI) number which is an identification number used in all customs procedures when exchanging information with Customs administrations.

It is expected that retailers will also need a Registered Exporters System (REX) when shipping goods from the UK into the EU, although this has not been confirmed. The REX system is ‘is a system of certification of origin of goods based on a principle of self-certification.

‘The origin of goods is declared by economic operators themselves by means of so-called statements on origin. To be entitled to make out a statement on origin, an economic operator has to be registered in a database by his competent authorities. The economic operator becomes a “registered exporter”.’

Northern Ireland has a specific status and may require customs clearance depending on the final or perceived destination of the goods.

Products which fall under CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora) now require a certificate as part of the documentation accompanying shipped goods when they cross a customs border

What’s changed for EU retailers exporting from the EU into the UK?

Orders exported from the EU into the UK will have duty applied to any shipments over £135 from 1st January 2021. The previous VAT threshold of £15 has been eliminated and VAT is now applicable on all shipments, regardless of value.

As above, customs import and export declarations are now required for exchanges. The deal also allows for qualifying goods to avoid duty based on Country of Origin (COO)regulations (Origin must be EU).

Individual shipments over  €6000 from the EU into the UK will need a Registered Exporters System (REX), and to include the REX number on the customs declaration form.

Retailers must self-certify the COO of goods as the EUR1is no longer accepted as proof of origin.

As with UK retailers exporting to the EU, Northern Ireland has a specific status and may require customs clearance depending on the final or perceived destination of the goods.

Products which fall under CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora) now require a certificate as part of the documentation accompanying shipped goods when they cross a customs border

Conclusion

As two separate markets, there are now processes and paperwork that apply to all exporters selling into the EU/UK from either jurisdiction. This has had an impact on supply chains and delivery networks, as both exporters and the authorities get to grips with the requirements of the new trading relationship.

Working with an experienced partner like ESW is now more critical than ever, to mitigate the impacts of the new requirements, and ensure that ecommerce orders continue to flow with as little friction as possible. The good news is that in ESW’s recent Global Voices 2021 survey, EU shoppers indicate that they will continue to shop from their favourite UK brands, regardless of any disruption. Customer communications will be key to how brands manage the breaking-in period, so features such as in-checkout messaging and predictable delivery dates will help set expectations with consumers in each jurisdiction.

If you’d like to understand how ESW can help solve any Brexit related ecommerce challenges, let us know and one of our experts will be in touch.

esw cross-border ecommerce experts