The UK’s trading relationship with the EU has changed. As of 1st January 2021 when the so-called Brexit transition period ended, the UK is no longer a part of the European single market and customs union.
That has put an end to the free movement of goods between the UK and mainland Europe (with the exception of Northern Ireland). It means that if you sell goods to customers in the EU, you now have to follow a new set of rules which includes making registering to export, making customs declarations and paying duties.
We know that many of our clients sell goods to customers based in the EU. We also know that the changes to the trading arrangements represent a major upheaval for many businesses, and that it will inevitably take everyone time to get used to them
To lend a hand, we wanted to set out the main points you need to know when selling to the EU. For more detail, we’d recommend this step-by-step guide from the government.
Register to trade goods overseas
If you have not exported goods to non-EU countries previously, you will need to get an Economic Operators Registration and Identification number (EORI number). This registers you to use customs systems and without it you will face delays and extra costs if you try to send goods to any other country.
You will also need an EORI number if you are a customer of ours based in Northern Ireland, the Channel Islands or the Isle of Mann.
There are different types of EORI number, including a special one if you need to send goods to or from Northern Ireland. You may need more than one EORI number. Finally, if you have an existing EORI number that doesn’t start with ‘GB’, you will need to re-register for a new one.
Transporting goods
If you sell products directly to consumers in EU countries, you will be able to continue to send items by post or courier. The main difference is that you will need to fill in a customs declaration form to accompany your parcel. You will also need a Certificate of Posting Goods for VAT purposes (see below).
Royal Mail’s Parcel Force Worldwide service includes a special ‘dispatch pack’ containing all the documents you need to send goods overseas. Check with other couriers to see what similar services they offer.
If you need to move larger quantities of goods by freight, you may want to speak to your transport provider about freight forwarding services. A freight forwarder will deal with customs on your behalf. If you use a company based in the EU to distribute goods, you will need to check that they are set up to make import declarations in their own country.
None of the above applies if you are based in Northern Ireland. You can continue to sell and trade goods within the EU without making customs declarations.
Changes to VAT
Goods sold to the EU are no longer subject to UK VAT. This means you can now zero-rate VAT on EU exports in most circumstances. If you are selling to an EU-based business that is registered for VAT in their own country, neither party will have to pay VAT.
However, if you are selling to consumers, they will have to pay import VAT at their own country’s rates (up until 30 June 2021, there is an exemption to this on goods worth less than €22). Without clear signposting, this could be interpreted as a ‘hidden charge’ on arrival and affect your customers’ perception of the value of buying from you.
As an alternative, you could choose to register for VAT in the EU. This would allow you to charge VAT upfront at local rates and then pay and/or claim back VAT through tax returns, as you do with domestic VAT in the UK.
From July 2021, this will be much easier to do as the EU is implementing a ‘one stop shop’ (OSS) for VAT administration for cross-border e-commerce. This remains open to UK businesses and saves you having to register separately in each country you do business in. However, you will still have to make submit separate VAT returns for each country and to the central OSS, meaning a significant increase in paperwork.
