Effects of Brexit on UK Ecommerce Retailers Selling to EU

Published on October 13, 2022
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Filed under Shipping News
Read time 8 Minutes

After a number of extensions, the UK left the European Union on 31st January 2020. A transition agreement was made, running until 31st December 2020, with new rules coming into effect on 1st January 2021. During this period, the UK and EU have been negotiating a trade deal. However, for UK ecommerce retailers selling to European consumers, there are implications for both importing and exporting goods whether a deal is struck or not.

The UK Government website provides clear and detailed guidelines on how to make sure you’re ready for the new rules. We’ve pulled out the key ways in which Brexit will affect ecommerce exports and imports beginning in the new year. 

How Brexit Will Affect Ecommerce Exports and Imports Beginning in 2021

1. Customs

The change in customs borders will impact rules and restrictions, tax and duty rates, and the import/export documentation required. 

To get started, you will need to apply for an EORI number to be able to export goods from the UK to any country and you’ll need to be VAT registered to do this. If you already have an EORI number, ensure it starts with the letters GB. If not, you’ll need to apply for a new one. 

If you’ll be making declarations or getting a customs decision in the EU, you’ll need an EORI number from the customs authority in the EU country where you submit your first declaration or request your first decision

For exporting goods to Northern Ireland, you may also need to apply for an EORI number that starts with the letters XI. However, if you already have an EORI number from an EU country, you will not need a separate EORI number for exporting to Northern Ireland.  If you already have an EORI number starting with the letters GB, you should automatically receive one starting with XI from HMRC.

It’s also important to ensure all your product data is updated to ensure smooth movement through customs. Carriers will require an accurate description and commodity code (also known as a HS code) for the product or products you are sending, which will be used to determine duty rates. Additionally, UK merchants sending parcels to the EU must include:  

  • Country of origin or manufacture. Without it, exported goods could be subject to customs security checks, impacting the delivery timeline.
  • Total weight in kilograms (not grams, i.e. 0.5KG not 500 grams) 
  • One of the three accepted reasons for export – Sale, Return/Replacement, or Gift.

2. VAT

As the UK leaves the EU, there are some changes to the treatment of VAT and tax when trading with consumers in the EU member states and your obligations will change starting 1st January 2021. 

You will need to be VAT registered with HMRC to obtain a “GB” and / or “XI” EORI number.

You will potentially also need to register for tax in each EU country that you sell into. We recommend that you talk to specialist VAT and tax advisers, such as Avalara or Vatglobal, to understand your obligations after the 31st December 2020.

Review your commercial terms (Incoterms) that state your delivery policy and who pays customs and any VAT on import of the goods – the seller or buyer. The main options are Delivered Duty Paid (DDP) or Delivered At Place (DAP) often referred to as Delivered Duty Unpaid (DDU). For business-to-consumer transactions, you will probably want to sell your items including all applicable VAT. 

Some marketplaces are mandating, while others only recommending, that all item prices include VAT (DDP). We recommend that you review your commercial terms for each SKU and each selling channel to ensure compliance. 

3. Fulfilment

If you’re currently using a third party fulfilment partner (3PL) or thinking of partnering with a 3PL in the future to manage your pick, pack, and dispatch processes, the customs and VAT changes we highlighted earlier will also affect your processes and obligations with 3PL partners starting 1st January 2021.   

If you’re not holding inventory outside of the UK, consider locating inventory in the EU to be closer to your customer (we have partners who can help).

If you’re using a 3PL, consider exporting more inventory before the 31st December 2020 deadline to save time and money. 

The biggest change affects those using Fulfilment by Amazon (FBA) within the UK. With the new trade agreement, you can no longer send inventory to Amazon Fulfilment Centres in the UK to distribute inventory to fulfil EU orders. Starting in January you will need to export inventory to one of the Amazon European fulfilment centres. Look out for promotions from Amazon that are offering to help reduce the costs of transporting goods to European fulfillment centres.

What have we been doing at ShipStation?

Our team has been working hard to ensure that all our customers selling into Europe can structure and store product data correctly, store company and tax registration data, and automatically create the required customs documentation.

We’ve also been in conversations with our carrier partners so our sellers can be confident they will be providing the necessary information and paperwork for any international shipments.

If you would like to speak to the team to learn more, please contact us. We’re here to help. 

Checklist for Importing and Exporting Goods from UK to the EU

  1. Register for VAT with HMRC as soon as possible, if you’re not already registered
  2. Register for / check your EORI so you’re able to export goods to the EU
  3. Use the correct HS codes to classify your products and check your product descriptions match the HS codes
  4. Ensure the country of origin/manufacture is included in your product data
  5. Ensure all product values are declared accurately on accompanying invoices or data
  6. Ensure buyer emails addresses and phone numbers are captured during checkout
  7. Decide who’s paying the duty – you or the buyer
Written by

Jonathan Tait

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