BIFAlink
Policy & Compliance
www.bifa.org
Make the most of EU procedures to minimise the impact of Brexit
The beginning of 2021 was very difficult for many British businesses trading with the EU. In addition to a Brexit deal which re-imposed many Customs and other frontier controls, the impact of COVID-19 made trading particularly problematic. The biggest change for UK businesses is that the UK is now treated as a ‘third country’ by the EU. Since then, time has passed, but many British and European companies are still struggling to determine: • How they should be selling across this new border and invoice their EU clients, • Whether they have to set up a permanent entity in the EU, • Their Customs and VAT obligations in the UK and in the EU, • The best country of import in the EU, • Their obligations in terms of CE marking. And, more generally speaking, how to keep a competitive position in the European market. In this article we examine one option that may be appropriate to business allowing UK companies easier access to the EU market than was first anticipated in a post-Brexit environment. BIFA has maintained regular contact with RM Boulanger (RMB), an independent fiscal representation firm based in France, to better understand the post-Brexit landscape. RMB has explained the French VAT system to BIFA and it is upon this information that this article is based. The main bottleneck around Brexit is that UK companies no longer benefit from the EU’s harmonised trade rules and are now facing new Customs and tax obligations when selling in the EU. In addition, a significant number of EU buyers expect their UK suppliers to sell to them on a DDP basis. The incoterm DDP (delivered duty paid) means that the British exporter is responsible for the transportation of goods and Customs formalities into the EU. In short, the UK exporter is BIFAlink examines how UK companies can gain easier access to the EU market than was first anticipated in a post-Brexit environment
designated as the importer of record in the EU and remains the owner of the goods until they are delivered at destination in the EU.
transported to destination under a bonded transit regime (T1), which can quickly become very costly and is administratively more burdensome, particularly where final delivery is directly to the customer. From anecdotal evidence supplied by Members, in many cases there is a preference to clear goods into the EU as they arrive in France. This fits with existing trade flows via the Short Straits route. Once cleared into free circulation within the EU, they can be freely transported within the union, thus reducing administration and cost. To maximise the benefits of this process, goods will need to be Customs cleared in France as a unique country of import. The idea behind it is that, as previously explained, goods are put into free circulation as soon as they enter the EU so that they can be transported and delivered with no specific Customs formalities. Why France believes that it is best placed to facilitate DDP movements from UK to EU • Geographically Dover is 22 miles from Calais; • Because the UK and French authorities created the ‘Smart Border system’ in France, a fully automated Customs process. Goods are
Selling DDP is greatly appreciated by EU customers as they are not involved in the import Customs process and continue to buy goods from UK suppliers as they used to do before Brexit. Most of the time, selling DDP does not require the set-up of a fixed establishment in the EU as most UK businesses do not intend to hire people nor to own warehouses in the EU. As a result, EU transactions remain taxable for corporate tax purposes in the UK. Another question is to know in which EU country the import Customs formalities should be performed. At first sight it may make more sense to have goods Customs cleared in the country of destination. This, however, implies that companies have the ability to deal with individual local Customs authorities when it comes to HS code classification, health certificate or payment of import VAT. In addition, the goods need to be
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October 2022
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