With less than 6 months to go to the end of the Transition Period, negotiations are continuing between the EU and UK, further guidance is being provided by EU and UK authorities and the UK have published a tender document looking for a service provider to deliver Trader Support Services for companies that are trading between Great Britain and Northern Ireland.
It is now critical that companies prepare for the end of the Transition Period. Below we have outlined some of the key takeaways from the European Commission's Communication on preparing for the end of the transition period between the European Union and the United Kingdom.
The Commission have outlined what they envisage the change in Trade in Goods will look like as of 01 January 2021. Some of the important areas are as follows:
Customs formalities will be required under Union law for goods entering and exiting the EU customs territory when coming from and going to the UK. This will be the case even in the event of a Free Trade Agreement
The EU's common risk-based system will be applied to products entering to the EU from the UK in the same way as goods from any other third country
EU business wishing to import from or export to the UK will need to be registered with an Economic Operators Registration and Identification (EORI) number
UK issued EORI numbers will no longer be valid for import/export purposes in the EU, and if companies with UK EORIs wish to import to/export from the EU they will need to apply for an EU EORI number or appoint a customs representative in the EU
If there is a future EU-UK Free Trade Agreement, companies will need to be able to prove originating status for products to avail of preferential treatment. If companies cannot prove originating status, they will be liable to customs duties even in the event of a zero-tariff, zero-quota EU-UK trade agreement
UK content will be treated as non-originating for the purposes of EU preferential trade agreements for origin determination purposes. As such, any companies utilising EU Free Trade Agreements with third countries need to review their origin calculations and remove UK content to determine if their products can still avail of preferential treatment
Value Added Tax (VAT) will be liable upon import of goods from the UK to the EU at the applicable VAT rate. Good exported to the UK from the EU will be exempt from VAT in the same way they are for exports to other third countries
Excise duties on products such as alcohol, tobacco etc. will be liable upon import from the UK to the EU
From 01 January 2021, as the EU and UK will be two separate regulatory and legal areas, goods imported to the EU from the UK will need to comply with Union rules and standards and as such be subject to the same regulatory compliance checks and controls as products coming from third countries. Certificates and authroisations issued by UK authorities or bodies that are valid today, will no longer be valid and will require certification/authorisation from an EU authority/body
If you have any questions on how your company may be affected by the above changes, or any other changes, contact us at info@abconsulting.ie
It is important for companies to understand that this is the beginning of a new trading reality, and not simply a moment in time change on 01 January 2021 and preparing for this is critical.
The full text of the European Commissions Communication can be found at the following link - https://ec.europa.eu/info/sites/info/files/brexit_files/info_site/com_2020_324_2_communication_from_commission_to_inst_en_0.pdf