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Goods in the EU can move freely between member states and are not subject to customs duties or quantitative restrictions.

Interlinked with the free movement of goods are regulations surrounding consumer protection, in which goods must meet specific standards. EU VAT regulations ensure that no double-taxation of VAT occurs for any cross-border supplies of goods.

We can provide expert advice on:

  • Applying for Special Customs Procedures and Authorised Economic Operator status (AEO)
  • Checking local VAT registrations
  • Reviewing your future plans and forecasts
  • Reviewing your supply chain
  • Foreign exchange implications
  • Preparing for the cash flow impact of restrictions on imports and exports

Typical questions from our clients:

Do I need to pay VAT when I import goods from the EU from 1 January 2021?

Yes, import VAT will be due on imports of goods from the EU in the same way as for imports of goods from the rest of the world. However, from 1 January 2021 “postponed accounting” for VAT will apply to all imports of goods. This means VAT registered UK businesses will no longer have to pay the import VAT upfront but can pay and recover it at the same time through their VAT return. Businesses that are not registered for VAT in the UK may be able to delay the payment of import VAT by applying for their own duty deferment account or using the facility offered by their shipping agents. Businesses should ensure they have applied for a UK EORI number as their EU EORI number will no longer be valid in the UK.

Will I need multiple VAT registrations in EU member states if I am involved in an international supply chain?

This will depend on what the supply chain looks like. For simple exports to EU countries the business customer will normally be liable for the local VAT. However, a number of simplifications for certain scenarios such as those for call-off stock and triangulation will no longer be available to UK businesses and may require local EU VAT registrations and the appointment of a local fiscal representative.

Will new tariffs apply on trade with goods between the UK and the EU?

If no comprehensive free trade agreement is agreed and signed before the end of 2020 then the UK would begin to use its UK Global Tariff (UKGT) to impose tariffs on goods imported from the EU. This UKGT simplifies, amends or removes many tariffs on products currently being imported, not just from the EU, but around the world. Similarly, UK exporters to the EU would face tariffs based upon the EU’s Common External Tariff.

If a free trade agreement is concluded, then the majority of goods will be free of any tariffs. However, some goods could be excluded from the free trade agreement such as agricultural goods and goods deemed to be produced by key UK sectors.

Further, the rules for trade between Northern Ireland and the Republic are different. Goods will be able to move tariff-free between the north and south of Ireland without the imposition of tariffs in a dual-tariff regime.

Will the amount of customs paperwork required to move goods between the UK and EU increase?

In short, yes it will. Even if an FTA is agreed additional customs documentation will be required by HM Revenue & Customs (HMRC). As the UK will be classed as a ‘third country’ customs entries, customs commercial invoices, packing lists, waybills and in some cases certain proof of origin certificates, health certificates and import/export licences will be required to move goods. The position will be similar to goods being imported at present from countries outside the EU such as the USA and China.

Exporters and importers moving their goods, whether by road or air, will be required to have access to existing and new HMRC computer systems. These will monitor the movement of goods and the vehicles moving them. Additionally, systems will monitor whether goods are simply transiting other EU states before they reach their final destination.

Will I have to pay customs duty and submit customs entries from 1st January 2021?

HMRC have stated full customs entries and duty will be due only on controlled goods (alcohol, tobacco etc,) from 1st January 2021. All other goods will be allowed to be imported into the UK from the EU without the need to submit full customs entry or pay customs duty until six months later. This will be a deferral not an exemption as deferring paying customs duty will require access to an HMRC approved Duty Deferment Account.

From 2 April 2021, all products of animal origin will require pre-notification of arrival and health certification. After 1 July 2021 all goods will be subject to full customs controls and the deferred customs documentation and duty will be due at point of arrival, subject to any extant deferral arrangements held by the importer of record.

Customs & Excise Duty

The Four Freedoms of the European Union

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