Shipping delays, customs rates and duties, a drop in the pound’s exchange rate: these are some of the possible effects of Brexit that merchants operating to and from the UK will likely face.
Over the past year, European and British leaders have been working to reach an agreement on the rules that will govern relations between the two blocs, once the United Kingdom is finally separated from the European Union. With the almost 11-month transition period now over, many European e-commerce companies with British customers and British companies with EU customers are wondering how this will affect their businesses, especially regarding sales to customers and shipping. Here is some advice fromShippyPro.
“Unfortunately, 61% of British companies have not prepared for the formal departure from the European Union*. And with as many as 2.31 million European citizens working in the United Kingdom, there will be no shortage of hiring challenges – commented Francesco Borghi, CEO of ShippyPro– As if that weren’t enough, there is concern that Brexit will damage national and foreign investment in European economies. And the fact that giants like Amazon have temporarily suspended deliveries of small packages between the UK and the EU in the Amazon Partnered Carrier Programme already indicates how much uncertainty remains about future scenarios after the transition period has ended.”
What is certain is that e-commerce companies in the United Kingdom with European customers will be affected differently than those in Europe with British customers, but substantial changes are expected for everyone in any case:
“There may be shipping delays to and from the United Kingdom and the EU, additional taxes and duties could push more customers to buy from local rather than international e-commerce brands, and there may also be a drop in the pound exchange rate“, added Francesco Borghi.
Merchants operating to and from the United Kingdom will therefore have to fulfill new administrative obligations and implement them in their processes. ShippyPro, the platform for managing shipments, tracking, and returns of orders, has identified the main pain points and tried to provide a guide of useful tips for addressing them.
Let’s see what they are:
New rules to follow for shipping to the United Kingdom
When you ship to the United Kingdom from the EU, you will need to apply VAT on orders under £135 (approximately €147). Orders over £135, however, will be subject to import duties and VAT.
Customs documents required for shipping to the United Kingdom.
EORI code
From January 1, 2021, if you sell in the United Kingdom as well as in Europe, you will need both a British and a European EORI (Economic Operator Registration and Identification) code. This applies wherever your business is located. Since the United Kingdom and the EU will be officially separated, you will need an EORI for both entities, as your EORI code identifies you as an exporter.
Customs declaration CN22, CN23
Companies and individuals sending goods from the United Kingdom to the EU will need to complete a customs declaration form, CN22 or CN23.
- CN22 – Parcels weighing up to 2 kg and valued up to €425
- CN23 – Parcels weighing from 2 to 20 kg and valued at €425 or more
DAP and DDP
The choice to use the DAP (Delivered at Place) or DDP (Delivered Duty Paid) servicedepends on the type of business. With DAP, the importer is responsible for paying duties. With DDP, on the other hand, the exporter pays them before delivering the product.
Most B2C e-commerce companies should use the DDP service to meet customer expectations. DAP might be the right strategy for B2B e-commerce companies or those delivering large quantities of goods to a retailer.
What changes for VAT
UK sellerswill have to register for VAT in each country they sell to. There is no longer a minimum threshold, so if you have even one order from a country, you will need to register for VAT in that country. Furthermore, UK vendors will have to check the laws of individual EU countries to determine which ones require a local tax representative. For these reasons, you may consider abolishing VAT from some countries where you do not expect large sales, in order to simplify your VAT registrations.
EU sellerswho plan to ship orders under ÂŁ135 to the UK must register for VAT with HMRC. If you ship to the UK, you will need to collect VAT on orders under ÂŁ135 (this responsibility falls to the platform instead if you use a marketplace like Amazon or eBay).
VAT collection and transfer to HMRC
You will need to declare and pay VAT to HMRC quarterly. This must be done for quarterly orders under ÂŁ135. You will not need to do this for orders over ÂŁ135, which will instead be subject to import VAT and any duties.
Returns management in the UK
E-commerce returns to and from the UK and the EU may change. Firstly, shipping delays are anticipated, which could cause dissatisfaction among customers waiting to receive a refund.
“Our advice to merchants in this last case is to be proactive and review their e-commerce shipping strategy– added Francesco Borghi – However, we suggest not eliminating the returns option in key markets: we can confirm that an excellent returns experience can increase conversions and customer loyalty. Our shipping software is of course Brexit-compliant, and we plan to increasingly support our merchant customers shipping to and from the UK in finding the right answers to their questions.”Â
Pubblicato in Business
Be the first to comment