After quite a number of extensions, the UK has left the EU on the 31st of January 2020, with a transition period lasting until the 31st of December (same year). Starting from January the 1st 2021, all UK-based retailers will have to follow new rules and regulations when it comes to exporting goods to countries in the EU.

During the transition period, the UK and EU have been negotiating a trade deal that suits both sides but bringing new implications for both importing and exporting goods from the two regions. You can read more about the new regulations on the UK Government website. In this blog, we’ll point out the key ways in which Brexit affects eCommerce exports and imports.

What has changed after Brexit?

Customs

brexit shipping containersAfter Brexit, we’ve seen a lot of changes in customs rules and restrictions, tax and duty rates, and the required import/export documentation.

First, you will have to apply for an EORI number to be able to export goods outside of the UK to any country and keep in mind that you will have to be VAT registered to apply for an EORI number.

What if you already have an EORI number?

If you already have an EORI number, then make sure that it starts with the letters GB, if it doesn’t, then you will have to apply for a new one. If you will be making declarations or getting customs decisions in the EU, you will be needing an EORI number from the customs authority in the EU country where you submit your first declaration or request your first decision.

If you want to export goods to Northern Ireland, then you will also be needing 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 that you can use to export goods to Northern Ireland.

It is also important that you ensure that all of your product data is updated to ensure smooth movement through customs. All carriers will require you to have an accurate description and a commodity code (HS code) for all the products that you’re shipping – this will be used to determine the duty rates. Additionally, all UK sellers that send parcels to EU countries must include the following:

  • Country of origin or manufacturer. Without this information, the exported goods could be subject to customs security checks, impacting the delivery time.
  • Total weight of the parcel in kilograms – not grams, i.e. 0.5KG not 500 grams.
  • One of the three accepted reasons for export – Sales, Return/Replacement. Or Gift.

VAT rules

VAT rules

VAT has also become subject to change, starting from the 1st of January all UK sellers exporting goods to EU countries have to be VAT registered with HMRC in order to get a GB or XI EORI number. You might also need to register for tax in each EU country that you sell to. We would recommend talking to specialists regarding VAT and tax – such as Vatglobal and Avalara to understand your obligations.

We also advise you to 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 three 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 require you, while others only recommend, 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.

Fulfillment

If you are not holding any inventory outside of the UK, we recommend you considering moving some of your inventory to an EU country so it will be closer to your customers.

One of the biggest changes in fulfillment comes to sellers that are using Amazon FBA within the UK. With the new trade agreement, you can no longer send inventory to Amazon Fulfilment Centers in the UK to distribute inventory across the EU. Now you will have to export inventory to Amazon European fulfillment centers. Keep an eye out for promotions from Amazon that are offering to help reduce the costs of transporting goods to their European fulfillment centers.

What changes have we made to JustShipIT to accommodate the new regulations?

Brexit has had an impact on businesses of all sizes that are exporting goods to the EU. Our team of developers has been working hard to ensure that all of our customers selling goods in European countries can structure and store product data correctly, store company tax data, and automatically create the required customs documentation.

We’ve also added the newly required fields into our software – such as HS codes, Country of Origin, and more to help you ship your goods to all EU countries.

If you need any help with starting a Trial with our software, please feel free to contact us on 01212851051.