Brexit e-commerce shipping: How does it work?

As of 31 January 2020, the United Kingdom ceased to be part of the European Union. This manoeuvre was called Brexit (Britain + Exit).

For the market and trade this meant a change of regulations and also of costs.

In this article, we describe the new regulatory framework for trade after Brexit.

Trade Cooperation Agreement: the Turning Point (Trade Cooperation Agreement)

Following the 2016 referendum, the transition began, leading to 2020, to the UK's final exit from the European Union.

The UK, with the exception of Ireland, has been excluded from the political institutions of the European Community. In that time, not much has changed for citizens.

After all, it was necessary to maintain the economic relations and cultural exchanges established while within the Union.

Meanwhile, ministers met to redefine the economic and social relationship between Britain and the rest of Europe following Brexit.

This decision-making transition gave rise to the TCA (Trade and Cooperation Agreement of 24 December 2020), which from 1 January 2021 redefines the relationship between the UK and Europe.

The United Kingdom has thus become an outsider to the European Union.

The TCA is essential for any trader, large or small, as well as European and British citizens, because defines the modalities for the exchange of goods and parcel shipments, but also of, investments, competition rules, tax transparency, transport of goods by air and road, cultural exchange and much more.

It is clear that the freedom to exchange articles and services has been lost and European companies must pay close attention to this. Above all, in a digitised age such as ours, the Brexit was a turning point for the world of e-Commerce.

How will the relationship between European traders and the UK change after Brexit?

What does the TCA provide for?

The acronym TCA stands for for Trade and Cooperation Agreement commercial) and points to an agreement signed on 24 December that determines the relationship between the European Union and the United Kingdom, now regarded as a of a non-European country in many respects.

In order to facilitate trade, the two countries decided not to apply additional tariffs or impose complex practices that could slow down the entry or exit of goods.

However, much has changed: free trade has been abolished and, in some specified cases, customs fees and VAT will be applied.

In particular, two points stand out in the TCA:

Non there is no duty compliance with the agreement on the origin preferential of the goods
Le customs procedures have been simplified thanks to the unlimited right to trade and no limit on the quantities allowed for export.

Brexit - What Changes in the Import/Export World and the Consequences for Shipping

The Brexit has introduced a number of changes regarding trade between the Kingdom United Kingdom and Europe. Firstly, the exit from the Customs Union. Secondly, the exit from the Single Market.

This means that the status of “supply of goods” is dropped in favour of “import and export of goods”.

This is because Shipping to England has become international in nature and it is therefore necessary to produce customs documents to allow goods to enter and leave the country.

Producing documentation to enable foreign shipments to reach their recipients could slow down shipping times, raise costs and make the whole process more cumbersome.

This news suggests that tariffs will be applied on exports. This will result in a increased costs shipping and customs clearance, but also related to the currency exchange.

Conformity checks of goods will be made compulsory. This means that the customs clearance time will be longer.

The hope is that these changes in business logistics will not discourage British and European e Commerce. The data collected by the magazine La Vanguardia do not communicate rosy forecasts.

On the contrary, the number of online purchases from Europeans to British e-Commerce and vice versa would have already dropped dramatically by 2020. Considering that this was a year in which online trade boomed substantially, this figure is alarming.

Imports after Brexit

The agreements between the EU and the UK try not to impose too high tariffs that could discourage trade on both sides.

Thus, the’deletion by customs duties for shipments crossing borders between the UK and Europe in some cases:

If the merchandise exported meets the requirements for obtaining the’EU origin,
If it is sent in the UK avoiding the triangulation the basis of drop shipping sales,
If the seller one has registered in the software REX (system of registered exporters authorised to certify the origin of goods), so that he can self-declare the traceability of goods

Exports after Brexit

The agreements between the EU and the UK seek to facilitate those companies that produce more in Europe.

The TCA therefore sought to zero in on additional tariffs and simplify the customs procedures.

When exporting, traders should take into account the VAT rules on e-Commerce sales.

The tax can be up to a limit of £135 and will be dependent on the value of the shipment and the sales channel.

For the sales which, including shipping costs, do not exceed this value will not be applied any duty at customs. Furthermore, the European seller should be reminded that he will have to open a UK VAT number by entering his details online at HMRC (Her Majesty's Revenue and Custom).

If the value of the goods sold exceeds 135 British pounds, then duty and VAT must be paid to the British state.

To make things even easier for European traders, it is possible to include customs duties and VAT already in the sales price and to pass on to the courier the import charges, referred to as Duty delivery paid (Shipment cleared through customs).

Customs: What Changes with Brexit

Following Brexit, customs has tightened controls on imported and exported goods. It will be necessary to identify the harmonised code for each package, based on HS code and commodity type.

Sellers will then have to provide the necessary customs documentation as in any other non-European shipment and bear the costs of customs charges.

However, in order to facilitate trade, the TCA provides for an extension, which allows self-certification of conformity for products with a low risk and facilities for products of interest to both countries.

These two facilities are called AEO (Authorised Economic Operator) and Authorised Exporter status.

Shipping Goods to the UK after Brexit: How to Do It?

For traders, you will be asked how to ship goods to the UK following Brexit. Here are the various steps:

Go to the Customs Agency website and get an EROI (Economic Operator Registration and Identification number);
Contact the sender and ask for the AEO number to speed up customs procedures;
Completing the application for the HMRC number (British Revenue Agency);
Please consult the European Union website for Goods Classification Codes or HS Codes.

Customs documents for shipping to the UK after Brexit

With Brexit, the seller will also have to pay close attention to the documents to be produced for export to the UK.

Each of these documents must be photocopied three times and translated in language English.

These are the same as those needed when trading to countries that are not part of the Schengen. These are:

Copy of the identity document
Photocopy of the tax code o VAT number attribution
Pro forma invoice or commercial (must contain data on sender and consignee, reason for shipment, items contained in parcel, country of manufacture, materials, intended use of item, value, total)
Declaration of Free Export (must contain sender's personal data, contact email, telephone, shipping number, place and date and signature)
Shipping labels