UK left EU on 1 February: “You should get an EORI number and read up on customs rules”
Negotiations on the future relationship between the EU and the UK will begin in March. They will aim for an ambitious free-trade agreement.
“Because there are no guarantees the talks will be successful, businesses should continue to prepare for a hard Brexit,” Suomen Yrittäjät international affairs manager Thomas Palmgren says.
During the transition period, the UK will continue to abide by EU rules and will negotiate with the EU on its future relationship with the bloc. During that time, the UK will retain all the rights and obligations of a member state. Brexit affects all enterprises that trade with the UK, which in Finland, this means about 15,000 businesses.
Palmgren warns companies to be prepared for the UK being outside the EU single market and customs union from next year.
“You should get an EORI number and read up on customs rules right from the start. Talk to your British clients about the effects of Brexit on contracts and prices. Both parties may face new obligations,” he says.
Get clear on the impact: a reseller may become an importer
There is still time to get ready for Brexit.
“If we avoid a hard Brexit and achieve a trade deal, that’s a big plus,” Palmgren says.
The Finnish Prime Minister’s Office says that the tight negotiating schedule could see businesses in some sectors pushed into a situation with no applicable trade deals from 1 January 2021.
The UK will remain part of the EU single market and customs union during the transition period. For example, the free movement of people, goods and services between the EU and the UK will continue. The withdrawal agreement only settled the conditions for the UK’s departure, bringing to an end the obligations and commitments the country had accrued during 47 years of membership. It does not provide for the future relationship between the UK and the bloc.
From next year, goods traded between the EU and the UK will have to clear customs. If you are a reseller, you may find that you are an importer into the EU from next year. That means you are responsible for the product conforming with EU requirements and rules. Businesses may face additional certification costs. Over 14,000 Finnish businesses import products and services from the UK.
“Whatever the result of the negotiations, trade between the EU and the UK will continue. Smooth trading is in both parties’ interests. However, businesses should prepare for companies becoming a ‘third country’ in relation to the EU,” Palmgren says.
Get ready for Brexit – 5 important tips:
When getting ready for Brexit, businesses should consider the following:
1. Know your supply chains (e.g., suppliers, distributors, subcontractors) and any new obligations you will have.
2. Find out if you need permits, certificates or licences to import or export goods.
3. Work out what customs duties, customs classifications, VAT and excise duty will apply to your business. Learn how to do business with Customs if you have no experience in trading outside the EU.
4. Check if there are any limitations or bans to the import and export of your goods.
5. Rules of origin determine the country of origin of goods. Will you need certificates of origin in future?
In June 2020, the EU and the UK will take stock of the progress of talks. If the negotiation period is not extended by 1 July, the new trade deal must be drafted by October to allow time for ratification.
You can read more on the effects of Brexit on entrepreneurs’ taxation here.