EU VAT changes

We wanted to send a personal note regarding the changes coming into effect from the 1st July. As it’s vital we are all as prepared as we possibly can be regarding these important changes. All of our advice and support can be found below.

There are two YouTube videos below which are only a few minutes long however they do cover everything off so please do take the time to watch these and familiarise yourself with the changes so that you are best prepared from the 1st July.

As always, thank you for your continued support and we remain available for any further assistance.

Here is a summary of the changes:

• From 1 July 2‌0‌2‌1, all commercial goods imported into the EU will be subject to VAT. The current VAT exemption for importation of goods up to €22 will be removed.

• All imports of goods into the EU will require a formal customs declaration.

• A new (optional) VAT collection scheme will be introduced for online sellers/online platforms, known as Import One-Stop Shop (IOSS) – which is only applicable for B2C transactions of goods with a value up to 150 EUR.

As of 1 July 2‌0‌2‌1, you can chose between the following options to pay VAT for goods imported into the EU:

a. Without IOSS (for B2C or B2B | any goods value)

b. With IOSS (only for B2C | only for goods up to 150 EUR)

For VAT payments without IOSS, you can continue to choose to pay duties & VAT on behalf of your customer, or opt for the payment to be collected from the recipient. This operates in the same way as it does today.

Please note that most shipments valued under €150 are not subject to Customs duties on arrival in the EU. This is separate to VAT and will continue to apply post 1 July 2‌0‌2‌1.

Please reach out to us if you need any support to ensure your business is ready.

Kind regards,

The Freight Brokers Team

PODCAST

What are the biggest challenges facing your business right now? As always, Freight Brokers are here to help.

Let us know what problems (and solutions) you would like to air and share on our latest service to clients – the Freight Brokers Podcast.

Hopefully, COVID-19 will soon be just a memory. The fall-out from Brexit may be with us longer. Sustainability in the fashion industry will remain a permanent challenge. Yet these are all hot topics we are having to deal with now.

What else would you like the industry experts among the Freight Brokers Family to tackle? What subjects connected with shipping and international trading would you personally like to comment on?

We’d be delighted to receive your suggestions ASAP. 

The Freight Brokers Podcast will be released once a fortnight, chaired by our friend and long-term consultant, Eric Musgrave, who has more than 40 years of experience observing and writing about the fashion sector.

Please let us know:

• The topics you are eager to discuss.

• If you or a colleague can talk about issues you’ve faced recently and how you solved the problem.

As a pioneering company in the Climate-Positive Revolution, Freight Brokers is keen to spotlight sustainability, practical solutions and best practice in shipping and trading worldwide.

A problem shared, a problem aired, is a problem halved. 

END OF TRANSITION PERIOD

Good Morning

The end of the UK’s transition period following ‘Brexit’ earlier this year, is now quickly approaching.

As we’re sure you are aware, with a free-trade agreement pending between the UK Government and the European Union, customs declarations will be required for moving goods between Great Britain and the European Union from the 1st January 2021. (This is assuming that the UK and EU do not agree a further transition period, which would mean that the export process would not change until another future agreed date.)

A team of dedicated experts have been working since the 2016 referendum to identify risks and find solutions that will minimise the impact and disruption of Brexit as much as possible.

They have invested in additional bonded warehousing space and trained new customs professionals in readiness for additional border clearance procedures. Their networks and systems have been reviewed and re-designed where necessary, and where new permits may be required, they have been obtained.

Getting your business prepared

1. DHL Express and FedEX are working to ensure their business's are as prepared as possible, however delays at the ports and therefore increased transit times for their road services are likely. 

An Economic Operator Registration and Identification (EORI) number will be required to move goods between the UK and EU after Brexit. The UK Government has issued all VAT-registered businesses with an EORI number by post. Other businesses can apply via the Government portal here. It’s free to apply and takes around 10 minutes.

As a priority, please submit your EORI number to DHL Express here if you have not already done so, FedEx clients are requested to include their EORI number at the point of completing their customs invoices. This will help prevent additional delays.

To Check if your EORI number is already validated please refer to the below website

https://ec.europa.eu/taxation_customs/dds2/eos/eori_validation.jsp?Lang=en

2. Digital customs paperwork submissions will be essential to help clear customs quickly.

Following Brexit, in almost all circumstances additional paperwork will be required when importing or exporting non-document shipments between the UK and the EU. It’s important you understand which paperwork will be required for the type of goods you import / export.

If you haven’t already, please sign up to DHL Express’ Paperless Trade (PLT) service to submit digital customs invoices. Submitting customs paperwork this way is expected to be extremely beneficial when clearing shipments through Customs post-Brexit. Most countries accept PLT and it’s a good way to improve efficiency whilst reducing your environmental impact. More information on PLT can be found here. Contact your account manager to get started now.

3. As trading with the EU becomes more complex (especially in a ‘No Deal’ scenario), additional cost will be incurred throughout the logistics industry, as more systems and processes, paperwork and formalities are introduced.

4. Check if a licence is needed to export your goods outside the UK.

5. Make sure you know the commodity code of your goods.

6. You also need to make sure you know the customs procedure code for your goods.

7. Apply for a deferment account to delay payment of your import duties and VAT for up to 46 days.

8. Ensure you keep records for the last six years for all traded goods declared to HMRC.

9. Please also note that for UK importers, business have the opportunity to opt in to the new Postponed Vat Accounting scheme (PVA). Opting in will mean that the main benefit for PVA is that no VAT would be charged at the time of import into the UK. This would be for any shipment regardless of where it originated and not just designed for EU. VAT is accounted for on a customer’s VAT returns.

2021 PRICE INCREASE

Good Afternoon,

We have now received notification from both DHL and FedEx today with regards to their 2021 rate increases. This will commence on January 1st 2021.

There is a 4.9% increase across all tariff's.

Please note new Brexit Surcharge is 0.25p per KG with a £4.50 minimum on all Non-Document Shipments to the EU.

Should you have any inquiries, please do get in touch.