{"id":3973,"date":"2020-12-31T10:44:14","date_gmt":"2020-12-31T09:44:14","guid":{"rendered":"https:\/\/old.prosman-pavlovic.sk\/?p=3973"},"modified":"2020-12-31T10:44:16","modified_gmt":"2020-12-31T09:44:16","slug":"brexit-and-customs-obligations-what-will-happen-after-1st-january-2021","status":"publish","type":"post","link":"https:\/\/old.prosman-pavlovic.sk\/en\/brexit-and-customs-obligations-what-will-happen-after-1st-january-2021\/","title":{"rendered":"Brexit and customs obligations                         What will happen after 1st January 2021?"},"content":{"rendered":"\n<p><strong>Updated on 30 December 2020<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" width=\"749\" height=\"400\" src=\"https:\/\/old.prosman-pavlovic.sk\/wp-content\/uploads\/2020\/12\/Brexit-a-coln\u00e9-povinnosti-aktualiz\u00e1cia-eng.jpg\" alt=\"customs-obligations-and-brexit-prosman-pavlovic\" class=\"wp-image-3975\" srcset=\"https:\/\/old.prosman-pavlovic.sk\/wp-content\/uploads\/2020\/12\/Brexit-a-coln\u00e9-povinnosti-aktualiz\u00e1cia-eng.jpg 749w, https:\/\/old.prosman-pavlovic.sk\/wp-content\/uploads\/2020\/12\/Brexit-a-coln\u00e9-povinnosti-aktualiz\u00e1cia-eng-300x160.jpg 300w\" sizes=\"(max-width: 749px) 100vw, 749px\" \/><\/figure>\n\n\n\n<p><strong>31st December 2020<\/strong>, which is marking\nthe end of the so-called transition period, is approaching inexorably and the\nUnited Kingdom will definitively, and thus <em>de facto<\/em>, withdraw from the\nEuropean Union. Although the United Kingdom already left the European Union <em>de\niure<\/em> on 1st February 2020, during the transition period it has remained a\npart of the common market and the customs territory of the European Union.<\/p>\n\n\n\n<p><strong>The United Kingdom (excluding Northern Ireland, which will be given a\nspecific status) will therefore be considered as a third country and a\nseparate customs and tax territory from that date. The conclusion of the\nFree Trade Agreement will not change this. Its conclusion will have no effect\non the customs obligations related to export, transit and import of goods, and\ncertainly not on tax regimes.<\/strong><\/p>\n\n\n\n<p><strong>It represents a significant change for economic operators from the\nEuropean Union (and thus also from the Slovak Republic) which trade with\neconomic operators in the United Kingdom. Customs formalities will be applied\nto these trades in the same way as they apply to trades with third countries,\nincluding the submission of customs declarations, customs checks all related\nchecks.<\/strong><\/p>\n\n\n\n<p>In particular, in the United Kingdom, contrary to the current simple procedure\nof the so-called Intra-Community delivery and acquisition of goods, already on\nentry into the customs territory of the United Kingdom, the customs\ndeclarations must be lodged, a consignment must be recorded in the United\nKingdom&#8217;s financial administration systems in order to carry out a risk\nanalysis and, where appropriate, to allocate consignment under customs control.\nThe same applies for goods dispatched from the United Kingdom to the European\nUnion, but in the opposite direction. <\/p>\n\n\n\n<p>It is necessary to emphasize <strong>three facts, which partially mitigate the customs and tax legal effects of Brexit and which will be relevant at the beginning of <em>de facto<\/em> Brexit (as of 1<sup>st<\/sup> January 2021)<\/strong>: <\/p>\n\n\n\n<p>1.We can state with almost certainty that the <strong>Free Trade Agreement will apply<\/strong> from 1 January 2021. The EU-UK Trade and Cooperation Agreement (hereinafter referred to as the &#8220;Free Trade Agreement&#8221;) was informally concluded on 24 December 2020, which will enter into force on 1<sup>st<\/sup> January 2021, even without the prior consent of the European Parliament which will only approve it subsequently in January 2021; on 28 December 2020 the Member States unanimously approved the Free Trade Agreement by the ambassadors from 27 EU Member States. <a>Until 29 December 2020, the agreement was formally confirmed by EU Member States<\/a> and on 30 December it was approved by the UK Parliament.<\/p>\n\n\n\n<p>The text of the Free trade Agreement is available at\nthe link bellow: <\/p>\n\n\n\n<p><a href=\"https:\/\/assets.publishing.service.gov.uk\/government\/uploads\/system\/uploads\/attachment_data\/file\/948104\/EU-UK_Trade_and_Cooperation_Agreement_24.12.2020.pdf\">https:\/\/assets.publishing.service.gov.uk\/government\/uploads\/system\/uploads\/attachment_data\/file\/948104\/EU-UK_Trade_and_Cooperation_Agreement_24.12.2020.pdf<\/a><\/p>\n\n\n\n<p>From the customs point of view, the provision\nconcerning the prohibition of the imposition of customs duties between the\ncontracting parties on goods originating in one of the contracting parties and\nthe prohibition of the imposition of other prohibitions and restrictions on\ngoods other than those permitted by Article XI of GATT 1994 are of the most\nimportance within the Free Trade Agreement.<\/p>\n\n\n\n<p>Thanks to the conclusion of the Free Trade Agreement, trade between the European Union and the United Kingdom will continue free of duties even after 1<sup>st<\/sup> January 2021, when the United Kingdom leaves the European Union&#8217;s single market. The businesses must be prepared for the fact that if they want to apply a zero rate of duty after 1<sup>st<\/sup> January 2021, they will have to prove the origin of the goods in one of the contracting parties (GB or EU) on the one hand, and customs formalities, customs supervision, including customs checks or checks following the release of goods for the declared customs procedure will apply on the other hand.<\/p>\n\n\n\n<p>2. Regardless of the conclusion of the Free Trade Agreement, the United Kingdom will not leave the European Union completely without an agreement. On 30 March 2019, the <strong>Agreement on the withdrawal<\/strong> of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community (hereinafter referred to as the &#8220;Withdrawal Agreement&#8221;) entered into force. From the point of view of the customs and tax law, inter alia, important &#8220;transition&#8221; legal relations in the third part, chapter II. and III. it addresses the <strong>ongoing customs procedures and matters relating to VAT and excise duties<\/strong> (for example goods placed on the date of Brexit (on 1<sup>st<\/sup> January 2021) under special customs procedures, or under tax transactions with a cross-border element (for example call of stock)).<\/p>\n\n\n\n<p>The text of the Withdrawal Agreement is available at\nthe link bellow: <\/p>\n\n\n\n<p><a href=\"https:\/\/eur-lex.europa.eu\/legal-content\/SK\/TXT\/?qid=1580206007232&amp;uri=CELEX%3A12019W\/TXT%2802%29\">https:\/\/eur-lex.europa.eu\/legal-content\/SK\/TXT\/?qid=1580206007232&amp;uri=CELEX%3A12019W\/TXT%2802%29<\/a><\/p>\n\n\n\n<p>3. The United Kingdom has introduced autonomously in its customs territory <strong>a simplified 3-stage import clearance regime <\/strong>due to a need to complete the \u201ecustoms capacities\u201c such as electronic consignment tracking systems or border checkpoints from 1<sup>st<\/sup> January 2021 until 30 June 2021. <\/p>\n\n\n\n<p><strong>3.1 First stage from 1st January 2021<\/strong>: <\/p>\n\n\n\n<ul><li>suspension of\ncustoms obligations on standard goods is introduced on import into the United\nKingdom from the European Union (from clothes\nto electronics), while importers only keep sufficient records necessary for\nlodging supplementary customs declarations and paying customs duties (up to 6\nmonths from import), <\/li><li>\u201eSafety and Security\ndeclarations\u201c will not be required on imports for the first six months, <\/li><li>standard customs declarations\nwill be needed from 1<sup>st<\/sup> January 2021 for controlled goods and excise\ngoods, while there will also be physical checks on high-risk live animals and\nplants at the point of destination,<\/li><li>standard procedure for export\nfrom the United Kingdom will apply from 1<sup>st<\/sup> January 2021. <\/li><\/ul>\n\n\n\n<p><strong>3.2 Second stage from 1st April 2021<\/strong>: <\/p>\n\n\n\n<ul><li>import of all\nproducts of animal origin and plant products will require pre-notification \u201eSafety and Security declarations\u201c and health documentation; any checks\nwill be conducted inland.<\/li><\/ul>\n\n\n\n<p><strong>3.3. Third stage from 1st July 2021<\/strong>:<\/p>\n\n\n\n<ul><li>standard customs\ndeclaration for all imported goods will be lodged and checks will take place at\nborder control posts. <\/li><\/ul>\n\n\n\n<p>Regardless of the above-mentioned transition simplifications concerning\nmainly import of goods into the United Kingdom, it is time to seriously deal\nwith the customs and tax impact of Brexit on trade with the United Kingdom.\nThe main consequence of the United Kingdom withdrawal from the EU is<strong>, that the\nmovement of goods, which enter the European Union from the United Kingdom, will\nbe from the date of the withdrawal treated as import. The movement of goods,\nwhich leave the European Union into the United Kingdom will be treated as\nexport. The opposite applies for the opposite direction of the goods. <\/strong><strong><\/strong><\/p>\n\n\n\n<p>This implies various obligations and changes for sellers, buyers, freight forwarders, carriers, customs representatives, guarantors, regular shipping operators, ports and the customs or financial administrations. It is therefore difficult to summarize all the changes in the obligations of individual parts of the supply chain within one document, even, if we need to take into account both directions of trade (EU \u2192 UK, UK \u2192 EU) and also if we need to take into account the fact that goods may enter and leave the customs territory of the European Union through the different Member States of the European Union, which have their own customs systems and smart systems for managing the entry and exit of goods. Nevertheless, we will try to make some general recommendations that we have identified in relation to Brexit. Please find bellow the following recommendations:<\/p>\n\n\n\n<p>1.<strong>Revise the delivery terms and conditions with your business partner<\/strong><\/p>\n\n\n\n<p>As already mentioned, customs obligations will occur on both sides of trade (EU, GB) in both directions. In order to complete customs formalities, you must meet the necessary requirements according to customs legislation (registered office or permanent establishment). At the same time, it is a professional activity for which you need to have the necessary qualification. We draw your attention to EXW and DDP delivery clauses agreed between the trading partners, which probably worked smoothly during the common market and during the so-called intra-Community supply, but after the withdrawal of the United Kingdom from the European Union they are absolutely unsuitable if you do not have a registered office or permanent establishment and necessary registrations in the country of supply or dispatch of goods.<\/p>\n\n\n\n<p><strong>2. Clarify your customs and tax status in the country of import or export, ensure the EORI registration and cooperate with customs representative.<\/strong><\/p>\n\n\n\n<p>After reviewing the delivery terms and conditions and possible negotiations with a business partner, please clarify your customs position in the country of dispatch and supply according to the terms agreed. If you are for example responsible for completing the customs formalities in the United Kingdom or you will communicate in any way with the financial administration of the United Kingdom, you need to apply for a EORI number in the United Kingdom. <strong>The unique EORI number that you have been given in the European Union will not apply in the United Kingdom after Brexit<\/strong>, as the United Kingdom is introducing their own unique EORI numbers. If you are responsible for the customs procedure in the country of supply and at the same time you do not meet the conditions for the status of declarant in the country of supply, <strong>you will have to conclude a contract with a customs representative for indirect representation<\/strong> so that an indirect representative acts as a declarant on your behalf. It is also necessary to consider VAT registration in the country of supply and thus facilitate the payment of VAT.<\/p>\n\n\n\n<p><strong>3. Check the validity of the customs authorisations issued so far and check the necessity to issue the new customs authorisations.<\/strong><\/p>\n\n\n\n<p>If you have customs authorisation in the European\nUnion according to European customs legislation and this authorisation, for\nexample, covers certain operations in the United Kingdom, please bear in mind\nthat these operations will no longer be covered by customs authorisation in the\nEuropean Union, as these operations will already be carried out in the\nterritory of a third country. In the case of such authorisations, it will be\nnecessary to request their change in the Member State of issue. On the other hand,\ncustoms authorizations issued according to European customs legislation in the\nUnited Kingdom before Brexit cease to be valid after 1st January 2021 (for\nexample authorisations for simplified procedures). This is without prejudice to\nthe provisions of the Withdrawal Agreement about the goods released on the\nbasis of such customs authorisations (Article 49). <\/p>\n\n\n\n<p>If certain processing operations were carried out on the other side of the English Channel within the common market and the single customs territory before Brexit, from 1st January 2021 you will need to have customs authorisation for those operations. The tax regime will also change.<\/p>\n\n\n\n<p><strong>4. Analyse the impact of Brexit on the application of preferences<\/strong><\/p>\n\n\n\n<p>Regarding the prohibition concerning the imposition of any customs duty on goods originating in one of the contracting parties under the Free Trade Agreement, trade between the European Union and the United Kingdom will be subject to the application of a preference (0% of duty rate) in customs proceedings and a proof of origin (EU or UK) will be required in the prescribed manner.<\/p>\n\n\n\n<p>It is necessary to distinguish the origin of goods from the status of goods. The fact that certain goods imported from a third country are released for free circulation in the United Kingdom or in the European Union does not mean that they also originate there.<\/p>\n\n\n\n<p>The Free Trade Agreement contains its own rules for determining preferential origin, including the possibility of cumulation of origin, a tolerance clause and neutral elements.<\/p>\n\n\n\n<p><strong>5. Prohibitions and restrictions shall apply during a trade with the United Kingdom as they are applied with any other third country<\/strong><\/p>\n\n\n\n<p>Prohibitions and restrictions introduced by the European Union legislation will also apply to the goods coming from the United Kingdom after Brexit and vice versa. The United Kingdom imposes its own autonomous prohibitions and restrictions in accordance with Article XI of GATT 1994, so it is necessary to check the existence of these measures (for example check them with a customs representative in the United Kingdom).<\/p>\n\n\n\n<p><strong>6. Consider to apply for the simplified procedures and AEO status or for BTI, BOI<\/strong><\/p>\n\n\n\n<p>One of the negative effects of Brexit will also be the\ndelay of consignments due to the completion of customs formalities, whether at\nborder or inland customs offices. Delays at customs offices can be avoided precisely by using a wide range\nof simplified customs procedures for import, export, but also for transit of\ngoods. The British government has published a manual<strong> <\/strong><strong>UK Border Operating Model\n(<\/strong><a href=\"https:\/\/assets.publishing.service.gov.uk\/%20government\/uploads\/system\/uploads\/attachment_data\/file\/925140\/BordersOpModel.pdf\">https:\/\/assets.publishing.service.gov.uk\/\ngovernment\/uploads\/system\/uploads\/attachment_data\/file\/925140\/BordersOpModel.pdf<\/a>)<strong>, <\/strong>where it explicitly recommends to request all\navailable customs facilitations and simplifications in order to ensure the\nsmooth flow of goods. <\/p>\n\n\n\n<p>The same recommendations are on the side of individual\nMember States of the European Union. The\nstatus of Authorized Economic Operator (AEO) is considered as the most\nimportant, which is a prerequisite for obtaining the widest range of different\ntariff simplifications under the fast-track regime. The execution of customs\nformalities is shifting to the economic operators themselves, or to customs\nrepresentatives thanks to the simplified procedures. It also simplifies the\npresentation of goods in such a way that the goods do not have to be presented\nat the customs office, but the economic operator presents the goods by\nnotification to the customs office so that the goods are in the economic\noperator&#8217;s private premises.<\/p>\n\n\n\n<p>Requesting binding information on the nomenclature and classification of goods or on the origin of goodscan also simplify the customs procedure. In that case, the customs officers do not question the classification of goods or origin of goods, which are, besides the customs value of goods, the most common reasons for the customs controls and subsequent charge of customs duties and VAT.<\/p>\n\n\n\n<p><strong>7. When importing goods into the European Union it is necessary to prepare for the payment of import VAT.<\/strong><\/p>\n\n\n\n<p>As already mentioned, goods coming from the United Kingdom after 1st January 2021 will be considered to be subject to customs supervision and, if those goods are to be released for free circulation in the European Union, they will be subject to payment of VAT and they will be subject to possible prohibitions and restrictions. The obligation to pay import VAT, which in many Member States of the European Union, including the Slovak Republic, must actually be paid within the due date of the duty (10 days) to the customs authorities, can be considered as the most significant change when trading with the goods from the United Kingdom. This will undoubtedly have a significant impact on the cash flow of the companies which import such goods, as until the date of Brexit, VAT on the acquisition of goods from another Member State (United Kingdom) was dealt through a reverse charge.<\/p>\n\n\n\n<p><strong>8. Check other obligations and conditions depending on the flow of goods <\/strong><\/p>\n\n\n\n<p>Firstly, it is necessary to emphasize that on both\nsides of the English Channel, the so-called<strong> smart systems<\/strong> are built.\nThese smart systems, on the one hand, will use the geographical specificities\nwhen transporting goods between the United Kingdom and the European Union and,\non the other hand, will eliminate the cross-border delays by an effective use\nof electronic systems for consignment registration and the effective use of\nrisk analysis by customs authorities. The ports of the European continent are\nunder the administration of the different Member States and under their customs\nand financial administrations. For that reason, you need to be prepared for the\nsituation that if your goods are transported through a port in France, you will\ncommunicate with other systems like in the situation that you transport the\ngoods through a port in the Federal Republic of Germany. It is therefore\nnecessary to consult customs formalities and specific local obligations on the\nweb portals of the customs and financial administrations of individual Member\nStates.<\/p>\n\n\n\n<p>We would like to draw your attention to the <strong>special status of Northern Ireland<\/strong>,\nwhich from the point of view of the European Union will be considered as part\nof the customs territory of the European Union. When transporting goods to\nNorthern Ireland, or Ireland is therefore recommended to use a direct regular\nmaritime transport, without using the transport section in the United Kingdom.\nIn that case there would be no need to use the transit customs procedure and no\nneed to prove the status of the goods in the European Union.<strong><\/strong><\/p>\n\n\n\n<p>Following the above-mentioned, Brexit will bring significant changes in trading with the United Kingdom, so any company that buys or sells goods related to any kind of relationship with the United Kingdom <strong>should meet its minimum due diligence and carry out a basic analysis focusing on the impact of Brexit on its trading.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>From 1.1.2021, the UK will be considered a third country and a separate customs and tax territory. What are the new customs obligations for traders?<\/p>\n","protected":false},"author":2,"featured_media":3975,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[214,217,196],"tags":[185,307,218,221],"_links":{"self":[{"href":"https:\/\/old.prosman-pavlovic.sk\/en\/wp-json\/wp\/v2\/posts\/3973"}],"collection":[{"href":"https:\/\/old.prosman-pavlovic.sk\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/old.prosman-pavlovic.sk\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/old.prosman-pavlovic.sk\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/old.prosman-pavlovic.sk\/en\/wp-json\/wp\/v2\/comments?post=3973"}],"version-history":[{"count":4,"href":"https:\/\/old.prosman-pavlovic.sk\/en\/wp-json\/wp\/v2\/posts\/3973\/revisions"}],"predecessor-version":[{"id":3992,"href":"https:\/\/old.prosman-pavlovic.sk\/en\/wp-json\/wp\/v2\/posts\/3973\/revisions\/3992"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/old.prosman-pavlovic.sk\/en\/wp-json\/wp\/v2\/media\/3975"}],"wp:attachment":[{"href":"https:\/\/old.prosman-pavlovic.sk\/en\/wp-json\/wp\/v2\/media?parent=3973"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/old.prosman-pavlovic.sk\/en\/wp-json\/wp\/v2\/categories?post=3973"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/old.prosman-pavlovic.sk\/en\/wp-json\/wp\/v2\/tags?post=3973"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}