Following Britain’s exits from the European Union, a lot of things have changed. Shipping is one of them. As a result, those who ship to and from the country need to reorient themselves on the new rules and regulations to ensure their operations run smoothly.
Luckily for you, this article aims to provide you with the basics of what you need to know about shipping to the EU. These include the processes you have to put in place, like customs forms, EU import VAT, commercial invoice, etc.
To understand Brexit and what it connotes for shipping for consumers, we should first understand what Brexit is. Equally important is an understanding of the other actors in this story. This article looks at all of that.
Let’s get started!
What is Brexit?
Brexit is a combination of two words – “Britain” and “exit.” This term is used to refer to the exit of the United Kingdom of Britain from the European Union (EU). It was coined by a former lawyer, Peter Wilding when he wrote about “Brexit” in 2012.
What is the European Union?
The European Union is a group of 28 European countries that allow their citizens to trade and roam freely amongst one another for work and pleasure. This union was created on the ruins of the Second World War, to foster unity and enhance economic power.
Brexit and the Free-Trade Agreement
After several years of trying to exit the EU, the UK finally did on January 1, 2020, at around 11 pm GMT. Fast forward to December 24, 2020, both the UK and the EU signed a provisional free-trade agreement. This agreement ensures that the two sides trade their goods without having to pay quotas or tariffs.
More than a week later, on January 1, 2021, the UK parliament ratified the agreement. Subsequently, on April 28, 2021, the European Parliament approved it, too.
The provisional free-trade agreement, which is known as the Trade and Cooperation Agreement (TCA), allows both the UK and the EU to trade goods without tariffs or quotas. However, these trades have to undergo customs checks, making commerce more unpleasant.
What You Need to Carry Out Shipping after Brexit
Regardless of the items you want to ship, endeavour to provide the information below to ascertain that the items will be easily cleared through customs. This information includes:
- The UK EORI number, also known as economic operator registration and identification number
- The importer’s EORI number, if it is another business
- The item’s details, including its weight, value, description, and quantity
- The sender’s name, address, and contact information
- The recipient’s name, address, and contact information
- The country of origin
- The recipient’s VAT number
- The harmonisation code, which is eight digits long
Put together, these details inform the customs professional about what the item is. It also tells them about its value, origin, and destination. It is important to note that you cannot negotiate any of the aforementioned details. In addition, any missing information will result in the payment of fines, duties, or delays. It might even make it difficult or completely impossible to clear customs.
How to Get Your EORI Number and Harmonisation Codes
An EORI number is used to identify the person sending the items. On the other hand, harmonisation codes are used to standardise the manner with which customs operate across the world. To get your EORI number and harmonisation codes, do the following:
- For EORI number: Applying for an EORI number involves a simple process that takes mere minutes. To do this, visit the UK government’s dedicated portal at gov.uk/eori.
Whether you are a sole trader or global enterprise, you need this number if you will be shipping to the EU commercially. Bear in mind that your EORI number should start with GB.
- For Harmonisation codes: Also known as HS codes, click on gov.uk/trade-tariff to search for your harmonisation codes. All you have to do is describe the item you want to ship, its code, duties, VAT rate, and you’ll get more information. Make sure you always have an accurate harmonisation code for your items to avoid delays or fines.
Important Tips You Should Note
You should take note of some factors when you are shipping post Brexit. This will not only make the process much easier for you; it will also make it much cheaper. To ensure that you are on the right track, take note of the following:
Before Brexit, you didn’t need customs forms to ship to the EU. That is, however, not the case anymore. Bear in mind that customs forms vary depending on the courier you’ll be using.
For Royal Mail and DPD, you either use a CN22 or CN23 form. The CN22 form is used for items with a maximum value of £270. The CN23, on the other hand, is used for items that are valued higher and require additional paperwork, like commercial invoice and others.
For DHL, FedEx, and UPS, you use an EDI form, which works in the same way as the CN22 and CN23 forms.
EU Import VAT
Before Brexit, the European Union didn’t charge import VAT on items brought into the countries in the group. However, Brexit changed this as there are currently taxes on all EU imports. You should note that these import taxes are not the same as UK VAT, which are the taxes UK businesses collect on sales higher than £85,000.
Bear in mind that EU import VAT varies between countries. Also, its collection depends on several factors, including how you manage your business, the value of the item, and its country of origin. Take note of the following:
- For items worth £22 or less, there is no EU import VAT.
- For items between £22 and £150, you have to pay EU Import VAT.
- For items that cost higher than £150, you have to pay EU import VAT and additional duties.
- For items like perfume, alcohol, and other specialist products, you have to pay EU import VAT as well as excise duties, regardless of their value.
It is recommended that you always have your commercial invoice handy. This is because it is an essential part of your shipping process, and as such, you might need it at any time.
A commercial invoice is a document that contains information on the goods being shipped along with their value. It is also used in assessing duties and taxes which facilitates customs processing.
For several people, the above can seem complicated. However, the more you get used to it, the more you understand it and adjust to the new methods. To facilitate the ease with which you understand it, you may want to contact a tax professional. You may also want to be detailed, patient, and aware.
If you’re already familar with DDP or Delivery Duty Paid, then you know half the misery of locating the correct HS Codes – The best news in all of this is that your forwarding company is already aware of these rules and new regulations and they won’t let you down.