Carry on shipping: The Spring Brexit Digest

Brexit Spring transition

The Trade and Cooperation Agreement announced on December the 24th marks an historic milestone in relations between the European Union and the UK.

It set out the framework of "a new economic and social partnership", one of the central elements of which is a Free Trade Agreement.

Although the document is the result of four years of negotiations and runs to more than 1,200 pages, it's important to realise that, for the time being, it is still only in draft form.

Some detail has to be added and, of course, the remaining EU member states and the UK Government need to debate and then vote on whether to ratify the provisional deal which has been struck.

Nevertheless, as one of the world's leading cross-border specialists, Spring has carefully studied the Agreement and is able to offer some guidance about how it might impact on your business.

Source code

One of the objectives of the negotiations prompted by the UK's withdrawal from the EU was securing something referred to as 'frictionless trade' - the movement of goods between individual countries or trading blocs without costly duties and lengthy customs checks.

The Agreement document, even in its draft form, makes clear that duties may still apply but only in certain circumstances.

Items costing less than €150 (£135) will now attract VAT but no duties and even goods valued above that threshold will in principle not see duties levied. The standard rate of VAT in the UK is currently 20% and this is the rate charged on most purchases. Only some products allow for reduced VAT

However, for products worth more than €150 (£135), it's important to establish their country of origin because duties may still be applicable if it was outside the UK or EU.

Products which are either entirely or largely made in the UK or EU can be designated as having a preferential origin and, therefore, will be rated for duty purposes at zero per cent.

Shippers unable to proof EU or UK origin on their products shipped, risk seeing the goods which they sell being classed as being of general origin, something which may result in duties being applied by customs authorities in the country to which they are being delivered.

Demonstrating origin can be easily done using the HS Code along with a certificate or declaration of origin.

The code is a six-, eight- or 10-digit classification which has been used with exports for more than 30 years and specifies the country from which they're being shipped as well as what items are actually made from.

The information about the constituent elements of a product which the code contains is useful in demonstrating what percentage has been procured or produced in either the EU or UK - thereby underlining whether goods qualify for preferential rather than general origin status.

Do also remember that the responsibility for providing the information required lies with the shipper and not with Spring or a commercial carrier.

The Spring Advantage

Even though the Agreement allows for a 'grace period' of up to one year to allow businesses to gather proof of any claim that their goods should have preferential origin status, shippers should begin observing the requirements immediately - and keep clear records to show that they have done so just in case of customs' enquiries.

After all, as of the first of January the UK and EU become two separate markets.

Whilst the Agreement has greater potential consequences for those retailers shipping more expensive goods to foreign customers, it's worth remembering that most e-commerce shipments are relatively low value items which can also be delivered via the postal network.

Post has been an integral part of the e-commerce success story precisely because of its ability to swiftly handle large volumes of packages through a long-established, tried and trusted system.

Spring has played an instrumental role in that process for its clients because it is wholly owned by PostNL, one of the world's largest post and parcel operators.

However, our unique role as a broker means that we can provide a wide range of both postal and commercial solutions for deliveries and returns to ensure that you have the most appropriate route for your goods, depending on the type of products being shipped and your desired speed of delivery.

Get in touch

To keep your shipments moving without interruption, speak to Spring.

Join the many hundreds of clients who know that they can rely on our expertise and the local knowledge and support of Spring's sales operations in many countries throughout Europe and across the world.

Brexit may have brought about a new era in European trade but it doesn't have to mean great change or challenge for you.

After all, we are Spring. We listen, we inspire and we deliver.