The consequences of Hard Brexit regarding commercial trade within EU
As you may already know the United Kingdom notified the European Council of its intention to leave the European Union on March 29 of 2017, in accordance with Art. 50 of the Treaty on European Union.
This decision, unless otherwise specified, will take effect from next March 30, 2019.
The Customs Agency on February 26 illustrated the implications in the VAT and custom taxes arising from the withdrawal of the United Kingdom from the European Union, in the absence of a specific agreement that regulates in a transitory way the consequences deriving from such scenario.
The scenario for the next days is summarized in the following way:
Indirect Tax
One of the first consequences is that the goods sold and shipped towards United Kingdom will no longer be part of intra-community non-taxable sales according to the art. 41 of the D.L n.331/93, and at the same time the goods coming from United Kingdom will no longer constitute intra-community purchases as written in the art. 38 of the Law Decree n. 331/93.
In fact, after the exit, the supplies of goods to a person stablished in the United Kingdom will be a non-taxable transaction for VAT purposes, in accordance with article 8 of the D.P.R n. 633/72 and, for their shipment outside of the EU territory will be mandatory to carry out the customs formalities foreseen for the export.
Likewise, for the introduction of goods from the United Kingdom in to EU territory, it will be mandatory to complete the necessary customs formalities and a customs duty payment will be due and for their release for consumption in Italy, excise duties – if due- and the relative VAT according to the provisions and procedures as stated by law.
A direct consequence of this situation is that economic operators:
- Will not have to submit INTRA models either for purposes or for statistical purposes, in relation to trade with non –UK residents.
- Will no longer be required to integrate and register the invoices received from the United Kingdom.
Application of Customs Provisions
These are the main consequences analyzed by Customs.
a) Imports
The Economic operator wishing to import goods from the United Kingdom must present the goods with a customs import declaration and must be transmitted electronically to the competent Customs Office.
b) Export
The Economic operators wishing to ship goods to the United Kingdom must submit a customs export declaration. It must be transmitted electronically to the competent customs office in relation to the place where the exporter is established if to the place where the goods are loaded or packaged for export.
c) Authorized Economic Operator (AEO)
All the AEO authorizations released by the British Customs Authority, starting from March 30, must be revoked automatically, and the eventual accepted demands by the British Customs Authority will be automatically rejected.
d) Authorizations to special procedures
The Customs authorizations granted by the United Kingdom Customs Authority will not be valid in the European Union territory as well as the authorizations granted by the Italian Customs Agency to entities in the United Kingdom.
e) Common Transit (regime that consents the movement of good without payment of customs duties. VAT, excise duties and other charges)
With effect from March 30, the United Kingdom will become a contracting party to the Common Transit Convention (CTC) and will apply such regime.
f) Custom Warehousing procedure (an arrangement allowing the suspension of payment of the rights affection of the goods deposited here)
From March 30, holders of permits at the Customs Warehouse will be able to introduce in their own warehouses, the good coming from the United Kingdom as third party goods.
g) Authorized and Registered Exporters
The authorizations and registrations granted by the United Kingdom Customs Authorities to exporters are no longer valid in the European Union. The same with authorizations and registrations made by the European Union Customs Authorities to exporters established in the UK or the same entities established in the EU but with EORI number – UK are no longer valid in the EU.
h) Warranties
Following the exit of the United Kingdom from the EU without an agreement, the Customs Authorizations in relation to the Global Warranties issued by the United Kingdom Authorities and by the Italian Customs Agency to entities from the United Kingdom, will be no longer valid, being no longer operators stablished in the territory of the European Union.
For a complete list of the cases analyzed by the Italian Customs Agency, please refer to the note issued by such Agency.