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  • Brexit planning guide

    UK businesses importing from the EU

UK businesses importing from the EU

As leaving the EU may involve leaving the EU Customs Union, tariff-free trade with the remaining EU member states could end with Brexit. UK businesses sourcing goods in the EU to sell in the UK should recognise that their suppliers will have to comply with Customs-related rules which may have an impact on prices and delivery lead times.

Although importers may face direct cost increases if tariffs (eg at WTO rates) are imposed on imports from the EU, it is possible to manage these. For example, it may be possible to import the same goods from an intermediary in a non-EU jurisdiction at a lower tariff rate. Sensible use of Customs Warehousing and Inward Processing Relief can also manage cash flow for Customs duty costs.

However, importers should remember that their EU suppliers are likely to face additional administration costs themselves so may have to increase their prices. For example, EU suppliers are unlikely to be able to use the existing EU ‘one stop shop’ mechanisms for UK sales and may need to register for VAT in the UK unless the UK implements some new simplifications under a new UK-EU trade deal.

If the goods sold in the UK can be sourced from global markets, simply switching suppliers may be a sensible option. Alongside due diligence checks on suppliers it will be necessary to carry out a full analysis of the new supply chain to consider preferential customs duty rates and whether Customs Warehousing will be beneficial.

Where a UK sales operation is supported by imports from an EU subsidiary manufacturer, then the cost profile for that subsidiary will have to be assessed carefully. It may be cost-effective to relocate that business back to the UK or to another non-EU jurisdiction with which the UK has preferential customs duty rates. Where such a business restructuring exercise takes place, it will be important to document the business rational and ensure that transfer pricing policies are updated accordingly.

Download our guide to read more on these issues:

  • Customs Warehousing 
  • Inward Processing Relief 
  • Preferential customs duty rates 
  • VAT administration 
  • Business relocation and migration
  • Transfer pricing 

Download our guide