How European companies adapt to Brexit

It is almost two months since the UK’s free trade agreement with the EU entered into force after Brexit.

Under the new rules, European companies must pay UK direct sales tax, or VAT, directly on sales below £ 135 (€ 155; $ 190), so they must now register and submit quarterly declarations to the UK authorities.

Other changes include customs declarations and additional paperwork. How have they adapted so far and what impact have the changes had?

BienManger took its final orders from the UK on 18 December and shipped them before the new rules went into effect on 1 January. It is unclear if and when it will serve in the UK again.

We operate an e-commerce deli that sells a variety of fine foods from France, Europe and worldwide. About 20% of our orders come from outside France.

The UK market is not central to our business, but customers in the UK have searched for these products and are happy to find them on our website.

Even in November and December, it was a bit vague in terms of what would happen with Brexit and what the rules would be. Now we’ve heard of the new procedures for sending parcels to the UK, but it’s still not very clear.

We still have a relationship with some English producers and sell products from England and the UK on our website. And we have customers in England who called to say, ‘I ordered this product on your website, where can I find it?’

It will be a pleasure to start selling to the UK again, but we need to spend more time better understanding the changes and costs involved. The question we have is: is it worth implementing all these solutions for the small amount of business we have done with the UK?

From my perspective, it’s hard to have an opinion on Brexit: everyone will adapt and adapt. I just regret that we used to have this free market and that it was so easy to do business all over Europe, and it’s harder now.

The company was founded about three years ago and has continued to sell to the UK since Brexit.

We are a very small business but about 20% of our exports go to the UK.

The biggest practical thing was the confusion among customers. Many people do not understand how the system works: people think that if they order more than £ 135, they do not have to pay tax at all, so we need to explain that the more you have to do yourself, the more you buy.

For purchases over £ 135, the customer is liable to pay VAT once the product arrives in the UK.

With online shopping, people are expecting free shipping these days, but with Brexit it is quite expensive and has to be paid for. If you use a courier service, they have to make customs declarations and it costs about € 5 (£ 4.30) for each package.

What I do not know yet is how complicated the tax return to the UK is, and how much work it is. Fortunately, a large portion of our UK sales go through Etsy, the market, and there they add the UK VAT on top of the price.

But the biggest problem for us is our accounting: it is another country where we have to check all the taxes and get the amounts correctly for the Finnish tax authorities. It’s a bit more work in the sense, but otherwise it’s going pretty well, so we did not really think about not selling to the UK – at least for now.

The company has faced a month of disruption, but delivery to its UK suppliers is now back to normal.

I think the UK is the fourth or fifth largest country we work with.

We managed to send some stock to our distributors in the UK and Ireland before Brexit, and we had about a month or so when we could not ship deliveries.

We had to wait for VAT numbers to make sure we had everything right in our system for the new customs regulations, but we had a company helping us get it right.

Our distributors in the UK have made contact with customers but the impact has not been bad as it is the middle of the season and due to the UK shutdown.

We can now deliver throughout the UK.

The company stopped selling directly to hundreds of individual customers in the UK due to the VAT rule.

We thought about getting a VAT code to be able to ship smaller items to the UK, but that’s too much work. We can therefore not ship to private customers in the UK if the order is under £ 135.

I have some business-to-business customers and it is not affected but all the small customers are gone. There is something like 400-500 UK customers that we can no longer serve, so it’s causing a loss here.

For orders over £ 135 it is much more expensive for all UK customers because they have to pay customs fees and some fees: DHL, for example, charges a flat fee of € 12.00 per package.

I can sell to UK private clients via platforms like Etsy and eBay – then the platform must collect UK taxes. However, you have to pay an initial fee that costs money. We have something like 10,000 items, so we have to pay the fee 10,000 times, and that’s something we do not want to do. So the customers can not buy everything.

We also need to update our online shopping system to adopt the VAT system and UK shipping costs, which cost thousands of euros. It is the only country in the world that handles tax in this way, and that is the biggest problem. This is an individual thing done by the UK and nowhere else in the world.

The company was launched shortly before the first UK exclusion in 2020, but has suspended deliveries to Northern Ireland and Europe.

We are still growing as a business, but it is now suppressed.

The idea was to start exporting more: we know the customers are there and we get a lot of inquiries. But this is something we will have to put on until things get easier or clearer.

The couriers let us know that they no longer transport food to Northern Ireland.

Then we have a lot of problems with orders in Europe, because there is a lot of paperwork involved. You have to give details of every product that is in the order – sometimes our orders contain up to 50 to 100 items, and it takes too much time.

We’re just a small business, so it’s not worth the headache.

We used to import ourselves from wholesalers in Europe, but now we have to use companies here in the UK. One supplier we had in Germany now uses a customs broker and the costs are added to each delivery, so it is no longer worth importing from them. product cost.

Our margins are reduced by almost half because we have to pay the middleman while we were previously able to import and save. Unfortunately, we have to pass on the extra cost to the customers.

We are only seven weeks into the Brexit and prices have risen, but it is currently difficult to say exactly how much it will affect in the long run. I think there needs to be a lot more guidance for smaller businesses like ours.