In the context of the ongoing Brexit negotiations, the European Commission is informing all interested parties of the possible consequences of a hard Brexit. On 25 January 2018, the Commission published two notices to stakeholders aimed at making them aware of the consequences of Brexit in the field of import/export licences for certain goods and in the field of customs and indirect taxation.

The Commission reminds the operators that, without a sector-specific agreement or a transitional agreement, from 30 March 2019 the United Kingdom will become a Third Country. This means that businesses, in particular those active in the import/export sector, should take all necessary measures to stand ready to face the exit of the United Kingdom from the European Union.

The import/export of certain goods from the EU to the UK and vice versa will require a mandatory authorisation/approval/shipment notification, contrary to the present situation where in most cases such licences are not required for intra-Union shipments. Moreover, as of the withdrawal date, import/export licences issued by the United Kingdom as an EU Member State on the basis of Union law will no longer be valid for shipments to the EU-27 from third countries or vice versa.

Goods that require an import/export licence include: “dual use goods” (Council Regulation (EC) No 428/2009), cultural goods (Council Regulation (EC) No 116/2009), waste (Regulation (EC) No 1013/2006), firearms and ammunition (Regulation (EU) No 258/2012) and military technology and equipment (Council Common Position 2008/944/CFSP).

With regard to customs, the Commission recalls that goods which are brought into the customs territory of the EU from the United Kingdom or from the EU to the United Kingdom, will be subject to customs supervision and to customs controls in accordance with the Union Customs Code (Regulation (EU) No 952/2013). Goods which are brought into the customs territory of the EU from the United Kingdom will be subject to the relevant custom duties according to Council Regulation (EEC) No 2658/87 on the tariff and statistical nomenclature and the Common Customs Tariff.

Certain goods which enter the EU from the United Kingdom or are leaving the EU to the United Kingdom will be subject to prohibitions or restrictions on grounds of public policy or public security, the protection of health and life of humans, animals or plants, or the protection of national treasures.

The status of Authorised Economic Operator (AEO) issued by the customs Authorities of the United Kingdom will no longer be valid in the customs territory of the Union.

In the field of indirect taxation, the Commission pointed out that goods which enter the VAT territory of the EU from the United Kingdom or are dispatched or transported from the VAT territory of the EU to the United Kingdom will be treated as importations or exportations of goods respectively in accordance with Council Directive 2006/112/EC on the common system of value added tax. This will imply charging VAT on importation, while exports will remain exempt from VAT.

Taxable persons established in the United Kingdom purchasing goods and services or importing goods subject to VAT in a Member State of the EU who wish to claim refund of that VAT may no longer file their applications electronically in accordance with Council Directive 2008/9/EC and will need to claim that VAT in accordance with Council Directive 86/560/EEC.

A company established in the United Kingdom carrying out taxable transactions in a Member State of the EU may be required by that Member State to designate a tax representative as the person liable for payment of VAT in accordance with Directive 2006/112/EC.

Finally, the Commission points out that the movement of goods from the EU to the United Kingdom and vice versa will be treated as an importation or exportation of excise-liable goods respectively in accordance with Council Directive 2008/118/EC on general arrangements for excise duty. This implies, inter alia, that the Excise Movement and Control System (EMCS) will no longer be applicable to movements of excise-liable goods under suspension from the EU into the United Kingdom, and will be treated as exports, where excise supervision ends at the place of exit from the EU. Movements of excise-liable goods to the United Kingdom will therefore require an export declaration as well as an electronic administrative document (e-AD). Movements of excise goods from the United Kingdom to the EU will need to be released from customs formalities before a movement under EMCS can begin.

Davide Scavuzzo