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The clock stopped ticking - every end is a new beginning
1 January 2021 is the day that will be marked in history as the day the United Kingdom officially left the European Union. Finalised at the eleventh hour, the EU-UK trade and cooperation agreement (EU-UK TCA) provisionally entered into force, leaving businesses, governments and citizens with only a few days to acquaint themselves with the content. The agreement is subject to legislative approval and applies provisionally till 28 February 2021. The Revised Irish Protocol governing the applicable rules for trade with Northern Ireland is applicable regardless of the EU-UK TCA.
The EU - UK TCA is only the beginning. The demanding process of analysing and incorporating the agreement into your business and daily activities has only just begun. Many questions arise out of the new situation. What are the conditions for tariff and quota free-trade between the EU and UK? Does your business comply with the new customs and regulatory formalities? What are the rules of origin that apply to your products? Are there additional VAT registration requirements to be met?
The knock-on effects don’t end here. How will Brexit affect your trade relations with Northern Ireland? How should you fulfill your obligations under the revised Irish Protocol? Although the free trade agreement was the best possible outcome in the Brexit scenario, the way trade is done with the UK has changed dramatically and will be more restricted than ever before. The UK left the EU customs union, VAT area and the internal single market. These changes will affect every aspect of your business.
The EU - UK TCA is only the starting point for future rounds of negotiations. Brexit is not done and dusted, but is an on-going process. Businesses need to stay alert that they are following the new rules in place, which is why having a Brexit strategy to manage these changes is essential.
Discover the latest Brexit news
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Get updated on the protections obtained in the ratified Implementation Agreement, the main differences in the future trade agreement and more.
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Requirements: don’t delay - act immediately
- Rules of Origin - no tariffs for those that pay attention
- Customs compliance
- VAT
- The Revised Northern Ireland Protocol
- ERP and process changes
- People
- Notified bodies
Rules of Origin - no tariffs for those that pay attention
Under the EU- UK TCA, goods must originate either from the EU or the UK to benefit from preferential treatment, in other words, no tariffs and no tariff quotas.
Do you know the origin of your goods? Where and how they are made and how they get to the EU/UK? Do you know how to properly document the EU/UK origin for customs? Do you know about the special customs procedures to be eligible for an exemption?
We can assist you in finding a tailor-made solution or restructuring your supply chain based on your specific needs.
Warning! Annex on RoO under the UK TCA might cause a serious headache up to 3 years after the import, if not approached with careful consideration.
Customs compliance
The EU-UK TCA does not remove the customs compliance obligations!! Traders will be exposed to new customs and regulatory verifications.
If customs authorities call/visit, do you have a customs compliance person in charge? Do you know which documentation you may need as an exporter or importer? Did you check that all the documentation is up to date? What about record keeping requirements? Do you have resources to follow what the EU/UK agreed in the joint specialised committees? Did you consider advance rulings to simplify your customs compliance?
VAT
As of 1 January 2021 the trading in goods and services is subject to a different set of VAT rules and related VAT compliance obligations.
Do you know these rules? Have you already considered how to recover UK VAT? Will you require a fiscal representative? Or will you require a UK VAT number - and if so who will pay for the import VAT?
The Revised Northern Ireland Protocol
The Northern Ireland Protocol means that Northern Ireland maintains alignment with the EU VAT rules for goods (not for services). Northern Ireland is, and remained, however also part of the UK VAT system. Hence businesses will have to comply with different rules and procedures with transactions with GB than for transactions with Northern Ireland.
Do you have economic relations with Northern Ireland? Are you trading in goods or services? Do you or your customer require the specific Northern Irish VAT number - XI VAT number? Are you shipping goods to Northern Ireland over GB?
As of 1 of January 2021, the VIES website can be used to check the XI VAT numbers whereas GB VAT numbers can no longer be verified. As a valid EU VAT number of your client is a substantive condition to apply the exemption for intra-Community supplies the verification of those XI VAT numbers becomes key. We have updated our RoboVAT tool to validate these XI VAT numbers in bulk as well. Should you be interested in a full demo of our RoboVAT tool, do not hesitate and reach out to us!
ERP and process changes
Your ERP or accounting system should be able to cope with all the changes, i.e. different tax treatment, invoicing requirements, reporting obligations etc.Start the process now, if you haven’t already and make sure that you do proper testing of all possible scenarios.
People
As of 1 January 2021, after the 'status quo' period, the rights that apply to UK and EU nationals in Belgium according to the principle of free movement of persons ended. UK nationals travelling to Belgium as of 1 January 2021 are treated as ‘regular' third-country nationals and are subject to Belgian immigration rules. UK nationals who were residing and/or working in Belgium before 31 December 2020 and are considered as the beneficiaries of the withdrawal agreement have until 31 December 2021 to apply for a new type of residency card. This is the M-card or the N-card, and safeguards their residency rights and is linked to their right to work.
With regards to social security, as of 1 January 2021, the current EU coordination rules on social security will be replaced by the Trade and Cooperation agreement, which includes a Protocol on Social Security Coordination (the Protocol). This agreement ensures individuals who move between the UK and the EU after 1 January 2021 have access to reciprocal healthcare cover and that cross-border workers and their employers are only liable to pay social security contributions in one state. Generally, this will be in the country where work is undertaken. However, for multi-state workers and detached workers for up to 24 months, specific provisions are foreseen that are comparable to the provision of the EU Regulation 883/2004. However, the Member States should still agree to apply the ‘detached worker’ rules by 1 February 2021.
Notified bodies
The impact of Brexit will be high in the areas of regulatory requirements and notified bodies.
Are you currently relying on a UK/EU notified body to place your products on the market? Have you considered all Brexit implications in this respect, like CE marking and other labelling, chemical, medical and food safety requirements?
What are the risks of being unprepared for Brexit?
No post-Brexit strategy in place? You risk severe interruptions to your business and a corresponding loss of revenue. You need to be ready to do business with the UK under a new set of rules set out in the EU-UK TCA and the revised Irish Protocol. The failure to have the appropriate measures in place could be detrimental. With the need to lodge customs declarations and supplementary certifications, major disruptions to your supply chain could occur due to goods being held up at the border. In addition, the VAT and customs rules have changed under EU-UK TCA. Close attention needs to be paid to the rules of origin. With two separate legal regimes, you could face regulatory and compliance issues, particularly within highly regulated industries such as chemicals and pharmaceuticals.
You could face immigration red tape with your workforce, loss of funding, increased pricing, to mention just a couple of pitfalls. If you don’t have a post-Brexit strategy, your business could be at risk.
We are there to guide you through the maze of changes
It’s clear that you need to understand the impact Brexit has on your business! With the use of our Brexit assessment tools we will be able to quickly assess the impact and areas of attention for your specific needs. So let’s (virtually) meet.
Managed services
Do you lack the time and/or resources to effectively implement your Brexit strategy? PwC’s managed services may be the solution. Our dedicated specialists work alongside you as part of your team, in whatever capacity you require: finance, tax, VAT, customs - we apply best practices throughout your Brexit transition and beyond, freeing up time for you to focus on your core business.
Why PwC?
Our technology-enabled Brexit experts take a holistic approach to cover every facet of your organisation impacted by Brexit, everywhere you do business. We’re a global team of highly experienced tax, international trade, supply chain, legal and finance specialists that’s been helping organisations prepare for Brexit since it first made headlines in 2016.
Using our proven Brexit methodology and PwC-developed landmark digital solutions, we’ll assess your readiness and provide your organisation with the resilience to navigate the uncharted waters of Brexit, from Strategy through Execution.
Our digital Brexit solutions
Brexit Assessment Tool
Do you know the cost of Brexit to your business? PwC’s Brexit Assessment Tool quantifies estimated duty and VAT and calculates your cost of compliance.
Global Trade Tool
PwC’s unique trade analytics platform provides a customisable, comprehensive dashboard view of your import and export activity.
Brexit timeline and update
Official Brexit information
- United Kingdom
- Belgium
- Europe
United Kingdom
UK government information
The UK government has published a revised guide and case studies to explain how the UK border with the EU works post-Brexit. These include:
- UK guidance on the rules of origin
- UK guidance on imports
- UK guidance on exports
- UK guidance for Hauliers and commercial drivers
- UK guidance on import VAT and VAT returns
- UK guidance on possibility for applying for repayment and remission of duties
- UK guidance on VAT refunds in Northern Ireland
- UK guidance on selling services to the EU and EFTA countries
- UK guidance on UKCA marking
- UK guidance on moving goods into, out of, or through Northern Ireland
- UK guidance on placing goods on the EU market
Belgium
Belgian authorities guidances
Europe
- General website of the Commission for the EU-UK relations
European Union Law (EUR-lex) information
- EU-UK Trade and Cooperation Agreement (TCA)
- Revised Protocol on Ireland and Northern Ireland
- Other Brexit relevant documents related to the EU-UK (TCA)
European Commission information
- Relations with the United Kingdom
- Relevant preparedness notices under Withdrawal Agreement (not TCA)
- Guidance from the DG Taxud concerning the EU-UK TCA
- Commission proposal for the first extension of the provisional application
Information from other agencies
Contact us
International Tax Partner, Platforms and Market Positioning Lead, PwC Belgium
Tel: +32 476 87 52 24
Connect with PwC Belgium
