Exporting to EU after Brexit

[Nobody]

Firstly apologise if this has been discussed already, but wasn't able to find any thread.

We have pretty much lost all our European customers. They do not want to pay local VAT and custom charges and the whole paper work that goes with it. We are down 50% of our turnover.

I have noticed some major international European companies have set up LTD companies in UK, so therefore they themselves become the importer and the goods are sent directly to UK end individual customers (the local UK customers then do not have to pay VAT and custom charges on delivery).

Is there anyway a UK company can do the same in Europe? For example we set up a LTD company in Europe, the goods are collected via a courier (UPS, DHL, Fedex etc) and shipped directly to end customer. Our LTD company then becomes the importer and is responsible for VAT and custom charges. The company in Europe is just a virtual company and wont he handling any physical goods. We have spoken to UPS and DHL if we can do this but their customer service team do not seem to understand what we want to do.

Has anyone else gone down this route? If so your help and guidance will be greatly appreciated.

Thank you.

 

[Customs Geek]

Yes it’s possible to set up a company or a branch in the EU but it’s shouldn’t be done without fully understanding your obligations. For a start a virtual company is not usually sufficient for customs or VAT purposes. There is normally a requirement for physical presence and people. Effectively a door for the customs and VAT authorities to knock on to see your business records.


Depending on whether your customers are individuals or other businesses there are probably other less complex options.

For instance you can often just get the courier to send you the customs and VAT charges.
You would just increase your prices to cover it.

 

[Nobody]

Yes it’s possible to set up a company or a branch in the EU but it’s shouldn’t be done without fully understanding your obligations. For a start a virtual company is not usually sufficient for customs or VAT purposes. There is normally a requirement for physical presence and people. Effectively a door for the customs and VAT authorities to knock on to see your business records.


Depending on whether your customers are individuals or other businesses there are probably other less complex options.

For instance you can often just get the courier to send you the customs and VAT charges.
You would just increase your prices to cover it.

Thanks for the advice

As per your other option of paying the VAT charge on behalf of the customer can we claim at back?

P.s our customers are other businesses, we are b2b business!!

 

[Customs Geek]

Thanks for the advice

As per your other option of paying the VAT charge on behalf of the customer can we claim at back?

Probably not if you are not VAT registered in the country of import

P.s our customers are other businesses, we are b2b business!!

If you have business customers who are VAT registered then it really would be easier and more cost effective if they were the importers. Most EU countries have some sort of VAT deferral, postponement or even in some cases automatic population of the VAT return. Even if they opted to pay it would usually be recoverable .
Getting you to pay duty and taxes probably increases costs to them .

EU customs law doesn’t make it easy for a non EU business to be importer but it is possible to register for VAT and get an EORI as a UK business. You would need to find a customs representative willing to act as indirect representative and possibly fiscal representation for VAT. A fiscal rep is nit too much trouble to find but customs indirect representation is something many are reluctant to do but some will. You will need to check with your courier if you want to go down that route.
Although you would sort out the import you would in effect be importing your own goods . There would then be a EU supply to your customer subject to supply VAT accounting.

I do think it’s more fear of complexity and costs that makes customers ask for the seller to sort the customs so perhaps a bit of education may help. If you are using couriers then there is very little paperwork if any at all for the receiver. Provided you give the courier your customer details VAT number EORI etc. they simply make the customs declaration. They will ask for duty etc to be paid before releasing the goods but if the customer sets up an account then they will invoice later.

I would only look at setting up a business overseas after all other avenues have been exhausted. Even really big companies don’t go down that route without serious thought.

 

[eteb3]

This strikes me as a prime example of where a coop would be a good idea: many small exporters club together and collectively run their own indirect representative. If it’s a partnership, it could even have a UK presence for taking UK security, etc

It’s the sort of thing DexEU should have incubated if they weren’t sworn to the idea that everything Brexit is marvellous.

 

[Nobody]

Probably not if you are not VAT registered in the country of import

If you have business customers who are VAT registered then it really would be easier and more cost effective if they were the importers. Most EU countries have some sort of VAT deferral, postponement or even in some cases automatic population of the VAT return. Even if they opted to pay it would usually be recoverable .
Getting you to pay duty and taxes probably increases costs to them .

EU customs law doesn’t make it easy for a non EU business to be importer but it is possible to register for VAT and get an EORI as a UK business. You would need to find a customs representative willing to act as indirect representative and possibly fiscal representation for VAT. A fiscal rep is nit too much trouble to find but customs indirect representation is something many are reluctant to do but some will. You will need to check with your courier if you want to go down that route.
Although you would sort out the import you would in effect be importing your own goods . There would then be a EU supply to your customer subject to supply VAT accounting.

I do think it’s more fear of complexity and costs that makes customers ask for the seller to sort the customs so perhaps a bit of education may help. If you are using couriers then there is very little paperwork if any at all for the receiver. Provided you give the courier your customer details VAT number EORI etc. they simply make the customs declaration. They will ask for duty etc to be paid before releasing the goods but if the customer sets up an account then they will invoice later.

I would only look at setting up a business overseas after all other avenues have been exhausted. Even really big companies don’t go down that route without serious thought.

Thank you for the detailed respone and explanation!!

 

[Nobody]

This strikes me as a prime example of where a coop would be a good idea: many small exporters club together and collectively run their own indirect representative. If it’s a partnership, it could even have a UK presence for taking UK security, etc

It’s the sort of thing DexEU should have incubated if they weren’t sworn to the idea that everything Brexit is marvellous.

Worth exploring?

 

[Customs Geek]

Worth exploring?

The reason why EU customs representatives are reluctant to act as indirect representatives is because they are legally liable for a customs debt . This isn’t an immediate problem as the non EU resident company can be asked for the taxes due up front.
The problems can occur much later when the customs authorities do an audit and find there hasn’t been enough duty charged. If the customer / business has vanished or can’t be contacted in that time the representative is billed.

Some EU countries require that the representatives are authorised and meet strict standards.

 

[japancool]

Probably not if you are not VAT registered in the country of import

If you have business customers who are VAT registered then it really would be easier and more cost effective if they were the importers. Most EU countries have some sort of VAT deferral, postponement or even in some cases automatic population of the VAT return. Even if they opted to pay it would usually be recoverable .
Getting you to pay duty and taxes probably increases costs to them .

EU customs law doesn’t make it easy for a non EU business to be importer but it is possible to register for VAT and get an EORI as a UK business. You would need to find a customs representative willing to act as indirect representative and possibly fiscal representation for VAT. A fiscal rep is nit too much trouble to find but customs indirect representation is something many are reluctant to do but some will. You will need to check with your courier if you want to go down that route.
Although you would sort out the import you would in effect be importing your own goods . There would then be a EU supply to your customer subject to supply VAT accounting.

I do think it’s more fear of complexity and costs that makes customers ask for the seller to sort the customs so perhaps a bit of education may help. If you are using couriers then there is very little paperwork if any at all for the receiver. Provided you give the courier your customer details VAT number EORI etc. they simply make the customs declaration. They will ask for duty etc to be paid before releasing the goods but if the customer sets up an account then they will invoice later.

I would only look at setting up a business overseas after all other avenues have been exhausted. Even really big companies don’t go down that route without serious thought.

How does this apply to businesses who set up a branch in Northern Ireland? Can you get round the tax representative that way?

As far as setting up in the actual EU, in my case, all of our suppliers are EU based anyway, so if we set up in the EU, the supplies would go directly from one EU country to another without ever touching UK soil, so there wouldn't be any customs charges involved.

 

[eteb3]

The problems can occur much later when the customs authorities do an audit and find there hasn’t been enough duty charged. If the customer / business has vanished or can’t be contacted in that time the representative is billed.

How do those issues arise? I mean who misses them first time around?

Knowing not much about the sector, my suggestion is for an UK-owned, EU-resident rep, with a UK presence which takes security in the UK (personal from directors if necessary) .

Imagining a partnership between the rep EU side, and the security-taker UK side, which could mitigate the risk?

 

[Customs Geek]

How do those issues arise? I mean who misses them first time around?

Most things are never actually checked by Customs first time round. It’s mostly automated clearance that takes seconds. A few will be selected for documentation checks and even fewer for physical checks. Most customs checks are carried out post clearance possibly out to three years later. This is when problems can be found such as misdeclared HS codes or values.

Knowing not much about the sector, my suggestion is for an UK-owned, EU-resident rep, with a UK presence which takes security in the UK (personal from directors if necessary) .

Imagining a partnership between the rep EU side, and the security-taker UK side, which could mitigate the risk?

A customs representative is normally the person also making the customs declaration. so it’s not just about the security . The people need to have the software and knowledge to make customs declarations.

 

[eteb3]

it’s not just about the security . The people need to have the software and knowledge to make customs declarations.

Gotcha, hence partnership of two experts: customs rep and security-taker

If Labour get in we might just possibly get mutual guarantee societies, which would be a good fit here for the UK side

 

[Someone else]

Yes it’s possible to set up a company or a branch in the EU but it’s shouldn’t be done without fully understanding your obligations. For a start a virtual company is not usually sufficient for customs or VAT purposes. There is normally a requirement for physical presence and people. Effectively a door for the customs and VAT authorities to knock on to see your business records.


Depending on whether your customers are individuals or other businesses there are probably other less complex options.

For instance you can often just get the courier to send you the customs and VAT charges.
You would just increase your prices to cover it.

If you register a Ltd or a BV in the Netherlands, you will have more obligations than for a Ltd in the UK. There's more red tape there and higher fees (negligible relative to losing a big chunk of turnover) and you may also have an obligation to pay the directors a minimum annual salary.

Why don't you call a company that's done it? There's a wine guy who set up a company in France and is living there now but who also still imports into the UK, off the top of my head. There have been several articles about these Brexit impacts in the Guardian. That should get you a list of people to call. Most won't be competitors and will be happy to share.

 

[Customs Geek]

Gotcha, hence partnership of two experts: customs rep and security-taker

If Labour get in we might just possibly get mutual guarantee societies, which would be a good fit here for the UK side

Whoever the UK government is It won’t make any difference to EU requirements for a customs representative In Europe. Now we have left the EU the UK doesn’t get any say in their legislation.

The Customs indirect representative is the one who provides the security to the customs authority usually via a bank or insurance company. The customs authority will insist that only recognised financial institutions are used. In Europe they must be European.
We have similar rules here for non UK based importers .

 

[eteb3]

customs authority will insist that only recognised financial institutions are used [as givers of security].

Do you happen to know if any mutual guarantee societies do this? They’re a big thing in southern Europe, especially Italy.

 

[Bab]

Has anyone found an Indirect Custom representative? I contacted one in France and it is simply too expensive. Has any of you found one? If yes please share.
An Indirect Custom representative can be based anywhere in the EU.
Thank you,

 

[BradSher]

Has anyone found an Indirect Custom representative? I contacted one in France and it is simply too expensive. Has any of you found one? If yes please share.
An Indirect Custom representative can be based anywhere in the EU.
Thank you,

maybe try in countries like croatia or poland it can be cheaper in countries with lower wages

 

[eteb3]

Whoever the UK government is It won’t make any difference to EU requirements for a customs representative In Europe. Now we have left the EU the UK doesn’t get any say in their legislation.

I realise. It seems to me the question is, how do you reduce the costs of indirect representation? Much of their own costs must be risk?

So putting up security in the UK, quickly enforceable by the indirect rep’s own UK partner, may reduce that risk, and with it the cost?

In my ideal world a mutual guarantee society registered in the EU has as its members UK exporters; and the UK security they put up is held by the guarantee society’s UK subsidiary.

(understand that I’m a legal geek with a fondness for creative thinking, and this may be commercially unviable.)