Analyse the financial impact
With the prospect of a possible no-deal Brexit, it is important to examine in more detail the costs involved in your trade with the UK and to ensure you are properly covered against potential risks. After all, a no-deal Brexit goes hand-in-hand with the creation of a hard border between the United Kingdom and the European Union. This means that every delivery from and to the United Kingdom will be subject to customs formalities and import duties which, in turn, will mean a longer delivery period. Furthermore, after Brexit an EORI (Economic Operator Registration and Identification) number will also be required to continue trading with the UK in the future.
This means there will be a significant impact on the pricing of goods. As a business, it is therefore also important to find out whether it would still be viable
(and logistically possible) to operate in the British market. The upside is, however, that British companies will also encounter the same difficulties. For them too it will therefore become more difficult to trade in the European market, which could present potential opportunities to Belgian companies in mainland Europe.
Do you import large quantities of goods from the United Kingdom? If so, import VAT will henceforth also be owed. In principle, this VAT is immediately due and payable, which leads to a pre-financing cost on the part of the importer. Applying for an ET14.000 licence, which allows payment of the import VAT to be deferred to the periodic VAT returns, may offer a solution.
Finally, in the event of a no-deal scenario, the British Pound will become more volatile. To protect yourself against this, it would be better to enter into future contracts in Euros.
Take VAT into account
Following Brexit, the United Kingdom will cease to be part of the EU VAT area. This will mean that every previous intra-Community transaction will be considered to be a taxable import or an exempt export. To ensure this is correctly incorporated into the VAT return, the accounting software that is used must be modified.
The fact that the United Kingdom will become a third territory also has an effect on various simplification measures. As an example, the simplified triangular intra-Community transactions with the United Kingdom will no longer be possible, the scheme for distance sales can no longer be applied and it will no longer be possible to use simplifications in terms of consignment/call-off stock with trade partners in the United Kingdom.
Check the contracts you have entered into
Brexit will have an impact on the contracts that you enter into with your suppliers and this impact must not be underestimated. In the event of disputes, it is therefore important to know which right you can invoke.
In addition, the importance of INCO terms, which outline the responsibilities of each party when delivering goods, become more and more important. After all, as the goods can be checked at the border, it is important to know who is responsible for the risks and costs.
Examine what the social impact could be
Finally, Brexit also has far-reaching consequences at a social level. For example, there is the possibility that Belgian employees who work in the UK may have to contribute to the British social security system. In that case, they will therefore have to pay social security contributions in two countries, whilst the current European legislation enables them to only pay social security contributions in their country of residence under certain conditions.
Also, after Brexit, labour migration will become a lot more difficult. That is because, after Brexit, employees with a Belgian nationality will have to be in possession of a residence permit and will be subject to immigration control. As a company it might therefore be useful to find out exactly where you will be able to source people with the talent and skills you require.
If you haven't yet given thought to the possible impact of a no-deal Brexit, or would like to learn more about the implications of this, it is high time that you do so! Our specialists will be happy to help, please contact them at firstname.lastname@example.org.