How European companies are adapting to Brexit

It has been almost two months since the UK’s post-Brexit free trade agreement with the EU came into force.

Under the new rules, European companies must pay UK sales tax, or VAT, directly on sales under £ 135 (€ 155; $ 190) directly, so they now need to file and file quarterly statements with the authorities from UK.

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

BienManger received its final orders from the United Kingdom on December 18 and dispatched them before the new rules took effect on January 1. It is unclear if and when he will resume services to the UK.

We run an e-commerce delicatessen, selling a selection of fine foods from France, Europe and around the world. About 20% of our orders come from outside France.

The UK market is not central to our business, but UK customers were looking for these products and were happy to find them on our website.

Even in November and December I was a little confused in terms of what would happen with Brexit and what the rules would be. Now we hear about the new procedures for shipping orders to the UK, but it is still not very clear.

We still have relationships with some English producers and sell products from England and the UK on our website. And we have customers in England calling to say, “I used to order this product on your website, where can I find it?”

It would be a pleasure to start reselling to the UK, but we need to devote more time to better understand the changes and costs involved. The question we have is: is it worth implementing all these solutions for the small turnover we were doing with the UK?

From my point of view it is difficult to have an opinion on Brexit: everyone will adjust and adapt. I only regret that we used to have this free market and it was so easy to do business across Europe, and now it is more difficult.

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

We are a very small company, but about 20% of our exports go to the United Kingdom.

The biggest practical thing has been confusion among customers. Many don’t understand how the system works: people think that if they place orders over £ 135, they won’t have to pay taxes, so we have to explain that the more you buy, the more you have to do yourself.

With purchases over £ 135, the customer is responsible for paying VAT once the product arrives in the UK.

With online shopping nowadays people expect free shipping, but with Brexit it is quite expensive and these costs have to be paid for. When you use a fast delivery service, they have to make customs declarations and it costs about € 5 (£ 4.30) for each package.

What I still don’t know is how complicated tax reporting for the UK is and how much work it takes. Fortunately, a large part of our sales in the UK go through Etsy, the market, and there they add UK VAT to the price.

But the biggest problem for us is our accounting: it is yet another country where we have to check all taxes and get the correct amounts from the Finnish tax authorities. It is a bit more work in that sense, but on the other hand it is going very well, so we don’t think about not selling to the UK – at least for now.

The company faced a month of disruption, but deliveries to UK suppliers are now back to normal.

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

We were able to send some stock to our distributors in the UK and Ireland before Brexit, so we had about a month or more when we were unable to send deliveries.

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

Our UK distributors were able to contact customers, but the impact was not so bad because we are in the middle of the season and because of the UK blockade.

We can now make deliveries across the UK.

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

We thought about getting a VAT code to be able to ship smaller items to the UK, but it is very laborious. Therefore, we cannot ship to private customers in the UK if the order is less than £ 135.

I have a few business-to-business customers and they weren’t affected, but all the small customers are gone. There are about 400-500 customers in the UK that we are unable to service anymore, so it is 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: for example, DHL is charging a fixed fee of € 12 per package.

I can sell to private UK customers through platforms like Etsy and eBay – so the platform needs to collect UK taxes. But you have to pay an upfront fee, which costs money. We have something like 10,000 items, so we would have to pay the fee 10,000 times, and that’s something we don’t want to do. Therefore, customers cannot buy everything.

We also need to update our online store system to adopt the UK VAT system and shipping costs, which cost several thousand euros. This is the only country in the world that manages taxes in this way and that is the main problem. It is an individual thing done by the UK and nowhere else in the world.

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

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

The idea was to start exporting more: we know that customers are out there and we received a lot of inquiries. But it is something that we will have to leave in the background until things become easier or clearer.

We have been informed by the messengers that they are no longer bringing food to Northern Ireland.

So, with Europe, we are having a lot of problems with orders because there is a lot of paperwork involved. You need to detail each product in the order – sometimes our orders have 50 to 100 items and that takes a long time.

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

We used to import wholesalers in Europe, but now we have to turn to companies here in the UK. A supplier that we had in Germany is now using a customs broker and the cost is added to each delivery, so it’s no longer worth importing from them – I think they’re adding € 200 extra in delivery charges and product costs.

Our margins fell by almost half because we have to pay the middleman, before we could import and save. Unfortunately, we have to pass on the extra cost to customers.

We have only been in Brexit for seven weeks and prices have gone up, but it is difficult to say at the moment exactly how much this will affect us in the long run. I think there needs to be a lot more guidance for smaller companies like us.