How do European companies adjust to Brexit


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Written by Victoria Besset
BBC News

Image copyrightGetty Images

It has been nearly two months since the post-Brexit free trade agreement between the United Kingdom and the European Union came into effect.

Under the new rules, European companies must directly pay UK sales tax, or value-added tax, on sales below £ 135 (€ 155; $ 190), so they now have to register and file quarterly returns to the UK authorities. .

Other changes include customs declarations and additional paperwork. So how have they adapted to date and what is the impact of the changes?

Laurent Caplat, founder of French online food store BienManger.com

BienManger received its final orders from the UK on December 18 and shipped them before the new rules came into effect on January 1. It is unclear if and when service will resume in the UK.

Image copyrightBienmanger.com
Comment on the pictureLaurent Caplat says he will need to spend some time weighing costs and changes before deciding on his next move

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

The UK market is not the center of our business, but UK customers have been looking for these products and are happy to find them on our website.

Even in November and December, it was a bit unclear as to what was going to happen with Brexit and the rules. We have now heard about the new procedures for sending parcels to the UK but it is still not entirely clear.

We still have a relationship with some English producers and sell products from England and UK on our site. And we have clients in England calling and saying, “I was ordering this product on your website, where can I find it?”

It will be a pleasure to start reselling to UK but we need to spend more time to better understand the changes and the cost. The question we have is, is it worth implementing all of these solutions for the small amount of business that we have been doing with the UK?

In my view, it is hard to have an opinion on Brexit: Everyone will adjust and adjust. I just regret that we used to have this free market and it was so easy to do business all over Europe, now it’s even more difficult.

Thomas Leba, co-founder of Finnish online wall poster design company Made Sundays

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

Image copyrightMade from Sundays
Comment on the pictureMade of Sundays says many of its sales pass through an online marketplace adding value-added tax to the price

We are a very small company but around 20% of our exports go to the UK.

The biggest practical thing was confusion among clients. Not many people understand how the system works: People think that if they ask for over £ 135, they won’t have to pay taxes at all, so we have to make it clear 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 somewhat expensive and these costs must be paid. When using a courier service, they are required to make customs declarations, and the added cost is around € 5 (£ 4.30) per package.

What I don’t know yet is how complicated the UK tax return is, and the amount of work. Fortunately, a large portion of our UK sales pass through Etsy, the marketplace, and there they add UK VAT above the price.

But the biggest problem for us is our accounts: it is another country where we have to check all taxes and correct the amounts to the Finnish tax authorities. It’s a little more business in that sense but other than that it was going fairly well, so we haven’t really considered not selling to the UK – at least for now.

Dorte Randrup, export manager for clothing brand NÜ Denmark

The company faced a month-long outage, but deliveries to its UK suppliers are now back to normal.

Image copyrightNot Denmark

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

We were able to send some inventory to our distributors in the UK and Ireland prior to Brexit, then we had about a month or so when we couldn’t send the cargos.

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

Our UK distributors were able to reach out to customers, but the effect wasn’t too bad as it is mid-season and due to UK shutdown.

We are able to deliver across the UK now.

Harald Mücke, owner of German online store Spielmaterial.de, sells board game components

The company has stopped selling direct to hundreds of individual customers in the UK due to the VAT law.

Image copyrightSpielmaterial.de

We thought about getting a VAT code so we can send smaller items to the UK, but that takes a lot of work. Therefore we cannot send to private clients in the UK if the order is less than £ 135.

I have a few company-to-company clients that weren’t affected, but all of the younger clients are gone. There are close to 400-500 clients in the UK that we cannot serve anymore so it pays a loss here.

For orders over £ 135, it’s more expensive for all UK customers because they have to pay customs and some fees: for example, DHL charges a flat fee of € 12 per package.

I can sell to private clients in the UK via platforms like Etsy and eBay – then the platform has to collect taxes in the UK. But you have to pay an initial fee, which costs money. We have close to 10,000 items so we have to pay the fee 10,000 times, which is something we don’t want to do. So customers cannot buy everything.

We also have to update our online shopping system to adopt the UK’s value-added tax and shipping costs system, which costs several thousand euros. This is the only country in the world that deals with taxes in this way and that is the main problem. It is an individual thing that the UK and nowhere else in the world do.

Bal Loyla, owner of Eastern European online grocery store Europa Fresh, UK

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

We are still growing as a business, but for now this is being stifled.

The idea was to start exporting more: We know that clients are out there and are receiving a lot of inquiries. But it’s something that we have to put in the back so things get easier or clearer.

Couriers inform us that they are no longer transporting food to Northern Ireland.

Media captionWhat’s the deal on Northern Ireland and Brexit?

Then with Europe we have a lot of issues with orders since there is a lot of paperwork. You must detail each product in the order – sometimes our orders contain up to 50 to 100 items and this takes a lot of time.

We are just a small company so it’s not worth it.

We used to import ourselves from wholesalers in Europe but now we have to use companies here in the UK. One supplier we have in Germany now uses a customs broker and the cost is added to every delivery, so it’s not worth importing from them anymore – I think they add an extra € 200 in addition to the delivery fee and product costs.

Our margins have been almost cut in half because we have to pay the middleman, whereas previously we could import and save. Unfortunately, we have to pass the extra cost on to the customers.

There are only seven weeks left since Brexit and prices have risen, but at the moment it is difficult to say how much this will affect us in the long term. I think there should be a lot of guidance for small businesses like us.


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