The year 2020 has almost come to an end and soon Brexit will be reality. This without clarity, about the conditions under which the United Kingdom will officially depart from the European Union. As leading Logistic Service Provider for the Fashion industry, servicing a wide range of international Fashion houses, it is essential to advise and assist our customer base about all possible scenarios. And also important: to ensure that all these scenarios can be dealt with. Consequently Modexpress has explored all consequences with respect to customs regulations, duty structure, intrastat reporting and others.
Despite the complexity of being fully prepared for the still unknown status, Modexpress has anticipated on the future circumstances by fine tuning its Bonded services. As AEO certified organisation, it is in the position to store products without the need to pay import duties or VAT for exports to the UK or other countries outside the EU. Needless to say, that this leads to improved profitability and cash flows.
Presently the Netherlands has installed programs for import VAT under postponed VAT accounting programs. Most likely a trade agreement between the UK en the EU will not contain such provision relating import VAT. This might make it even more attractive for Fashion brands to relocate their logistics from the UK into the Netherlands, with Modexpress as their logical partner.
One Stop Shop E Commerce
In 2017 the European Committee adopted a proposal with respect to new regulations to be applied for E Commerce. The aim of this proposal, is to simplify the charging of VAT on cross-border sales by web shops to consumers.
The proposal covers cross-border supplies ( distance selling ) and services to consumers within the EU and supplies and services to consumers from countries outside the EU. In principle, these sales to consumers are subject to VAT in the country of the purchaser. Under the current system, the brand must therefore often register for VAT in Member States where his customers are established. In certain cases, this system enforces the brand to register in up to 28 of the EU Member States in order to submit VAT returns in each of them. The new proposal eliminates this need . From 2021 onwards, the EU company will be able to declare foreign VAT in his country of establishment. This is what is known as the Mini One Stop Shop. This MOSS scheme will not apply to companies supplying from outside the EU ( read: UK ).
Reduction of avoiding import duties
The EU has trade agreements with many countries, from Western markets to developing countries. There exist also countries with which the EU does not have a trade agreement, such as China and the United States . If a brand imports from these countries it will be enforced to pay the general import duties and not eligible for tariff preference. However if a brand imports from countries with which the Union has a preferential trade agreement, it will be faced with reduced or nil import duties. This is called tariff preference and to take benefit a preferential document or certificate of origin ( COO) is required. At this stage it is uncertain as to whether the UK will apply such duty reductions, after Brexit has come into play. In order to anticipate the fact that this might happen at later stage, Modexpress assist its customers exporting to the United Kingdom with the preparation of a COO to speed the duty reduction process at later stage.
Next to all of the above Modexpress has implemented, in cooperation with one of its partners, a World Ease program for simplification of customers procedures in the UK or other countries. By means of consolidating several shipments into one, customs clearance can be executed as a single unit, reducing documentation and clearance time.
BREXIT will have a serious effect on not just customs but on the complete Supply Chain into the country. To ensure smooth processes, it requires a Logistics Service Provider which is not only fully aware of all regulations but at the same time flexible and supportive. Our advice to you is to concentrate on what you can do best: developing, marketing and selling products. And let Modexpress concentrate of what we are superb in: fulfilling and delivering orders and complete customer care. We invite you to join us !