The transition period of the UK leaving the EU is ending, and e-commerce vendors need to make some changes to keep trading across the English Channel.
Amongst all the chaos of 2020 it’s easy to forget that we are also in the midst of the UK’s exit from the European Union. But it is happening, and e-commerce needs to be prepared for the end of Britain’s transition period on 31 December 2020.
E-commerce sellers in both the UK and the EU must ensure that they’re complying with new VAT and Customs regulations once the UK has left the EU’s VAT scheme to avoid being blocked at customs, being removed from online marketplaces, or fined. Ensuring that you are prepared for Brexit will ensure that you can maintain a good CX and avoid frustrated customers.
If you are a UK seller selling goods to the EU under any country’s VAT distance selling threshold, you will need to VAT register in each country, and you may need to appoint a Fiscal Representative. If you are an EU seller you will need a UK VAT registration to sell to UK customers if your sales are below £70k, but you will not need to appoint a Fiscal Representative. Both UK and EU sellers of digital goods will no longer be able to use the single MOSS return filing or registration.
Online marketplaces like Amazon may require businesses trading in the UK and the EU to change operations. From 31 December Amazon will no longer allow businesses to sell via FBA (Fulfilled by Amazon) from the UK to the EU; goods must first be imported into the EU, which may require a new EU VAT registration and import VAT. Other marketplaces may have similar obligations.
After Brexit goods may no longer travel freely between the UK and the EU, and must clear customs. For this you will need a UK and an EU Economic Operator Registration Identification (EORI) number, and complete exit and entrance customs declarations with correct commodity codes.
One of the most significant issues that EU and UK e-commerce businesses will have to reckon with as Brexit plays out is managing customer expectations and providing consistently high-quality CX. You may have to revise delivery terms to clarify delivery times and who is responsible for customs clearance and tariffs.
In terms of who is responsible for new duties & taxes, B2B and B2C vendors trading across the English Channel have two options: DDP (Delivery Duty Paid) or DAP (Delivered at Place). Duties and taxes are collected at online checkout and paid by the seller in DDP, whereas in DAP it is paid by the customer and collected at delivery. DAP is easiest for sellers, however DDP provides the best customer experience, which may be valuable during this period of change and associated potential for customer frustration.
The political circus of Brexit has played out across international headlines and social media hot takes, but it is important for e-commerce businesses to deal with the practical realities of the UK leaving the European Union. Important steps need to be made before 31 December to ensure that your business complies with new rules and regulations. However, it is now more important than ever to ensure that Brexit doesn’t impact CX, and it may be prudent to not put the increased cost and inconvenience of post-Brexit trade across the English Channel solely on consumers, who are already reeling from the ongoing pandemic and are now more reliant on e-commerce than ever. Carefully managing this situation will reduce churn and ensure a loyal, satisfied customer base.
For more information on Brexit, checkout our partner Avalara’s 10 point checklist for Brexit HERE.