Tax, Customs Board: Estonian companies should be prepared for no-deal Brexit

TALLINN – The Estonian Tax and Customs Board is advising that all companies be prepared for a no-deal withdrawal of the United Kingdom from the European Union and added that companies should immediately assess the impact of Brexit on their activity.

Brexit will have an especially significant impact on companies currently only trading on a borderless single market. Companies, which are planning trade with the United Kingdom in the future, must take into consideration customs formalities that are obligatory for trade with third countries, the authority said on its website. 

For that, according to the Tax and Customs Board, one must acquaint themselves with the procedure in question in good time and acquire information on what trade with non-member states means and what kind of requirements will be applied to goods transported to the single EU market  from third countries or to goods transported to third countries.

Should the parties to the proceedings not reach an agreement regarding the withdrawal deal, the customs authorities of EU member states must adjust rules and formalities that apply to trade between EU and third countries, that means regarding goods imported from or exported to the UK.

The customs authority said that passengers should also be prepared that, when travelling to the UK, the same restrictions, provisions and limit values will be applied to free of duty import as when arriving from a non-member state, that is third country.

When ordering goods online, one should also be prepared that orders made from the UK will be subject to declaration and taxation in customs as any other goods bought online from non-member states, that is third countries, the Tax and Customs Board said.

On March 29, 2017, the United Kingdom announced to the European Council its intention to withdraw from the EU. The two-year period of negotiations that was launched then will end on March 29 of this year and a withdrawal agreement should enter into force on the next day, that is March 30.

The withdrawal agreement would include provisions concerning the transition period, including the free movement of goods between the EU and UK. The transition period would last until December 31, 2020. As negotiations regarding the withdrawal deal are still ongoing, there is no full clarity regarding the duration and content of the transition period, the tax and customs authority said.

At present, there are two scenarios in the exit talks being held between the EU and UK. Regardless of whether the withdrawal deal will be signed or not, the relations between the UK and the EU will change thoroughly when the UK becomes a non-member state, that is a third country. A third country cannot have the same rights and benefits as a member state.

According to the tax and customs authority, if no joint agreement is reached regarding the transition period and its content, the UK will exit the EU without a transition period. In this case, the UK will become a third country starting from March 30 of this year and a customs formalization will be necessary for the movement of any kind of goods between the UK and EU.

The Tax and Customs Board said that this means that importers and exporters are responsible for declaring the goods in customs. Declarants may clear the goods through customs themselves or use a customs agency. Smooth customs clearance and electronic declarations often require different authorizations granted by a customs authority.

According to the given scenario, the EU will start the application of its regulations and tariffs on the borders of the UK as a third country, including the carrying out of customs, sanitary and phytosanitary controls. At that, the customs formalities and control procedures to be carried out on the borders will cause a significant delay in the movement of goods.

Thus, all of the UK's excise duty permits will be deemed invalid and, starting from March 31, 2019, no electronic accompanying documents can be drawn up for the UK, the Tax and Customs Board said.

In the event that a withdrawal deal is signed, the UK, according to the deal, will exit the EU on March 29, 2019, and the transition period will last until December 31, 2020. During the transition period, the UK from the perspective of customs formalization will be considered an EU member state and the free movement of goods between the EU and UK will continue until the end of the period, the authority said.

According to this scenario, rules, restrictions and other customs formalities applied to trade between the EU and third countries will not be implemented during the transition period. The obligation to declare goods in customs will start in the movement of goods between the EU and UK when the transition period has ended.

In that scenario, electronic accompanying documents for excise goods can be drawn up for the UK also after Brexit, until December 31, 2020 and the  acknowledgements of receipt can be drawn up until May 31, 2021.