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How European businesses are adapting to Brexit




By Victoria Bisset
BBC news

copyright to the imageGetty Images

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

Under the new rules, European companies have to pay direct sales tax in the UK, or VAT, on sales below 135 ($ 155; $ 190), so they now have to register and file quarterly returns with UK authorities.

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

Laurent Caplat, founder of the French online food store

BienManger received its last orders from the UK on 18 December and sent them before the new rules take effect on 1 January. It is unclear if and when it will resume service in the UK.

copyright to the
image captionLaurent Caplat says he will have to spend time evaluating costs and changes before deciding his next step

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

The UK market is not essential 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 it was somewhat unclear about what would happen to Brexit and what the rules would be. We have now heard about the new procedures for sending parcels to the UK but it is still not very clear.

We still have a relationship with several English manufacturers and sell products from England and the UK on our website. And we have customers in England calling to say, “I ordered this product on your website, where can I find it?”

It would be fun to start selling in the UK but we need to spend more time to better understand the changes and cost involved. The question we have is, is it worth implementing all these solutions for the small amount of business we were doing with the UK?

From my perspective it is difficult to have an opinion on Brexit: everyone will adapt and adapt. I just regret that we once had this free market and it was so easy to do business all over Europe, and now it’s harder.

Thomas Leppa, co-founder of the Finnish online poster design company Made of Sundays

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

copyright to the imageMade on Sundays
image captionMade on Sundays says many of its sales go through an online marketplace that adds price to VAT

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

The biggest practical thing has been the confusion between customers. Many do not understand how the system works: people think that if they order over 135 they do not have to pay any taxes at all, so then we have to explain that the more you buy, the more you have to do yourself.

With purchases over 135, the consumer 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. When using a courier service, they have to make customs declarations and this is about 5 (4.30) added cost for each package.

What I do not know yet is how complicated the tax return in the UK is and how much work this is. Fortunately a large part of our UK sales go through Etsy, the market, and there they add UK VAT at the top of the price.

But the biggest issue for us is our accounting: it is another place where we have to check all the taxes and get the correct amounts for the Finnish tax authorities. It’s a bit more work in that sense, but otherwise it has gone quite well, so we haven’t really thought about not selling in the UK – at least for now.

Dorte Randrup, export manager for clothing brand N Denmark

The company faced a month outage, but deliveries to its UK suppliers have now returned to normal.

copyright to the imageJo Denmark

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

We managed to send some stocks to our distributors in the UK and Ireland before Brexit, then we had about a month or so when we were unable to ship the shipments.

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 make it right.

Our UK distributors managed customer contacts, but the impact was not too bad because it is the middle of the season and due to the UK blockade.

We are able to deliver throughout the UK now.

Harald Mcke, owner of the German online store, selling board game ingredients

The company has banned direct sales to hundreds of individual customers in the UK due to the VAT rule.

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We have thought of getting a VAT code to be able to send smaller items to the UK but it is a lot of work. So we can not ship to private clients in the UK if the order is under 135.

I have some business to business clients and they are not affected, but all the small clients are gone. There is something like 400-500 clients in the UK that we can no longer serve, so it is causing losses here.

On orders over 135, it is much more expensive for all UK customers because they have to pay customs duties and some fees: for example, DHL is charging a fixed fee of 12 per parcel.

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

We also need to update our online shopping system to adapt the UK VAT and shipping system, which costs several thousand euros. This is the only country in the world that deals with taxes this way and this is the main problem. It’s an individual thing made in the UK and nowhere else in the world.

Bal Loyla, owner of Eastern Europe Online grocery store Europe Fresh, MB

The company started shortly before its first blockade in the UK in 2020 but has now suspended shipments to Northern Ireland and Europe.

We are still growing as a business, but now it is drowning.

The idea was to start exporting more: we know customers are there and we have a lot of research. But it is something we will have to put in the rear igniter until things become lighter or clearer.

We have been advised by couriers that they are no longer carrying food in Northern Ireland.

media inscriptionWhat is the deal for Northern Ireland and Brexit?

Then with Europe we are having a lot of issues with the orders because that includes a lot of documents. You need to detail every single product that is on order – sometimes our orders have something up to 50 to 100 items and that takes a lot of time.

We are just a small business so it is not worth worrying about.

We used to import ourselves from wholesalers in Europe, but now we have to use companies here in the UK. A supplier we had in Germany is now using a customs broker and the cost is added to each shipment, so it is no longer worth importing from them – I think they are adding another 200 in addition to shipping and product costs

Our margins are almost cut in half because we have to pay the broker while before we could import and save. Unfortunately, we have to pass on the extra cost to the customers.

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

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